China dominates the green economy

August 31, 2011

By Drs. Robert & Sonia Vogl
President and Vice President, Illinois Renewable Energy Association

Worldwatch report 185 focused on the green economy and green jobs in China. It addressed greening activities in energy, transportation and forestry. China has established a long-term green vision, and is likely to meet or exceed its goals.

The report points out that, in 2008, China became the world’s largest PV manufacturer with about 700 PV companies. By 2010, China had four of the top 10 solar PV cell manufacturers in the world. Employment in China increased from 13,800 workers in 2005 to 83,000 workers in 2007.

PV manufacturing increased a thousand-fold in China from 1990 through 2007, while installed capacity in the country only increased 39 times from a very small base.

With little local demand for PV equipment, China’s expanded manufacturing was targeted at the export market, creating a global glut in the PV marketplace.

The glut is undermining U.S. investments made in manufacturing facilities in the United States. In Massachusetts, Evergreen Solar, once the third-largest maker of solar panels in the United States, benefited from a $43 million incentive from the state government. Last January, it announced it would close its Massachusetts factory, laying off 800 workers and shift production to a joint venture with a Chinese company in central China.

According to Keith Bradsher in an article in The New York Times, the Evergreen CEO indicated Chinese state-owned banks and municipal governments provide large subsidies to their manufacturers, which preclude U.S. firms from building facilities in the U.S. Evergreen borrowed two-thirds of the cost of its new plant in China. No principal and interest payments are due until 2015. In Massachusetts, a state grant only covered 5 percent of the cost of the firm’s manufacturing plant. The remaining funds were sought from private United States banks, which were reluctant to provide the funds, even at interest rates more than double that to be paid in China.

Investment banker Henry C. K. Liu indicates that this form of unregulated global trade is pre-empting economic growth in market economies around the world. He sees it leading to long-term stagnation in domestic economies as wages paid by international capital are insufficient to support consumer demand.

With economic stagnation in the United States, demand for electricity has not kept up with the increased potential for electrical supply. Low natural gas prices stimulate private electrical production for internal use, undercutting demand for traditional utility power.

David Guitiani, of Sauk Valley Media, reports that three potential regional providers of electricity are unable to find buyers for their power. The three projects on hold include a biomass plant, a wind farm and the long-idled Invenergy facility in Nelson.

Given current economic conditions, downsizing the solar farm in Rockford to 3 MW from the original concept of 60 MW is not surprising. The size can be expanded as increased demand warrants. The continued support of the project by Winnebago County Board Chairman Scott Christiansen (R) is well timed. Secure, environmentally-friendly, long-term energy supplies at predictable prices contribute to a healthy business climate.

Drs. Robert and Sonia Vogl are founders and officers of the Illinois Renewable Energy Association (IREA) and coordinate the annual Renewable Energy and Sustainable Lifestyle Fair. E-mail sonia@essex1.com.

From the Aug. 31-Sept. 6, 2011, issue

One Comment

  1. John M. Stassi

    September 2, 2011 at 11:37 am

    Thank you for this most interesting article. It provides even more evidence of the dangers inherent in our “free trade” relationship with China than I mentioned in a Guest Column (“Free trade, not unions, has damaged the job market” http://rockrivertimes.com/2011/08/31/guest-column-free-trade-not-unions-has-damaged-the-job-market/ ) that appeared in this same issue.

    This is not the only instance of China flooding the world market with its cheaply made goods, and in so doing destroying manufacturing/production capacity in other countries, leaving it with monopoly control over those products and other countries at their mercy.

    The consequences include not only stifling economic growth, as Dr. Liu suggests, but more importantly in many instances damaging national sovereignty and economic independence.

    For example, consider China’s control of the production of Rare Earth elements. Until the 1980s, the US was the world’s largest producer, but once the US opened its market to unregulated imports from China, US mines could not compete with production from Chinese mines with their cheap labor and non-existent environmental, health and safety regulations, and so US production all but ceased. There is a decent review of these events here:

    Can the U.S. Rare-Earth Industry Rebound?
    The U.S. has plenty of the metals that are critical to many green-energy technologies, but engineering and R&D expertise have moved overseas.
    By Katherine Bourzac
    Technology Review. Friday, October 29, 2010
    http://www.technologyreview.com/energy/26655/?p1=MstCom

    What China is doing to global market for PV equipment seems to me to be just a rerun of what they did to the global rare earth metal industry. Can we expect the consequences to turn out any differently?

    Rare earth elements are used in the production of wind turbine magnets. China now controls that part of the sustainable energy market and appears to be intent on extending its monopoly control to other sustainable energy technologies.

    The rare earth metal industry and the PV equipment industry have another thing in common. They are both toxic processes.

    PV manufacturing toxicity is covered here:

    Taylor DA 2010.
    On the Job with Solar PV.
    Environ Health Perspect 118:A19-A19
    Online: 01 January 2010
    http://dx.doi.org/10.1289/ehp.118-a19

    A good review of the toxicity of Rare Earth element mining and processing is available on Wikipedia:
    http://en.wikipedia.org/wiki/Rare_earth_element#Environmental_considerations

    What do you think life is like for Chinese workers in either of these toxic industries? For an inside view of workplace health and safety in China, I recommend this series of articles:

    “American Imports, Chinese Deaths”
    By Loretta Tofani
    Salt Lake Tribune, 2007
    http://extras.sltrib.com/china/

    Without globalized social, economic and political justice for all, global environmental sustainability is not possible. We can delude ourselves into thinking otherwise, but in so doing, we contribute greatly to the suffering of those, like the workers in China, who feed our delusions at the cost of their own limbs, lives and liberties.

    A sustainable planet must be a free and just one. Anything less than that will not stand.

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