Gone with the Wind: Blowing U.S. Tax Dollars Off Shore

by Leo W. Gerard, Nov 19, 2009

It turns out a Texas windmill farm developer’s request last month for nearly half a billion in stimulus funds to create 2,000 jobs in China doesn’t rank first on the audacity scale.

Shockingly for American taxpayers, and sadly for the staggering 10.2 percent of Americans who are unemployed, it doesn’t even rank second.

That’s because Washington already has doled out hundreds of millions in stimulus funds to foreign renewable energy firms. Of the $1.05 billion in clean energy grants awarded by Washington, D.C., $849 million—84 percent—went to foreign wind companies, according to an analysis by Russ Choma of the Investigative Reporting Workshop. He wrote:

The cash grants were given for the installation of 1,763 megawatts of capacity—1,566 installed by foreign companies. Using the Renewable Energy Policy Project’s own numbers, as many as 4,500 manufacturing jobs may have been created overseas.

A strong, broad Buy American clause in the stimulus bill could have prevented the off-shoring of U.S. tax dollars intended to create jobs for unemployed Americans. My union, the United Steelworkers, and the AFL-CIO pushed hard for that language, and polls showed 86 percent of Americans supported it. Republicans and lobbyists for multinational corporations that wanted to spend U.S. tax money overseas opposed Buy American provisions.

Congress adopted weak, limited Buy American language. Now Washington, D.C., exports stimulus dollars to create jobs in foreign countries. 

Some of the foreign wind firms that got stimulus funds have American subsidiaries. But most of them shipped major components for wind farms to the United States. That means American stimulus dollars employed foreign workers. One Spanish company, Iberdrola S.A., got $545 million from U.S. taxpayers.

Sen. Charles E. Schumer, a Democrat from New York, denounced the request to use U.S. tax dollars to create jobs in China and demanded the Obama administration deny funding. But it’s too late for the $849 million in stimulus dollars already given away to foreign wind companies. American tax dollars, meant to create jobs and nurture a green energy industry in the United States, are gone with the wind.

Lavishing stimulus funds on foreign businesses is tragic for another reason: Those overseas companies are competitors to fledgling U.S. firms that were supposed to get the money. President Obama has said he wants the United States to be “the world’s leading exporter of renewable energy.” That’s not going to happen if the United States pays European and Chinese manufacturers to import wind turbines.

Congress set aside at least $3 billion in the stimulus bill for renewable energy projects. That investment would have two benefits. Growth in renewable energy—from sources such as windmills and solar cells—could reduce dangerous pollution from burning fossil fuels. In addition, the Blue Green Alliance estimated in its report, “Building the Clean Energy Assembly Line,” that U.S. manufacturers could create 850,000 jobs if Congress adopted a national standard requiring 25 percent of electricity to be generated with renewable sources by 2025.

The key, obviously, is that the wind turbines and solar cells constructed to meet that standard couldn’t be imported for the jobs to be created in the United States. The U.S. industry, however, needs the kind of help foreign governments give their clean energy manufacturers. The Blue Green Alliance report notes:

Without new policies promoting domestic manufacturing, an unnecessarily large portion of these jobs will remain overseas.

In a July 13 story, Keith Bradsher of the New York Times described China’s policy to protect and promote its renewable energy industries: “China is shielding its clean energy sector while it grows to a point where it can take on the world.” That includes, Bradsher recounted, a competition last spring where China disqualified all foreign bidders on technicalities for 25 contracts to supply wind turbines. Beijing then awarded the contracts to seven Chinese companies, including some that had never built a turbine.

There’s no reason except a desire to shoot itself in the foot for the United States not to protect and promote its own renewable energy industries. “The Building the Clean Energy Assembly Line” report provides recommendations for Congress to cultivate American renewable energy industries, including long-term investment tax credits, adopting a national standard requiring a minimum percentage of electricity be generated through renewable energy, passing cap and trade legislation and providing low-interest financing.  

After the Texas windmill incident, I wrote Sen. Schumer asking for bold action to support U.S. clean energy manufacturing. In the letter copied to all members of Congress, I told him we must expand and accelerate the availability of incentives for manufacturing wind turbines and other clean energy technologies—here, in the United States. One important way to do that is for Congress to extend to the manufacturing of components like turbines the funding incentives that are now provided for production of clean energy.

Clearly, another method would be to Buy American. When constructing a wind farm in Texas, why would taxpayers give their money to support importing the turbines from China or Spain when there are perfectly good turbine manufacturers here in the United States?

The Texas windmill farm developer announced this week that its Chinese partner plans to construct a $50 million turbine factory in the United States, according to a story in the New York Times.  But that facility won’t supply the turbines for the project that the partnership wants $436 million in stimulus funds to support. Those would come from China. So, in the end, it still means nearly half a billion in U.S. tax dollars would create 2,000 turbine-building jobs in China. 

When China passed its $600 billion economic stimulus bill this summer, it adopted “Buy China” provisions. Obviously, as far as wind turbines were concerned, it was implementing a “Buy China” policy before that.

Is the United States going to continue thwarting itself and tilting at windmills or is it going to adopt and enforce a robust Buy American policy and build some?

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