OPINION:
Just before Christmas, President Obama’s top trade negotiator dropped off a report to Congress complaining of Chinese wind-turbine incentives. U.S. Trade Representative Ron Kirk wants the World Trade Organization (WTO) to intervene in the dispute over Beijing’s use of grants and loans to prop up its domestic propeller industry.
The administration is irked that U.S. firms aren’t allowed to enjoy a slice of the Chinese pork. “Specifically, the United States is challenging subsidies being provided by the Chinese government to manufacturers of wind turbine systems that appear to be contingent on the use of domestic over imported components and parts,” Mr. Kirk’s report explained.
There are plenty of trade policy issues where China is in the wrong, but the president is living in a glass house on this one. The Obama administration has significantly boosted the support targeted to our own domestic windmill industry. “The Recovery Act is helping to ramp up manufacturing and deployment of wind-power components in the U.S., maintaining strong demand and financing for wind projects and helping to attract billions of dollars of additional investment into U.S. wind manufacturing,” a White House fact sheet boasted.
One of the primary mechanisms for this assistance is the production tax credit, which Mr. Obama’s “stimulus” bill renewed through the end of 2012. This measure offers an inflation-adjusted 2.1 cent per kilowatt-hour credit for windmill owners, which covers about 21 percent of the average retail cost of the power. The “stimulus” added a cash grant option covering 30 percent of the capital cost of wind-farm installation. Federal and state governments also offer “Buy American” incentives available only to U.S. firms.
The biggest beneficiary of this generosity happens to be General Electric, the top U.S. wind-turbine manufacturer. GE got into the windmill business after gobbling up “renewable energy” assets from Enron as that ill-fated firm was forced into bankruptcy in 2002. Enron’s rent-seeking business model didn’t change when its wind business moved into the house that Edison built. Billions in taxpayer dollars continue to fan the rebirth of this fundamentally medieval technology.
Wind power hasn’t made sense since the Industrial Revolution perfected the steam engine. Instead of looking to the skies to know when a trip across the Atlantic was possible, travelers were free to go when they pleased. Americans looking for reliable electricity aren’t going to find it by returning to the whim of an unpredictable breeze.
The Obama administration doesn’t care about efficiency or reliability. It’s responding to the distress call of a political ally. In September, the United Steel Workers union urged WTO intervention on the grounds that, “U.S. imports from China of the towers and masts for windmills have grown 17 times over since 2006.” Big Labor wants its cut of the international subsidies doled out to bird-slicing blade producers.
Both Washington and Beijing are wrong to intervene in the marketplace by bankrolling Enron-style wind boondoggles. The White House should drop its own “green energy” programs if it really wants China to do the same.
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