By James Collins
In the past few years, the State of California has passed Assembly Bill 32: Global Warming Solutions Act (http://www.arb.ca.gov/cc/ab32/ab32.htm), and the Federal Government has attempted to pass House of Representatives 2847: Green Jobs Act of 2007 (http://www.govtrack.us/congress/bill.xpd?bill=h110-2847&tab=summary). Within these bills was language that either directly funded green jobs, or mandated a reduced carbon footprint, thereby indirectly requiring companies to invest in creating or purchasing green power. While earlier in this decade it may have seemed like a fad, “going green” its clearly here to stay.
Beyond the goals of environmental responsibility, green spending has escalated to a new “space race” with major global players in the market. As author Thomas Friedman put it in his NY Time Op Ed piece last year, “The New Spudnik” (http://www.nytimes.com/2009/09/27/opinion/27friedman.html), even China has been forced, albeit out of necessity, to develop “clean-tech” alternatives to their manufacturing methods. As he explains, China’s decision to go green was the modern day equivalent to the Russians sending up Spudnik as a challenge the world to enter the space race. Once China realized that they had no choice but to change their ways, they quickly focused on the opportunity to make money and potentially be the world leader in manufacturing within a new industry. “China’s leaders, mostly engineers, wasted little time debating global warming… they also know that… the demand for clean, renewable power is going to soar as we add an estimated 2.5 billion people to the planet by 2050. In that world, E.T. – or energy technology – will be as big as I.T., and China intends to be a big E.T. player.”
As a manufacturing poweress, China’s ability to apply the ‘Walmart Model’ to green manufacturing poses a threat to the competitive position of the US. In the attached NY Times article by Keith Bradsher, (http://www.nytimes.com/2009/08/25/business/energy-environment/25solar.html?_r=3&hp) Chinese company Suntech Power Holdings CEO Shi Zhengrong, stated that “to build market share, [Suntech] is selling solar panels on the American market for less than the cost of the materials, assembly and shipping.” On top of this, “Chinese governments at the national, provincial and even local level have been competing with one another to offer solar companies ever more generous subsidies, including free land and cash for research and development. State-owned banks are flooding the industry with loans at considerably lower interest rates than available in Europe or the United States.” Although in a later NY Times article (http://www.nytimes.com/2009/08/27/business/energy-environment/27panel.html) Dr. Shi later revised his statements to say that the loss was due to administrative costs of running a US based subsidiary, the author suggests that Suntech could be accused of dumping, which is a practice of selling goods in a foreign market at lower than the cost of production. German company Bundesverbandes Solarwirtschaft has already considered taking legal action against China for alleged dumping of solar panels on the German market (http://www.businessgreen.com/business-green/news/2249935/china-gathers-panel-top-solar).
Given the increasing global focus on green energy, we must pay close attention to foreign manufacturers of green equipment and products. Most state and federal green jobs bills, including the Stimulus Bill, are written with “buy American” clauses, which require that the products purchased with government money must be made in the US. As we climb out of this recession and the demand for “clean-tech” within private industry grows, the US companies which manufacture these products must position themselves so that they are competitive in a post government sponsored program era. The US construction industry can play an important role in helping the US stay competitive in this market by reducing the costs of building solar or wind farms. It is equally important for the US to evaluate its relationship with China so that dumping practices don’t negatively impact the role of the US in green manufacturing.