Media Mayhem: A trade war in the wind
Histrionics over foreign companies getting renewable energy contracts could lead to protectionism.
Mon, Mar 08 2010 at 7:39 AM
TUNNEL VISION: Workers install a generator at a wind turbine factory in China. (Photo: ZUMA Press)
It sounds good: Insist that American money from the American stimulus plan — paid for by American taxpayers — be spent on equipment manufactured by American companies that create American jobs. Enough of that foreign crap.
That’s what Charles Schumer and three other Democratic senators now want the administration to require for the clean energy part of the President Obama’s stimulus act. They’re so keen on the idea that last week they announced plans to file a bill to force the White House to enforce such a “Buy American” provision. Schumer even issued a “demand” on Thursday that the White House “suspend” the one-year-old stimulus’ renewable energy grants “immediately.”
ABC News responded to the senators’ umbrage with barely concealed celebration. “Stimulus Jobs in China? Senators Angry About Money Going Overseas” blared a headline on the network’s website. Why the big stink? Well, ABC was the network that broke the story last month that $450 million in grants are going toward a massive wind farm in Texas that will generate only 300 American construction jobs, while the Chinese company building the turbines gets 2,000 jobs.
Well, technically, if you want to be accurate about it, the story was uncovered by a small shop called the Investigative Reporting Workshop at American University. But ABC’s happy to take credit; that’s the way things work on network broadcasting.
Nothing like four senators holding a press conference calling for action on just what your story was about — less than a month after it aired, mind you — to show what a great reporter you are and what a powerful news organization you work for.
But news frenzies like this one — especially when they turn on the jingoistic emotions unleashed by shooting wars and trade wars — take on a sort of unthinking fervor, an atmosphere that’s not exactly conducive to calmly considered, smart policies. If we didn’t know it already, surely we learned from last year’s town-hall meetings that by the time the mob picks up pitch forks and lights torches, it’s too late to parse truth from fiction. That’s particularly the case when the mob includes U.S. senators and major media outlets.
This particular riot began in October when the Investigative Reporting Workshop’s Russ Choma reported that 84 percent of renewable energy grants up until that point had gone to foreign companies — mainly to wind turbine manufacturers. Last month, Choma updated the number to 79 percent. A bit better, but still mighty difficult to swallow. It made a difference that ABC was now “partnering” with Choma on the story.
Then, after media talking heads and politicians had a month to stew and stomp over the issue, the Energy Department finally came up with its public rejoinder. According to the NY Times, a senior adviser to Energy Secretary Stephen Chu, “called the American University report ‘at best, misleading’ and ‘factually false.’ It may have kept track of locations of companies' headquarters but failed to identify the location of jobs created, which was in the United States.”
The Energy Department says wind turbine components going into American facilities are only 40 percent to 50 percent foreign-made, because many of those components are made in American factories even if the contract is with a foreign company. That number didn’t make it into reports by the Workshop or ABC.
The American Wind Energy Association has its own (admittedly self-serving) numbers. The trade group says that, out of the first $1 billion spent by the wind energy portion of the stimulus program, 53 percent of the value of turbines and 63 percent of other equipment came from the United States. That number didn’t make it into the stories either. I wonder why?
The real whipping boy in this debate has been a $1.5 billion wind-farm project in west Texas. The Cielo Wind Power project will produce enough electricity to power 135,000 homes with clean energy, if completed according to specifications, and would qualify for $450 million in renewable energy grants.
The problem? Its turbines will be built in China. That's the project that will generate 2,000 overseas jobs and only 300 “construction jobs” in the U.S., according to the workshop's reporting.
But company officials say those number are wrong. They now say 70 percent of the components of the project will be made in the U.S. There are even signs that the Chinese company producing the turbines will build a facility in the United States.
Energy Department officials also argue that stopping the renewable energy grants in their tracks would be counterproductive. It would cost jobs for dozens of projects already in the pipeline. It would hinder efforts to build up the American clean energy industry and our capacity to produce clean energy, which were the long-term goals of the renewable energy grants in the first place.
The point isn’t that we should be ignoring reporting that reveals that a huge portion of grants are going to foreign companies. How the media, the bureaucracy and political leaders respond to those findings is crucial, however.
The headline grabbing for which Schumer is famous may indeed play a role in getting the Energy Department to revisit how the grants can be used to build up the American renewable energy industry. But it just as likely can push things in the wrong direction.
A “Buy American” requirement would generate what protectionism almost always does: an equal and opposite reaction. Or even an escalation. That wouldn’t be so good for First Solar Corp., an Arizona-based company that now may be the world’s largest solar panel manufacturer.
Last year, the Chinese government chose First Solar to build the largest solar power plant in history — a 2,000-megawatt plant on the steppes of Mongolia. Had China been in the midst of a trade war with the U.S. over clean energy contracts, do you think First Solar would have gotten that contract?