The inherent conflict between nations’ climate needs and their competitiveness agendas threatens the global trading system.

WASHINGTON, D.C. – At long last countries are waking up to the dangers of carbon-dioxide pollution and a finite supply of fossil fuel. The bad news is that emergent green technology risks spawning new trade wars. A firestorm of public criticism emerged in the United States last year, with reports of taxpayer stimulus funds being used to buy 240 Chinese-made turbines for a new wind farm in west Texas. The world’s pursuit of low-carbon sources of energy collided with the national need to create jobs.

Wind-Farm-at-SunsetChina, Germany, Spain and the US vie with others to reap economic and environmental benefits of domestic green-energy sources while positioning themselves as market leaders in providing those technologies to the world.

While environmentalists applaud this new focus on renewable energy, the inherent conflict between nations’ climate needs and their competitiveness agendas threatens the global trading system, which lacks adequate rules and procedures on energy issues. Without a concerted effort to liberalize trade in green technologies, efforts to minimize climate change could rapidly devolve into new trade wars.

China intends to meet 20 percent of its energy needs from renewable energy sources by 2020. In so doing, it hopes to become the global production site for green technology.

In 2009, China accounted for more than a third of the world’s wind-capacity installations, more than doubling its cumulative installed capacity for the fourth year in a row. And the country has passed the US to become the world’s largest wind-turbine market. By 2020, China aims to obtain up to a fifth of the nation’s energy from renewable sources such as wind, solar and hydropower.

China hopes to meet its goals with Chinese-made equipment. In 2004, four-fifths of Chinese purchases of wind-power equipment came from abroad – overwhelmingly from Europe. This year less than a fifth of such technology will come from overseas.

China has yet to become a major player in global wind-turbine markets, with exports to Europe and the US equaling less than 1 percent of total Chinese production. But the growth in domestic Chinese output of wind turbines now outpaces the country’s own demand. Chinese producers are poised to become big exporters.

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Source: YaleGlobal
Photo: YaleGlobal