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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.

TEXT OF STORY

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.

About the author

Sarah Gardner is a reporter on the Marketplace sustainability desk covering sustainability news spots and features.
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Outsourcing isn't necessarily a bad thing, as long as companies use their moral compass. Too many companies use outsourcing as a cost-saving move, rather than using it to find a particular skill-set they're lacking.

The government should tax US companies the difference in savings that the corporations are receiving when they outsource. That way the only benefit for a company to outsource would be if they're having trouble finding a particular skill-set, not to save a buck by putting another American worker in the unemployment line.

What about the US company Clipper Wind power? Are the wind turbines they make not the right thing?

Amy Jaffe is correct only in a vacuum. She misses the point that the ONLY valid reason to have a stimulus (if there is a valid reason) is to grow US jobs, because that's where the tax money will come from in the future. Absolutely, we should insist that stimulus money goes to US jobs and US raw materials. This is a no-brainer.

Why is everyone so worried about giving the Chinese a few more billion dollars? Has anyone been to Walmart lately? Look at the "Made In" tag and check out where everything is made these days - China. Has anyone thought about the tech industry recently? It has been offshored to India, outsourced to Indian owned IT companies, and jobs here in the US have been taken over by H1-Bs from India (over 65,000 each year - since the early '90s). We send India equipment, training, jobs, infrastructure, salaries, jobs, support, technolgies, processes, and jobs. At least the Chinese may create 1000 jobs somewhere here in the US - maybe.

When it comes to energy policy, guess who receives the two largest subsidies in the entire country?

If you guessed oil and coal, pick a prize.

Those who complain about subsidies for newer, greener technologies should first put-up or shut-up about ending government subsidies permanently.

Meanwhile, competing countries worldwide are leapfrogging us and once again America is mired in 19th-century technology.

More lumps of coal in your Christmas stocking, anyone?

Indeed, let's get some consistency on "green" subsidies: cut them altogether, permanently. Government spending, including such subsidies and more importantly the so-called stimulus, does more harm than good to the economy when compared to the alternative. And if the technologies haven't become mainstream and viable without the subsidies after decades of unreasonably large government intervention, they've proven they shouldn't get another dime of taxpayer money.

Rob Gramlich is right.
American energy policy needs to get the long-term support and consistency that European green entrepreneurs have enjoyed for years now.

Our hot-and-cold, Carter-and-Reagan, solar-panels-on-the-Whitehouse-roof-and-then-removing-them see-saw battle is as responsible for our laggard status in the world as much (or more) than any other single factor.

As for Amy Jaffe's contention that attempting to spend our 'green' money at home (ref: her first blocked quote), I might be more inclinded to entertain her complaint if I saw China offering some rapprochement in this area, but China's domestic stimulus and green technology spending isn't being spent here; it's all Chinese and that's how it should be.

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