07 November 2009
Coal-Fired Electric Plants of China Give it Edge in World Clean Energy Market
Energy Secretary Steven Chu argues we should make ourselves more competitive in the growing green energy industries by taxing carbon with the carbon cap-and-trade Clean Energy Jobs and American Power Act of Kerry and Boxer in the Senate. He claims China is investing heavily in wind and solar power manufacturing and will clean our clock if we do not pass cap-and-trade taxation. Marlo Lewis points out that this is nonsense.
China does not tax carbon dioxide emissions. It is producing wind and solar products for export, not internal use. It is producing electricity now more cheaply with coal-fired power plants.
Meanwhile, in the U.S., the state of Massachusetts is one of the very foolish states already in a cap-and-trade program known as the Regional Greenhouse Gas Initiative. Ten states of the Northeast and Mid-Atlantic have pledged to reduce carbon dioxide emissions from the power sector by 10% by 2018. This puts them at a competitive disadvantage for power costs and power reliability with respect to many other sates, so they are desperate to get the federal government to make at least such draconian power cuts for the remaining states of the Union. But, let us examine how this cap-and-trade effort is benefiting manufacturer's of green energy products.
Massachusetts gave Evergreen Solar $58.6 million to build a factory in Devens, MA. A little more than a year after opening the plant, Evergreen announced it was moving its solar panel assembly operations to China, where the costs of production are lower. It plans to keep wafer and solar cell production in Devens. One of the lower costs in China is that of energy. In the first 9 months of this year, Evergreen lost $167 million. The market price of assembled solar panels has fallen 30% in the last year. Apparently, even with heavy subsidies, solar power companies have a very difficult time competing with both other forms of energy production and lower cost of production overseas competitors. The free market is not kind to solar power and even extensive subsidies and favorable mandates at taxpayer expense leave many of these companies unable to compete. Massachusetts Gov. Patrick and Obama both are going to be disappointed by the number of American jobs actually produced by green energy.
When the free market says a company is uncompetitive, it is very poor public sector policy to spend taxpayer money on it or to force consumers to buy its high-priced products.