For Clean Energy, Buy American or Buy It Quick and Cheap?

Patricia Fahy, a New York State legislator, celebrated the approval of a new development project for the Port of Albany in January – the country’s first assembly plant for the construction of offshore wind towers.

“I rode my bike,” said Ms. Fahy, who represents the area. But she soon got into a political bond.

A powerful union told her that most of the equipment for New York’s large offshore windmill investment was not built by American workers but was overseas. However, when Ms. Fahy proposed legislation to encourage developers to use locally made parts, she encountered opposition from environmentalists and representatives of the wind industry. “They said,” Oh God, don’t cause us any problems, “she recalled.

Since the election of President Biden, Democrats have touted the win-win charm of the fossil fuel transition, saying it could help avert a climate crisis while millions of people are at work. “We haven’t used the most important word for coping with the climate crisis for too long: jobs, jobs, jobs,” Biden told Congress last month.

On Tuesday, his government gave final approval to the country’s first major offshore wind project off Martha’s Vineyard, Massachusetts, reiterating its employment potential.

But there is a tension between the goals of industrial workers and those of environmentalists – groups that Democrats see as politically critical. The more the focus is on domestic production, the more expensive renewable energy will be, at least initially, and the longer it may take to meet the renewable energy targets.

This tension could be felt as the White House finalizes its climate change agenda.

“It’s a classic compromise,” said Anne Reynolds, who heads the New York Clean Energy Alliance, a coalition of environmental and industrial groups. “It would be better if we produced more solar modules in the USA. However, other countries have invested public money for a decade. So it’s cheaper to build them there. “

There is some data to support the claim that climate targets can create jobs. Consulting firm Wood Mackenzie expects tens of thousands of new jobs a year later this decade, just in offshore wind, an industry that hardly exists in the United States today.

And unions – even those whose members are most at risk of switching to green energy, such as miners – are increasingly accepting this logic. In recent years, many unions have teamed up with renewable energy advocates to form groups with names like the BlueGreen Alliance that are pushing for ambitious jobs and climate laws, similar to the $ 2.3 trillion proposal that Mr Biden proposed to the American Employment plan calls.

However, much of the supply chain for renewable energy and other clean technologies is overseas. Nearly 70 percent of the value of a typical solar module assembled in the United States comes from companies in China or Chinese companies across Southeast Asia. This emerges from a recent report by the Center for Strategic and International Studies and the energy research group BloombergNEF.

Electric vehicle batteries, their most valuable component, follow a similar pattern, the report said. And there is virtually no domestic supply chain dedicated to offshore wind turbines, an industry that Mr Biden hopes will grow from around half a dozen turbines in the water to thousands in the next decade. Most of this supply chain is located in Europe.

Many proponents of a greener economy say that importing equipment is not a problem but an asset – and that insisting on domestic production could raise the price of renewable energy and slow the transition from fossil fuels.

“It’s valuable to have flexible global supply chains that allow us to move forward quickly,” said Craig Cornelius, who once led the energy division’s solar program and is now the executive director of Clearway Energy Group, which develops solar and wind projects.

Those who value speed and procurement argue that as manufacturing becomes increasingly automated, most of the tasks in the renewable energy space will be building solar and wind power plants, rather than making equipment.

However, working groups fear that construction and installation work is poorly paid and temporary. They say that only manufacturing traditionally offers higher wages and benefits and can maintain the workforce for years.

Manufacturing partisans also point out that this often leads to jobs in new industries. Researchers have shown that the migration of consumer electronics to Asia in the 1960s and 1970s helped these countries become hubs for future technologies like advanced batteries.

As a result, union leaders are urging the administration to impose strict conditions on the subsidies for environmentally friendly equipment. “We will require that the domestic content of this material be really high,” said Thomas M. Conway, president of the United Steelworkers Union and close ally of Biden.

The experience in New York shows how delicate these debates can be when certain jobs and projects are at stake.

Late last year, the Communications Workers of America began considering ways to revive employment at a General Electric factory that represents the union in Schenectady, NY, near Albany. The factory has laid off thousands of employees over the past few decades.

