Investigations on Clean Energy in China Reveal the U.S.’ Gains

Sino-American trade conflicts never seem to stop. Recently, it has been said that the United States has begun investigations on Chinese clean energy policies under Section 301. With regard to this issue, the Chinese Ministry of Commerce has expressed regret that the U.S. is sending out the wrong message with its protectionist measures and that it will protect China’s national interests according to the regulations stated by the World Trade Organization.

The U.S. appears to have filed many complaints against China. However, the investigations on the Chinese clean energy policies have been particularly controversial. It was reported that the United States began investigations on Sept. 19 this year, and it was proposed by United Steelworkers to the Office of the United States Trade Representative. They felt that China has violated WTO regulations by employing subsidy measures in support of its clean energy sector.

No country can beat the United States in terms of subsidies for clean energy. It was reported that the United States subsidizes up to 2,300 projects, including clean energy projects. In fact, on accessing the Department of Energy’s website, one would immediately see listings of subsidy measures employed towards energy resources. For example, on Sept. 1, 2009, the DOE claimed that an estimated 5,000 projects will be awarded with subsidies once the tax credit measures are terminated. The DOE handles an average of $125 million worth of applications each week, which implies that the amount of subsidies given out will rapidly surpass the $3 billion that the U.S. originally budgeted for. Upon the recovery of the economy in 2009, the U.S. announced the American Recovery and Reinvestment Act, giving out subsidies for renewable energy, energy efficiency and technical assistance purposes. In particular, $25.2 billion will be awarded to renewable energy purposes. On Aug. 16, 2010, the DOE’s Office of Energy Efficiency and Renewable Energy announced that all subsidized solar energy projects will have to use American-produced chips within six months. On Jan. 8 this year, President Obama provided $2.3 billion in tax grants to green energy industries. If the U.S. clearly has initiated subsidies in clean energy, why can’t China adopt the same practices? What image is the U.S. trying to portray if it prevents other countries from following suit?

It is even more problematic if we look at clean energy trades between the U.S. and China. As of now, China has exported only three windmills to the U.S., while the American firm General Electric has exported a total of 80,000 kilowatts worth of wind turbines to China in 2005. In 2009, GE exported 340,000 kilowatts worth of wind power capacity to China, which represents a four-fold increase from 2005. A total of 1.13 million kilowatts was exported in five years. Clearly, the U.S. has had the upper hand in terms of clean energy trade between China and itself. Hence, it seems unbelievable that the U.S. is trying to prevent China from following its lead.

It seems undeniable that subsidies need to be doled out for clean energy resources. The public knows that the U.S. has been trying hard to reduce its carbon emissions and taking the initiative to use clean energy will help the U.S. achieve this goal. At the Copenhagen climate conference, China committed to cutting down its emissions in 2010. In order to do so, countries are turning to the use of biofuels, hydroelectric power, wind energy and solar energy. It is desirable for China to develop its clean energy sector because this will help support China’s goal in reducing carbon emissions and will greatly help the world decrease its carbon emissions as well. However, the U.S.’s investigations of China will give the public a mixed message; on one hand, the U.S. is pointing fingers against countries that do not reduce their emissions fast enough; yet on the other hand, it is investigating countries like China who have significantly tried to reduce emissions. So which stand does the U.S. support, and which stand does it oppose?

In terms of global economic development, there is not one country or sector that is able to maintain its dominant status indefinitely. The world is improving and whoever is able to adapt the fastest to changes in place will take the lead. It will indeed be a joke if we take action against countries that are better than us.