Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
Oh, I wish I had the time to write more here.

There's a lot I agree with, and some nitpicking that I'd like to do.

In defense of Bob Oak, I think that a great deal of the outrage is less at the fact that that money is headed overseas, than that there is a lack of an effective industrial policy to integrate expertise from overseas to build American industry.  Basically, he's pissed that there isn't an industrial policy here......  

Which means that in large part, you two are in agreement.

For me, I'm far less worried about European investment, Vestas, Gamesa, etc.... then the very clear threat from the Chinese.  Vestas and Gamesa have made committments to local content in North America.  A-power and the Chinese startups haven't.

I'm researching the Basque renewable energy cluster right now, and it's clear that industrial policy was a huge part of it. Eventually this is to be my dissertation.

Local content requirement allowed Gamesa to emerge from under the shadow of Vestas, and create a Spanish wind energy base.

This was done through protecting the domestic market for Spanish produced turbines, and only once this base was built beginning the process of internationalization.  

Ok, let's shift that to the side, and talk about China.

It's clear that the Chinese have an industrial policy in place to not only protect their local market but to monopolize control over the raw materials (95% of rare earth minerals used to make the permanent magnets used in wind turbines are mined in China. The other 5% is largely in Australia, and much of that is under the control of China non-Ferrous, as when they bought Lynas.) It's not just wind turbines, it's everything that has rare earth magnets in it.

The Chinese have placed export quotas on the minerals themselves and the magnets.  They are using their control over these to fuel a strategy of vertical consolidation.  They want to create (and have at least for periods) differential internal and external prices for these products.  And that creates a huge advantage in terms of centering production in China.

Since US government funds are going to purchase several hundred turbines from A-Power produced in China, helping to fuel this strategy of vertical consolidation, there is a reason for outrage.

It's this very specific case with China that is the problem.  And if it's allowed to proceed, the Chinese will make sure that they only components of the full wind turbine that are produced in the United States are low value added, e.g. outside the nacelle, the towers and the blades.

That is a reason for concern.

You agree that local content requirements are a good industrial policy, but it has to account for value added, so that you have the local content in the nacelle, not just the blades and towers........

So much more I could say, not enough time....  Maybe after the semester wraps up.

And I'll give my consent to any government that does not deny a man a living wage-Billy Bragg

by ManfromMiddletown (manfrommiddletown at lycos dot com) on Tue Nov 10th, 2009 at 01:17:50 PM EST

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