Around the same time, the state was about to approve bids for two large offshore wind projects. The eventual winner, a Norwegian developer, Equinor, promised to bring a wind tower assembly plant to New York and modernize a port in Brooklyn.

“All of a sudden, I’m focusing on the fact that it’s wind making,” said Bob Master, the communications officer who turned to Ms. Fahy, the state legislature. “GE makes turbines – there could be a New York supply chain. Let us try it.”

In early February, the union tabled a bill urging developers like Equinor to buy their wind equipment “as much as possible” from manufacturers in New York State – not just towers but other components like blades and nacelles house the mechanical entrails of one Turbine. Ms. Fahy, a member of the congregation, and Senator Neil Breslin, a Democratic compatriot from the Albany area, were signed on as sponsors.

Environmentalists and industry officials were quick to voice concerns that the move could deter developers from coming into the state.

“So far, Equinor has exceeded anything other companies have done,” said Lisa Dix, who until recently led the Sierra Club’s renewable energy campaign in New York. “Given what we have, why do we need stricter requirements for companies?”

Ms. Dix and other clean energy advocates had worked with unions to persuade the state that offshore wind construction jobs should offer union wages and representation. New York’s clean energy bid evaluation system was already awarding points to developers who promised local economic benefits.

Ms. Reynolds, the leader of the New York Environmental and Industrial Coalition, feared that exceeding the existing regulation could make renewable energy costs unsustainable.

“If it got bigger and more noticeable on utility bills, the general expectation is that political support for New York’s clean energy programs would wane,” she said.

The communications staff tried to provide reassurance, which was not entirely successful. “I said to them, ‘We are trade unionists: we ask for anything, the boss doesn’t offer us anything, and then we make a deal,'” said Mr. Master. “‘But I think there is no reason why turbines should come from France, unlike Schenectady.'”

The final language, a compromise negotiated with the state’s Building Crafts Council and passed by lawmakers in April, allows the state to award additional points in the tender process to developers who commit to creating manufacturing jobs in the state, a slight refinement of the stream approach. (It also effectively requires that workers who build, operate, or maintain wind and solar systems either receive union wages or can benefit from union representation.)

While the law included a “Buy American” requirement for iron and steel, the state energy research and development agency known as NYSERDA may waive the requirement.

Agency executive director Doreen Harris said she was generally pleased that the existing approach had remained intact and predicted that the state will have blade and nacelle factories within a few years.

Some analysts agreed, arguing that most offshore wind devices are so bulky – often several hundred feet long – that it becomes impractical to ship across the Atlantic.

“There is a point where importing all goods and services does not make economic sense,” said Jeff Tingley, offshore wind supply chain expert at consultancy Xodus.

However, this does not always reflect the experience of the UK, which earlier this year had installed more offshore wind turbines than any other country but produced only a small portion of the equipment.

“Even if the UK is the largest market, the logistical cost has not been high enough to warrant new factories,” said Alun Roberts, offshore wind expert at UK-based consultancy BVG Associates.

According to a 2017 report, the country produced significantly less than 30 percent of its offshore wind turbines, and Mr Roberts said the percentage has likely increased slightly since then. The country currently makes blades, but not gondolas.

All of this leaves the Biden administration with a difficult choice: If they really want to move production to the US, it might require an aggressive nudge. A senior White House official said the government is looking into ways some of the wind and solar panels in the US should be made when it comes to federal funds.

However, some current and former democratic business leaders are skeptical of the idea, as are clean energy advocates.

“I am currently concerned about the federal government’s local offshore wind content requirements,” said Kathleen Theoharides, the Massachusetts secretary for energy and the environment. “I don’t think adding something to the tariff payer that could potentially increase the cost of clean energy is necessarily the right strategy.”

Master said the recent New York legislation was a victory given the difficulty of getting stronger policies in place at the state level on domestic content, but acknowledged that it fell short of his union’s goals. Both he and Ms. Fahy vowed to keep pushing to bring more offshore wind manufacturing jobs to New York.

“I could be the queen of lost causes, but we want to get some energy for it,” said Ms. Fahy. “We need that here. I’m not just saying New York. This is a national conversation. “

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