High-stakes competition for the technologies that will power the 21st century

It is apparently a surprise to many that foreign companies are benefiting from the development of wind projects that received significant U.S. stimulus funding. It should not be. The United States relinquished its leadership in renewable energy technology beginning decades ago when Ronald Regan removed the solar panels from the White House that Jimmy Carter had installed and continuing with the "head-in-the-sand" reign of George W. Bush and Dick Cheney.

Wind energy is the biggest threat to the fossil fuel industry. So while oil interests exercised their considerable political muscle to thwart its domestic development and preserve the past, savvy forward-thinking countries elsewhere decided to invest in the future.

We do have a chance to take the lead in some emerging renewable energy technologies that promise to lead an unfoldiong clean energy economy -- most notably offshore wind and electric vehicles. Will we seize the opportunity or let these slip through our fingers as well? (GW)

American stimulus funds benefiting foreign wind energy firms

By Russ Choma
grist
October 30, 2009

The Investigative Reporting Workshop released a report on Thursday detailing how one of the first big chunks of money for clean energy under the stimulus package is actually being spent. Our findings (I was the lead reporter on the story) can be found here.

Most interestingly, we found that the program, which is designed to reimburse companies for 30 percent of the cost of building a renewable energy facility, has given out $1.05 billion since Sept. 1. Almost all of it (91 percent) has gone to 11 wind farms (a mix of solar, geothermal and biomass projects collected the rest).

The 11 wind farms are scattered throughout the United States, but the companies who own them and ultimately benefited from U.S. taxpayer funds are scattered across the globe. In fact, 84 percent of the total - $849 million – went to projects owned by foreign companies.

On one level, it’s very much an old-fashioned “How-Are-Your-Tax-Dollars-Being-Spent?” story. We looked at who owned the projects, what country they call home and who built the wind turbines that were installed (turbine manufacturing is where you find most of the long-term economic activity associated with building wind energy). We also looked at who lobbied Congress for renewable energy incentives the stimulus bill. We found a mixed crowd of international companies, including huge conglomerates like BP and Alstom—better known for their carbon and nuclear programs, all eager to come to America and take advantage of the package’s benefits for clean energy (hardly a secret).

We also examined how this money was disbursed with virtually no strings attached (there is no obligation for any of this $1.05 billion to be reinvested, though several of the companies have said they will).

But there is more than this one level to the story, and the deeper issues have serious implications for anyone interested in clean energy’s future in America. In a nutshell, the fact that European companies are lining up to collect stimulus money is indicative of something bigger: the American clean energy sector is not in great shape. There are only two major U.S.-owned manufacturers of wind turbines (GE Energy and Clipper Wind), and they produced less than half of the turbines installed last year. Even less this year.

The biggest developer of wind farms is still NextEra Energy Resources, a subsidiary of Florida Power & Light, but the Spanish firm Iberdrola is second. Foreign companies riddle the rest of the top ten. (Fascinating charts showing market share can be found on pages 14 and 15 of the American Wind Energy Association’s 2008 annual report.) Since the economic crisis of last fall, U.S. companies have pulled back their investment and foreign companies have charged ahead.

So, how did we get here?

It’s not a secret. Once upon a time, American innovators invented the modern turbine. After a brief moment of patriotic pride in the accomplishment, we mostly abandoned it until recently when we decided wind should be a bigger part of the renewable energy mix. Even in those brief periods when Americans did support wind, we loved other energy forms more (here’s a great chart illustrating federal incentives for various energy sources through 2003).

Numerous attempts to get wind going were made through the 1980s and 1990s, and numerous American wind companies stumbled and fell. Meanwhile, European countries were subsidizing their wind industries and pouring money into their technology development.

It is not a coincidence that the No. 1 supplier of wind turbines globally (and largest foreign supplier in the United States) is Denmark-based Vestas. Denmark set ambitious goals for their wind industry and backed them.

Other European countries did the same, and now Asia and China are following suit, pumping money into their industry and watching as they spring from nothing to major players. Indian companies have been selling turbines in the U.S. for several years now, and minutes before our report was released on Thursday, the first major deal to bring Chinese-built turbines to the U.S. was announced.

Does it matter that we have to rely on foreign companies to build our wind power?

Several people I spoke to about this story -– analysts and other journalists -– have made a comparison to the auto industry. One person asked me, “Is a Honda Odyssey manufactured in Lincoln, Alabama, a Japanese car?”

On the one hand, we live in a global economy where international borders are increasingly meaningless. Money knows no borders and so much of our economic system is based on international trade and manufacturing. And when it comes to many of the leaders in wind energy (Denmark, Spain, etc.), we don’t face the sort of geopolitical issues like we do with oil-rich countries like Saudi Arabia and Venezuela. Nobody worries about an addiction to Danish wind technology.

And in the midst of the worst recession in decades, a job is a job. Micheline Maynard’s new book argues that in many cases, it does not matter who owns the company, because it is the jobs we need.

An industry analyst I interviewed asked me why, if you’re talking about creating direct economic benefit—jobs and investment, here and now -– would you care if a turbine plant in Iowa is Spanish owned?

“The only thing that goes back to Spain is the corporate profits,” he said.

Well, the corporate profits and the fact that Americans are dependent on foreign technology, of course.

With the Senate beginning to debate a comprehensive climate and energy bill, President Obama has begun speaking out, very explicitly, on the need for the United States to assert its dominance in the clean energy sector -– i.e. to control the profits and the technology.

One week ago today, speaking at the Massachusetts Institute of Technology, Obama challenged the nation to be the clean energy leader:

“Countries on every corner of this Earth now recognize that energy supplies are growing scarcer, energy demands are growing larger, and rising energy use imperils the planet we will leave to future generations.

And that’s why the world is now engaged in a peaceful competition to determine the technologies that will power the 21st century. From China to India, from Japan to Germany, nations everywhere are racing to develop new ways to producing and use energy. The nation that wins this competition will be the nation that leads the global economy.

I am convinced of that. And I want America to be that nation. It’s that simple.”

If a comprehensive climate and energy bill passes with a requirement that 15 to 20 percent of our energy should come from renewables by 2020 or 2030 (as various drafts circulating Congress currently do), we’re going to be buying a lot of turbines. So, it seemed to us at the Workshop that now would be a good time to talk about who we’ll be buying them from.

View the full report on the Investigative Reporting Workshop’s Web site. You’ll also find charts, an interactive map of wind farms currently under construction and audio of administration officials describing how recipients can use their stimulus funds. The Workshop is a non-profit investigative journalism organization, based at the American University’s School of Communication. It’s mission is to provide high-quality investigative journalism reports and make the results available to the public and other news organizations to use.