Since Chinese wind farms—like this one in northern China—use turbines built in China, Sen. Schumer wants US energy projects to rely on parts built in the US. (image: danishcarbon.dk)

On Wednesday HeatingOil.com reported that Americans are growing more and more concerned over Chinese efforts to invest in US renewable energy projects. This week a debate broke out over China’s role in a wind power project in Texas. Many Americans are concerned that most of the jobs that would be created by this project will go to China. The rancor of this debate is further compounded by the possibility that this project may be partially funded with some of the $22 billion set aside from the economic stimulus package for clean energy projects and job development.

This debate has now caught the attention of New York Senator Charles E. Schumer. According to the New York Times, the Senator is calling on President Obama to deny the use of stimulus money for projects that would largely require manufacturing outside of the US. Schumer went on to reference a study by the Investigative Reporting Workshop at American University, which found that “84 percent of ‘green’ stimulus funding has thus far gone to foreign companies.” Stating that the stimulus money “is supposed to create jobs in America,” the Senator vowed that he would introduce legislation to prevent such funding if actions are not taken.

Adding more fuel to the fire of this debate are China’s domestic policies concerning renewable energy projects and job development. According to Time, foreign companies have complained that they are hindered from conducting business in China due to the government’s subsidy programs and local content requirements. In March China authorized subsidizing 50 percent of certain solar power projects and up to 70 percent in remote areas. For wind power, the New York Times reports that China has a 70 percent local content requirement—meaning that 70 percent of all manufacturing associated with a project must be done in China—although these requirements were eased to some degree last week. Nevertheless, many foreign companies feel that such policies make attempts to breach the Chinese renewable energy market virtually pointless.

Arguing that the Texas wind project would not have progressed as far as it has if the United States had protectionist policies like those of China, Walt Hornaday, president of Cielio Wind Power (a partner in the Texas wind project), asserted that “international partnerships are essential to the development of low cost renewable energy in America.” In addition, Cappy McGarr, a partner with the US Renewable Energy Group, argues that the potential benefits to Texas from the wind project are being underestimated.

So while it remains to be seen how the Obama administration will respond to Senator Schumer’s call, some involved in the controversial Texas wind project—who ought to know—worry that action taken to promote US jobs could in fact prevent any renewable energy projects from breaking ground at all.

A worker builds wind turbines at a GE factory in Shenyang, China. (image: ge.com)

China has been investing in US clean energy projects and many are not happy about it. Last week it was the announcement that China-based ENN will be teaming up with Duke Energy to bid on contracts for utility-scale solar farms and large commercial solar projects in the US.

This week it’s China’s role in a large-scale wind power project in Texas, reports the New York Times. Many unhappy readers wrote to the newspaper after learning that China, along with a coalition of other investors, will be financing the project. The outrage is over the possibility that some of the monies might come from the $22 billion of the economic stimulus package marked for clean energy projects and, more importantly, new jobs.

Although the project will create a few hundred jobs in the US, many more—approximately 2,000—will be created in Shenyang, China, where the 240 new wind turbines will be manufactured by A-Power Energy Generation Systems. The 600-megawatt wind farm will be the largest Chinese investment in US renewable energy, and is expected to cost about $1.5 billion.

The angry letters prompted a politically expedient response from Cappy McGarr, a managing partner with U.S. Renewable Energy Group (US-REG), a partner in the Texas wind deal along with an Austin-based wind developer, Cielo Wind Power. McGarr emphasized that the wind farm will go far in helping the US attain energy independence. Without this international partnership, he said, the project would not have been possible, and the resulting jobs and revenue would not exist. He added that many of the parts for the turbines would be made by General Electric.

Reaction to the project has not been positive. Douglas McIntyre at Daily Finance called it “a sad day for the U.S. renewable energy business,” and said, “it’s a sign that the campaign for America to rely less on fossil fuels is gaining some traction, but the tools to allow it to happen will be marked ‘made in China.’”

The Wall Street Journal’s coverage was more neutral, pointing out that Chinese companies will be involved in the sort of higher-value services that white-collar America needs. Seeking Alpha wonders if one of the best places to work in the future may be at a US subsidiary of a Chinese company.

About 330 jobs will be created in Texas as a result of the project, according to the Department of Energy’s National Renewable Energy Laboratory JEDI (Jobs and Economic Development Impact) analysis. About 734 indirect jobs will also be created.

Michael Kanellos at Greentech Media weighed in with a discussion about how the deal represents a significant shift from the past several years, when China wanted to remain anonymous about its investments. This, Kanellos maintains, is more proof that China wants to make a serious mark in green energy in the US.

But China has been making a mark in the renewable market in the US for some time; they were just much quieter about it. Russ Choma, a reporter with the Investigative Reporting Workshop, a nonprofit investigative journalism project attached to the American University School of Communication in Washington, told the New York Times that China has long dominated the solar panel manufacturing industry, of which 95 percent of its total output is exported to the United States and Europe.

Choma also noted that when it comes to stimulating the economy, it is the manufacturing that matters. He points to a 2004 study from the Renewable Energy Policy Project, a research institute based in Washington. The institute found that every 1,000 megawatts of installed wind capacity had the potential to generate as many as 4,300 jobs, of which about 3,000 are created at the manufacturing level.

But until that happens, we can expect to read more letters like this one that appeared in the Times.

“Thank you for killing the U.S. windmill industry,” wrote a reader from Chicago at the Times’ Green Inc. blog. “Thank-you, U.S. industrialists and financiers, for having us buy these things with financing and grants emanating from money borrowed from China.”