Evergreen Solar’s early January announcement that it is shuttering its Massachusetts solar panel factory to set up manufacturing in China—taking 800 renewable-energy jobs with it—landed with a thud and an echo. Having covered U.S. and North American manufacturing for nearly a decade, I've heard this before. I know this story. It doesn’t end well.
Evergreen Solar chief executive Michael El-Hillow, defending the controversial move, cited the plunging prices of solar panels and the Chinese government’s enormous financial support as the reasons. In a telephone interview with The New York Times, El-Hillow said Chinese state-owned banks and municipal governments were offering unbeatable assistance to Chinese solar panel companies. In addition, the Chinese government has been accused of violating World Trade Organization rules by subsidizing the export of solar panels, resulting in President Obama’s filing a complaint with the W.T.O.
In light of Evergreen Solar’s exodus plans, President Obama’s declared commitment to government’s support of clean-energy companies garnered more credibility.
“All of us in this country, in America, and our government need to invest in innovation,” President Obama said while addressing employees of Orion Energy Systems, Manitowoc, Wis., the morning after his State of the Union address.
“The nation that leads the world in clean energy will lead the global economy in the 21st century.”
Orion a Model
The president cited Orion as a model of what a green energy start-up company can do with the help of government assistance. Orion, the company that supplied solar energy to Anheuser-Busch InBev featured in this issue’s cover story, (p. 22) has capitalized on federal, state, and local incentives and tax credits to help it develop and grow. Just founded in 2004, the manufacturer now employs 250 and expects to add another 50 by the end of the year.
“In this new and challenging time, when America is facing tougher competition from around the world than ever before, we’ve got to up our game. We’re going to need to go all in,” Obama said. “We need to get behind clean-energy companies like Orion.”
Government Support or No?
So continues the debate. What is the role of government related to emerging technologies?
Critics of government financing of green-energy companies say American taxpayers should not have to pay for it, and that entrepreneurship, unburdened by heavy taxation and regulation, alone can do the job. They say that this is how American industry has always succeeded and how it will succeed in the future.
I’ve heard that refrain from manufacturers for years, and so I believe them that American industry is overtaxed and overregulated. However, to think the approaches steeped in the past will be sufficient to steer American industry to the future—especially in developing new green technologies in the face of subsidized global competition—is myopic and unrealistic.
Like it or not, our rules of fairness and our ideals of the role of government in industry are not the only rules being followed on the global field.
The reality we are living and working in today is that we now compete globally with countries that are heavily subsidizing renewable-energy manufacturers and their export activities.
The reality is that China has already captured about half of the solar energy market and has just surpassed the U.S. in wind energy production and installation. It has done so, at least in part, the way El-Hillow described it—by financing the production of its green-energy manufacturers.
When Chinese solar panel manufacturers, financed by their government, can sell their wares in our Lowe’s and Walmart stores for $1 per watt, compared to Evergreen’s $2 per watt, we can no longer think that an unfettered entrepreneurial spirit alone can propel domestic green-energy-technology companies to leadership. We need to recognize that North America is not operating on its own little island anymore.
What got us here won’t get us there.
How to Pay for It?
In his State of the Union address, the president offered an idea. “And to help pay for it, I'm asking Congress to eliminate the billions in taxpayer dollars we currently give to oil companies. ...So instead of subsidizing yesterday's energy, let's invest in tomorrow's.”