Protectionist Breezes: Wind-Power Companies Cry Foul on China Go back »
2009-05-29 | All chapters
Protectionist Breezes: Wind-Power Companies Cry Foul on China
Keith Johnson, Wall Street Journal, 28th May 2009
There is an ugly side to China’s headlong rush into clean energy: Protectionism.
Foreign firms complain that China’s quest for a domestic clean-energy industry is coming at their expense. European and U.S. wind-turbine makers, in particular, say they are being squeezed out of one of the world’s fastest-growing wind-power markets because of discriminatory rules for bidding on power projects. Here’s the European discontent:
“All the foreigners are out of the race,” Jorg Wuttke, the [European Union Chamber of Commerce in China’s] president, said at a media briefing in Beijing today. “There seems to be a drive by the central government to award this to Chinese and not Europeans established in China.”
In a nutshell, rules for getting a piece of the $7 billion wind-energy part of the Chinese stimulus all boil down to the cost of wind turbines—not factors such as equipment reliability or the total cost of generating clean electricity. That favors Chinese makers and punishes foreign companies such as General Electric, Vestas, and Gamesa, Mr. Wuttke said.
This isn’t the first time foreign companies have complained about China’s often Byzantine rules for bidding on public projects. The EU’s Chamber of Commerce includes that as one of its standing complaints about doing business in China. The desire to support homespun industry isn’t unique to China. Recall the “Buy American” rider in the U.S. stimulus package.
But the noise about China’s protectionist impulses when it comes to wind power is getting louder. While most companies gripe anonymously, India’s Suzlon kicked off the complaining earlier this month. Other observers, such as Nature magazine, have taken aim at China’s race-to-the-bottom in wind power, which leaves China with less actual clean energy than it should have.
Foreign wind-power firms have already gone to great lengths to keep a foot in the Chinese wind market, which has doubled in size every year for the past four years and which could overtake the U.S. as the world’s biggest market next year. Companies like Vestas and Gamesa have opened local manufacturing facilities—in part to try to comply with Chinese rules favoring “domestic” components.
But all the changes have some foreign companies ruing their big bets on China, Reuters noted a few weeks ago:
Frustrated by the moving goalposts, many were starting to reconsider their strategy, [one foreign wind-energy executive] said. “Whenever foreign companies meet the conditions set by the state, the conditions are raised again,” he said. “If we knew in 2006 what we know now in 2009, we would not have agreed to such big expansion plans.”
China’s drawn plenty of plaudits for its clean-energy push. But that drive to clean-up the world’s biggest emitter of greenhouse-gases would probably be even more effective if the world’s leading clean-energy companies took part.