U.S. Winning Green Energy Race to Nowhere

by William Yeatman on January 17, 2012

in Blog, Features

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Bloomberg New Energy Finance reports that the U.S. has overtaken China as the world’s most reckless energy investor. This race to the bottom will end poorly for both nations.

Since 2008, China has been global leader in government subsidies to renewable energy like solar and wind power. To be sure, the Chinese government isn’t investing in green energy for its people to use–China is building 1,000 megawatts of coal power every three weeks to satisfy the demand for electricity within its borders. Instead, these subsidies are meant primarily to spur the manufacture of solar panels and wind turbines that are needed to meet Soviet-style green energy production quotas enacted by the U.S. and European countries.  To put it another way, China is subsidizing the supply of green energy, while the U.S. and Europe are mandating its demand.

This is the best possible outcome, under the crummy scenario whereby demand for renewable energy is set by government. That is, the U.S. and Europe are foolish to force their people to use wind and solar power, but if they must, then it’s best that renewable energy be provided as inexpensively as possible. And thanks to subsidies, (relatively) affordable energy, and cheaper labor, China can produce wind turbines and solar panels much more cheaply than can the U.S.

However, environmentalists, renewable energy lobbyists, and their Congressional benefactors are always looking for excuses to explain away the bad press that clings to intermittent and expensive green energy.  Since 2008, they’ve had the perfect foil: The Chinese Dragon. They claim that China’s energy subsidies are allowing it to win supremacy in a supposed great green game. According to these green energy enthusiasts, the U.S. risks falling behind in the global market for renewables, unless the government out-subsidizes China. They would have you believe that Solyndra’s spectacular demise was caused by China, and not crony capitalism. Alas, U.S. policymakers have found these arguments persuasive. As noted above, this year we topped China in giveaways to green energy.

Both countries will get burned in the end. The entire global market for green energy is propped up by political favoritism. Absent subsidies and mandates, there would be no green jobs. Yet nothing is more fickle than politics. When the political winds change, and the subsidies and mandates are cut, the solar and wind industries will collapse. In the end, the country that invests the most, will lose the most.

Greener China January 22, 2012 at 12:06 am


Clean energy in China is not about carbon, and while there are certainly bad investments being made, the fact is that their is a strong business case for clean energy in China. It is a country that is desperately short of energy, is seeing brownouts across cities, and while building coal plants has sustained them to date, their ability to supply the coal to plant has been an issue for more than 5 years.

In short,China has nearly maxed out its capacity to fuel its growth worth coal, and it will require new solutions.


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