By Scott Paul
March 4, 2010 OurFuture.org
Four Democratic senators want to ensure that tax dollars are creating clean energy manufacturing jobs in America, not China. Now, they are under vigorous attack by the Obama administration and multinational companies, many of whom have heavily subsidized operations in Europe and Asia.
The senators are absolutely right: There should be no compromise in building the clean energy economy. It must be made in America. Otherwise, we’re simply trading dependence on oil from the Middle East for dependence on manufactured parts from China. And that’s not a trade-off worth making.
Yet, the senators—Charles Schumer, D-N.Y.; Jon Tester, D-Mont.; Robert Casey, D-Pa.; and Sherrod Brown, D-Ohio, are being criticized for their new legislation by wind energy corporations as well as the Energy Department.
Here’s the simple truth. Multinational companies still source too many wind turbine parts from overseas. The wind industry acknowledges that while generating capacity in America grew substantially last year, their manufacturing jobs base in the U.S. actually shrank. That’s quite simply a consequence of heavy outsourcing, which is encouraged by every tax dollar that finds its way into a global, rather than domestic, supply chain.
Over time, the domestic content of wind turbines in the U.S. could grow, but not without the right incentives. And the most effective incentive is ensuring that tax credits, loan guarantees, and other forms of federal assistance are geared toward building capacity, manufacturing and jobs right here in America. From my vantage point, it doesn’t make a difference whether the company is purely domestic or a subsidiary of a European turbine maker; what matters is where the jobs are created with the tax dollars.
I know of incredible entrepreneurs who have applied for Energy Department loan guarantees–backing that is required to build new wind turbine parts factories in America—but who were shunned in favor of well-established, multinational manufacturers of wind turbines with largely foreign supply chains. Imagine that: U.S. companies are denied federal assistance to build new factories in the Midwest, eliminating the opportunity for hundreds of skilled workers to get back on the job, while multinational companies are granted hundreds of millions of dollars to import parts from Asia and Europe.
Schumer first raised this issue with the administration more than four months ago after the announcement of a made-in-China Texas windfarm seeking federal assistance–but the response he received was completely inadequate. The senators are not seeking to permanently end federal support for clean energy development; they merely want to direct it to where it should be in the first place: building manufacturing jobs in communities all over our nation that will provide the foundation for our clean energy economy.
Two red herrings will inevitably get raised in this debate. The administration and wind energy multinationals are bound to cite all of the domestic jobs that are being created through wind energy investment—primarily in installation and maintenance. That’s not in dispute. But what is in dispute is where the thousands of parts and hundreds of tons of steel will be sourced. Second, the only answer lies in creating a national renewable energy standard. The truth is, while such a standard would certainly create demand for wind energy, it still offers no guarantees that the valuable manufacturing jobs will be created here.
If it takes a little bit longer to completely develop domestic manufacturing capacity, it’s worth the wait. After all, this administration has staked its jobs future on the clean energy economy. Five million manufacturing workers have lost their jobs over the past decade; 51,000 manufacturing facilities have shut their doors. The same steel that once went into Hummers can go into wind turbines. The same ball bearings that went into Pontiacs can be part of the wind-energy supply chain. The same workers that manufactured goods now outsourced can make the thousands of parts that go into a wind turbine. There are hundreds of entrepreneurs eager to launch factories to supply the clean energy market. Since Wall Street is apparently uninterested in financing these domestic projects, federal loan guarantees and tax credits are essential to leveraging the financing necessary to hire workers, upgrade a facility and buy machine tools.
The simple truth is that this is a now-or-never question. Either we build the manufacturing capacity here now, or we’ll end up with a clean energy economy made in China. So, hats off to the senators. Let’s hope their colleagues—and the Obama administration—respond quickly to this wake-up call.