Stealing a lyric from Queen’s Bohemian Rhapsody, “Anyway the wind blows” does really matter to President Biden.
After (disappointingly) electing not to exempt all of Europe and Hong Kong from U.S. government procurement of critical pharmaceutical goods this month, President Biden touted domestic manufacturing in his new green energy push. He highlighted wind power in his first official address to Congress on Wednesday.
“There is simply no reason why the blades for wind turbines can’t be built in Pittsburgh instead of Beijing. There’s no reason why American workers can’t lead the world in the production of electric vehicles and batteries,” he said, adding that his American Jobs Plan will “create millions of good-paying jobs…all the investments in the American Jobs Plan will be guided by one principle: Buy American.”
Two things have clearly guided the Biden platform since he took over the White House: climate change and racial equity and inclusion as a matter of economic principles.
“For me, when I think climate change, I think jobs,” he said.
Biden’s mention of the EV market should be watched as a guidepost. Auto labor is at least 18.2% Black American, compared to just 9.9% for Latinos and the general 13.4% of the total Black population, based on Bureau of Labor Statistics data.
As General Motors and others move to all-electric, there will be a blood-letting in jobs that were tied to making parts for the internal combustion engine. EVs will require fewer parts. Tens of thousands of jobs in the auto industry have been lost in the last 10 years. We have three new car companies sprouting up because of climate change-related policies: Rivian, Lucid, and Lordstown Motors, which is positive, but they are just startups. Legacy automaker GM is making their EV Hummer in the U.S. because trucks are tariff protected. Their rival Ford is making its Mach-E Mustang in Mexico, because sports cars and sedans are not. Maybe it’s a wash.
Biden’s focus on the environment matters. His Buy American comment, which he said twice during last night’s address, is imperative if the U.S. is to avoid going from being largely self-sufficient in oil and gas, to almost entirely dependent on other countries for wind and solar.
Some 80% of the solar panels you see on your neighbor’s rooftops (if not 100%) come from Chinese multinational solar manufacturers. They dominate the market after decimating the European solar industry and seriously wounding our own. Solar has made a comeback here only thanks to tariff protections.
On wind, the two biggest players here are European: GE Renewables, which counts France as its home; and Vestas, which is from Denmark.
China’s Goldwind, one of the world’s largest wind turbine manufacturers, is growing. In 2019, they installed 2 turbines in the U.S. In 2020, a pandemic year, they installed 48 in the U.S., according to data from the Global Wind Energy Council. It is unclear if any of those components were made in the U.S. Goldwind Americas is based in Chicago. They are a subsidiary of Xinjiang Goldwind Science & Technology, located in the far West China province made infamous for its detention of Uyghur Muslims.
GE Renewables manufacturers wind blades in North Dakota. But nearly all of the key components that are turning wind into electricity off the coast of Rhode Island came from Europe.
The world’s leading wind energy nations are home to hundreds of thousands of direct jobs in the wind industry. As of 2020, there were approximately 550,000 wind energy workers in China, 260,000 in Brazil, and in third place was the U.S. with 115,000, according to a global survey by GWEC Market Intelligence.
Vestas is the world’s largest and they manufacture the tower, the blades and the nacelle (the turbine itself) in Colorado. For onshore wind towers, Vestas is the world’s leader. China’s Goldwind is already No. 2. For offshore wind towers, the market leaders are Europeans – Siemens Gamesa (German-Spanish) and MHI Vestas (Japan-Denmark).
But look who’s next for the offshore category: the remaining top 8 are all Chinese except for GE Renewables (No. 7). Germany’s Senvion went bankrupt in 2019 and the Dutch firm XEMC Darwind is now 100% China-owned.
If the U.S. is not careful, our climate policy runs the risk of becoming a massive jobs program for Chinese wind, solar, and the EV battery supply chain, particularly in the metals category.
“The American Jobs Plan will put engineers and construction workers to work building more energy-efficient buildings and homes,” Biden said, which could just as easily mean installing Made in China solar panels.
For CPA, if residential properties want to use imported solar, that is their prerogative. But any state and local government spending tax dollars on solar-powered utilities should make absolutely certain that the bulk of those solar panels, whether it’s the polysilicon and the solar cells, or the solar modules themselves, are made in the U.S. If not, demand goes to China, and talk of supply chain resiliency becomes meaningless for Biden’s green energy development goals.
Biden also said that “Farmers planting cover crops so they can reduce the carbon dioxide in the air and get paid for doing it,” is also worth a highlight. Cover crops are not cash crops. However, that Biden looped in agriculture with climate change is important because the U.S. runs the risk of exporting its perceived environmental risks caused by agriculture to Latin America. American beef is increasingly imported. If regulations make it more costly for ranchers to compete with their counterparts in Mexico and Brazil, then the industry will increasingly source from there while touting their commitment to “protecting the environment” in the U.S., to the detriment of many family farms and ranches.
Biden said that he could be domestically focused in his manufacturing policies without running the risk of violating trade agreements.
“American tax dollars are going to be used to buy American products, made in America, to create American jobs. That’s the way it’s supposed to be, and it will be in this administration,” he said. “I made it clear to all my cabinet people, their ability to give exemptions has been strenuously limited. It will be American products.”
The President has spoken.
Will it be enough?
“If the big corporations, be them retailers or automotive or companies making wind turbines, don’t understand that the value is not just the final price — and I get that it is millions of dollars we are talking about here because of the sheer volume of what they buy – then if they are not supportive of domestic manufacturing, there is only so much Washington can do,” said Zach Mottl, President of Atlas Tool Works and Chairman of the Coalition for a Prosperous America. “The value is in a robust American society, a strong middle class. Is that worth millions? We think it is. If price is end-all-be-all, then we will have a problem.”