21 September 2010

Free Trade and Green Jobs

At the Climate Change Law Blog, Daniel Firger has an interesting post on an emerging dispute between Japan and Canada over subsidies for "green jobs." Firger explains:
In what may be an ominous shot across the bow for green jobs advocates, Japan on September 13 submitted a complaint to the World Trade Organization alleging that a Canadian renewable energy law violates WTO non-discrimination rules. [1] At issue are a set of domestic content requirements built into Ontario’s landmark green energy law, [2] which are designed to guarantee that local producers – and local jobs –supply a minimum percentage of the technology used to meet the province’s ambitious goals for renewable energy generation. [3] While Japan’s “Request for Consultation” with Canada does not formally initiate a case before the WTO’s Dispute Settlement Body (DSB), it nevertheless sets the stage for a high-stakes showdown between the two countries, with potentially global repercussions for energy and industrial policy linking renewable power to high tech employment opportunities.
What does this mean for the US?  Firger says that is not yet clear.  What is clear that efforts to prop up industries using government subsidies are unlikely to go unnoticed in our globalized world.


  1. It hasn't gone un-noticed, particularly by those in Congress. When Stimulous II came along, notably absent was any aditional subsidies for green energy. There was an article on this subject in the Washington Times (I realize not an exceptional source but worth a read.) http://www.washingtontimes.com/news/2010/sep/9/green-jobs-no-longer-golden-in-stimulus/print/

    Here is an interesting excerpt:
    "The Department of Energy estimated that 82,000 jobs have been created and has acknowledged that as much as 80 percent of some green programs, including $2.3 billion of manufacturing tax credits, went to foreign firms that employed workers primarily in countries including China, South Korea and Spain, rather than in the United States.

    Peter Morici, a business professor at the University of Maryland, said much of the green stimulus funding was "squandered."

    "Large grants to build green buildings don't generate many new jobs, except for a few architects," he said. "Subsidies for windmills and solar panels created lots of jobs in China," but few at home.

    In one of several embarrassing disclosures for the administration, a report last fall by American University's Investigative Reporting Workshop found that 11 U.S. wind farms used their grants to purchase 695 out of 982 wind turbines from overseas suppliers."

    You also have the US Steelworkers filing an WTO complaint about illegal subsidies for the steel going into the towers. http://www.newsweek.com/2010/09/09/steelworkers-launch-war-with-chinese-green-energy.html

    I heard recently, that the energy required to manufacture a solar cell takes 3 years to be recovered in a very sunny environment like So. California. All the power required simply means they will be manufactured where energy is cheap. Ironically, that rules out profitable production in California where electric rates are some of the highest in the continental US. (They also don't make base materials like steel and aluminum there anymore and composites for turbine blades probably cannot be processed due to very tight volatile organic hydrocarbon rules.)

    The real irony in all this is when you put in place the mechanisms to promote "green energy" you also create barriers for the local green manufacturing sector that make them non-competive with "non-green" parts of the world.

  2. Richard Tol had an interesting comment at another place about Green Jobs: http://klimazwiebel.blogspot.com/2010/09/richard-tol-challenges-assertion-by.html?showComment=1284291578342#c3672176458429086605

    Why do politicians in North America, Europe, and Japan claim that there is a Green New Deal when in fact the empirical evidence has none? Well, part of the answer is that there are organizations like the IPCC who'd rather toe the party line than tell the truth.
    ===end quote===

  3. -2- Craig 1st,

    I dunno....a Green New Deal sounds fairly accurate. We're doing some random things that make people feel like we're doing something. Meanwhile, the actual effects are the opposite of what we wanted.