Green stimulus benefits foreign firms
A Texas wind farm operated by Cielo Wind Power, which is receiving federal stimulus funds for a project involving Chinese companies.
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BOB MOON: Even with the billions of dollars we're spending on the federal stimulus program, at least 1 in 10 American workers still can't find a job. And it's almost adding insult to injury that some of our stimulus money may end up creating clean energy jobs in China.
From the Marketplace Sustainability Desk, Sarah Gardner reports on why foreign-owned companies are getting a big chunk of green stimulus dollars -- and why it might be unavoidable.
PRESIDENT BARACK OBAMA: We will put Americans to work in new jobs that pay well and can't be outsourced -- jobs building solar panels and wind turbines.
Sarah Gardner: That was President Obama back in January touting the benefits of the stimulus bill. What Obama didn't say was that the federal stimulus would help put foreigners to work as well, including workers in China.
LEO GERARD: My first reaction was disbelief.
That's Leo Gerard, head of United Steelworkers International. He's talking about a $1.5 billion wind project in west Texas, big enough to replace a coal-fired power plant. A Chinese manufacturer, an Austin-based wind farm developer, and a U.S. private equity firm are behind the venture.
Chinese banks will provide much of the financing. But the project's also applying for U.S. stimulus dollars -- up to 30 percent of the project's cost, and it will likely get them. Even though most of the jobs created will be in China, because that's where they intend to make the wind turbines.
Gerard wants Congress to make that illegal.
GERARD: I would hope that if you're going to use American taxpayer dollars to generate green energy then there's got to be a substantial net benefit to America by way of jobs that are created.
Some members of Congress, including New York Senator Chuck Shumer, have railed against this particular deal. Shumer says the purpose of the stimulus is to create and save American jobs, not Chinese ones. There's a "Buy American" provision for public works projects in the stimulus, but not for private ventures.
Scholars like Amy Myers Jaffe at Rice University insist there shouldn't be one.
AMY MYERS JAFFE: I mean, what is the message we're sending to China? We're trying to have these negotiations to beg them to lower their oil/fossil fuel intensity of their economy. And then we're going to have our Congress block them from developing a wind industry both in China and in the United States? That doesn't make sense at all.
Jaffe says jumpstarting a renewable energy economy in the U.S. inevitably involves foreign companies. That's because the U.S. lags far behind its global competitors in solar and wind investment. Now China's quickly ramping up too.
Greg Jenner is a tax lawyer who advises companies applying for green stimulus grants.
GREG JENNER: We don't have the manufacturing capacity yet to fully supply all of the projects. So if we want the projects built some of the developers are going to go offshore to get the parts. It's just the way of the world.
Still, the numbers are somewhat startling. According to the Investigative Reporting Workshop at American University, 84 percent of the federal clean energy grants so far have gone to projects with foreign participants like Iberdrola, the big Spanish wind developer.
Rob Gramlich at the American Wind Energy Association says American workers will get the construction, engineering and operations jobs that come with these wind farms. But some of the manufacturing jobs associated with them will go overseas. No one knows how many. Gramlich says the manufacturing jobs are key.
ROB GRAMLICH: We want the manufacturing here not just because manufacturing jobs are good, stable, well-paying jobs but also because whichever country has a large share of the manufacturing is also going to be the hub for the design, and the engineering, and a lot of the higher tech and higher-skilled and higher-paying jobs.
But Gramlich say Congress first has to stop its on again, off again subsidies for clean energy and make a longterm commitment, like supporting a national quota for renewable electricity.
GRAMLICH: So that potential manufacturers in the U.S. and supply-chain companies know what they're investing in. At this point the risks are pretty significant about what the U.S. wind market is going to be in 2011 and beyond.
Gramlich says despite cheap Chinese labor, foreign wind companies that want to sell to the U.S. market are increasingly moving manufacturing here. That's partly because shipping 150 tons of wind turbine parts across an ocean is pricey. And of course, there are political considerations. Shortly after the Congressional kerfuffle over the Texas wind farm, the Chinese company involved announced plans to build a wind turbine facility in the United States. No word when or where exactly, but Chinese officials vowed it would employ 1,000 Americans.
I'm Sarah Gardner for Marketplace.