AP Photo/Frank Augstein
Offshore windmills in the North Sea.
You could not ask for a more drastic demonstration of the contrast
between how the United States and China are rolling out renewable energy
technologies than the current state of offshore windmill deployment in
the two countries.
The U.S. does not have a single offshore windmill currently in
operation. The most notorious proposed project in the U.S., the
130-turbine Cape Wind offshore farm planned for Nantucket Sound, has
been mired in litigation and politics for almost 10 years. Just this
week the Massachusetts Department of Public Works opened hearings
investigating whether the
terms of the Cape Wind contract would be in the public ratepayer's
interest. The hearings will drag on for at least two months, and
whatever decision is made will likely be litigated by whichever side
China is a different story altogether. The
102-megawatt Donghai Bridge Wind Farm began operating near Shanghai
this July. Four more farms nearby, reports ClimateWire, are under
negotiation. And that's just the beginning:
The "Development Plan on Emerging Energies" released July 20
outlines wind production goals through 2020 by the Chinese government.
According to the plan, offshore wind power is expected to reach
30 gigawatts, and coastal provinces were required to start drafting
offshore wind-grid implementation plans. This includes Liaoning,
Shandong, Jiangsu, Shanghai, Zhejiang, Fujian and Guangdong provinces.
In the next three to four years, according to the Azure-WWF report, in
total, 514 MW should be installed along this coastline. As of March this
year, pipelines accommodating 17 MW were already installed between
Donghai and a pilot wind project in Bohai Bay near Tianjin.
In China, of course, offshore wind farm developers don't have to
worry about the annoyances of environmental impact studies or
deep-pocketed neighbors agitated about their ocean views. There are good
reasons why it is harder to get a major piece of infrastructure up and
running in the United States than in China, and I think I speak for many
Americans when I affirm my desire to live in an inefficiently
functioning democracy, however frustrating it may be at times, instead
of a totalitarian, windmills-run-on-time, proletarian dictatorship.
Plus, there's the added problem that China cheats. In a
thoroughly reported Page 1 New York Times article published Wednesday
Keith Bradsher makes a pretty good case that China is ramping up its
renewable energy sector in part by abusing or simply ignoring
international trade rules that are supposed to prevent governments from
giving particular industries unfair advantages over international
competition. It's so unfair! On one side we have is a cheating,
mercantilist, wannabe superpower unrestrained by environmental
regulation or civil society, and on the other, a dysfunctional partisan
gridlocked mess that can't even get its act together to pass a federal
renewable energy electricity standard. No wonder our ass is getting
The great irony of all this is that the world stands to benefit
greatly from China's renewable energy push, regardless of whether it is
achieved by fair means or foul. Economies of scale applied to the
production of solar panels and wind turbines in China are already
pushing prices for renewable energy power down worldwide, making it more
and more feasible to replace fossil-fuel power sources with cleantech.
Even more encouragingly, the creation of a vast infrastructure for
renewable energy research and development is bound to lead to countless
downstream technological innovations that lower prices and expand
capabilitiies even further.
And that's what the West should really be paying attention to.
complain that China is exploiting cheap labor and ravaging the
environment and right-wing nationalists do their best to stir up new
Cold War antagonisms, perhaps the most important aspect of the Chinese
drive toward a high tech renewable energy future, by any means
necessary, is going relatively unnoticed. Slowly but surely, the West is
losing its long-held domination of the technological high ground.
An excellent example of this can be found in the domain of rare
earth elements, a narrative visited earlier this month in How the
World Works here
At Carnegie-Mellon University, two professors in the Department of
Engineering and Public Policy, Francisco M. Veloso and Cliff Davidson,
along with graduate student Brian J. Fifarek, have been conducting
research into the impact of the offshoring of rare earth element
production upon innovation. Professor Veloso contacted me after reading
my earlier posts, having correctly surmised that research into a nexus
that connected offshoring, high technology, renewable energy and China
would be absolutely irresistible to HTWW.
technology innovation: A case study of rare-earth technology,"
published in the Journal of Operations Management in 2008, and
"Offshoring and the Global Geography of Innovation," published in the Journal
of Economic Geography earlier this year (and available in draft
form here,) the authors confirm, by investigating changes in the
geographic location of rare earth element technology patent filings,
what some might find intuitively obvious: When research and development
migrates from one country to another, so does innovation.
Rare earth element (REE) magnet technology -- which, incidentally,
is crucial to wind turbine manufacturing -- offers a perfect natural
experiment in which to investigate the effect of the offshoring of
research and development. First, rare earth elements are critical to a
number of important, fast evolving high tech industries so there is a
great deal of patent activity. Second, REE magnet technology offshoring
started relatively early but progressed quickly and comprehensively. In
just 20 years, for example, the United States has gone from a position
of leadership to the point of having zero domestic production
The REE industry was an early adopter of offshoring practices,
beginning in the 1990s, that affected the whole system involved in
rare-earth technology innovation. In fact, the industry is among those
that have evolved the furthest on this new path towards outsourcing and
relocation away from the U.S. and towards developing countries. This
creates an excellent setting to study the potential longer term impacts
of offshoring on innovation, especially in the home country.
The pattern goes roughly like this. U.S. firms looking to cut costs
start sourcing raw materials from the cheapest supplier -- namely
China. Next step, processing the raw ore close to the source of supply,
also for cost reasons. Third step: moving research and development into
the downstream production of advanced products, such as magnets, closer
to the processing facilities. The end result: The locus of new
innovation in magnet technology starts to cluster near the processing
and production facilities, as proved by an increasing number of rare
earth element patent filings generated in Asia as opposed to the U.S.
Rare earth element magnet technology offers a case study in how
individual decisions by freely acting firms can end up gutting an entire
As firms seek to position themselves in locations that maximize
their efficiency and competitiveness, their decisions will be affected
by the changing nature of the systems of innovation, industrial clusters
and industrial ecology to which they are exposed. Unfortunately many
firms participating in offshoring to increase their individual
competitiveness are unwittingly responsible for changes in the system or
ecology to which they belong.
...Informal conversations with one firm representative revealed
that removing manufacturing from the U.S. has also led to the removal of
over 90 percent of domestic R&D activities on rare-earth permanent
magnet materials. More importantly, the knowledge for producing
[neodymium boron] NdFeB magnets within the U.S. has been lost.
U.S.-based manufacturers can no longer compete with the quality of NdFeB
magnets produced in China or Japan.
The authors caution that the pattern observed in rare earth element
magnets is not an ironclad rule that applies to every high tech
industry in which offshoring occurs. And they warn that protectionist
polices aimed at preventing offshoring are no silver bullet, as any
attempt to build higher walls between the U.S. and its trading powers
will likely reduce the global competitiveness of U.S. firms and
potentially harm consumers with higher prices for things like ... solar
But there is clearly a role for public policy here. We can't, not
should we want to, duplicate China's pell-mell, environment-be-damned
complete reordering of society. But there are definitely things we could
do that would provide incentives for investment in the technologies of
the future right here at home. Like, say, a cap-and-trade system or
carbon tax that provides an incentive for investment to flow into
renewable energy technology, or state and federal standards that mandate
a certain percentage of electricity be generated from renewable
The strategic imperative is simply overwhelming. The
struggle over energy policy shouldn't be seen as a culture war between
environmentalists and free-market fundamentalists. It should be a matter
of basic common sense -- do we want to be involved with making the
future, or just buy it from China?
Leonard is a staff writer at Salon. On Twitter, @koxinga21. More Andrew