The Denver Post

For clean energy, buy American or buy parts quick and cheap?

- By Noam Scheiber

Patricia Fahy, a New York state legislator, celebrated when a new developmen­t project for the Port of Albany — the country’s first assembly plant dedicated to building offshore wind towers — was approved in January.

“I was doing cartwheels,” said Fahy, who represents the area.

Before long, however, she was caught in a political bind.

A powerful union informed her that most of the equipment for New York’s big investment in offshore windmills would not be built by American workers but would come from abroad. Yet when Fahy proposed legislatio­n to press developers to use locally made parts, she met opposition from environmen­talists and wind industry officials. “They were like, ‘Oh, God, don’t cause us any problems,’ ” she recalled.

Since President Joe Biden’s election, Democratic politician­s have extolled the win-win allure of the transition from fossil fuels, saying it can help avert a looming climate crisis while putting millions to work. “For too long we’ve failed to use the most important word when it comes to meeting the climate crisis: jobs, jobs, jobs,” Biden said in an address to Congress last month.

Interior Secretary Deb Haaland, in announcing the final approval of the nation’s first large-scale offshore wind project on Tuesday, called it an important step to “create good-paying union jobs while combating climate change.”

But there is a tension between the goals of industrial workers and those of environmen­talists — groups that Democrats count as politicall­y crucial. The greater the emphasis on domestic manufactur­ing, the more expensive renewable energy will be, at least initially, and the longer it could take to meet renewable-energy targets.

That tension could become apparent as the White House fleshes out its climate agenda.

“It’s a classic trade-off,” said Anne Reynolds, who heads the Alliance for Clean Energy New York, a coalition of environmen­tal and industry groups. “It would be better if we manufactur­ed more solar panels in the U.S. But other countries invested public money for a decade. That’s why it’s cheaper to build them there.”

There is some data to support the contention that climate goals can create jobs. The consulting firm Wood Mackenzie expects tens of thousands of new jobs per year later this decade just in offshore wind, an industry that barely exists in the United States today.

And labor unions — even those whose members are most threatened by the shift to green energy, like mineworker­s — increasing­ly accept this logic. In recent years,

many unions have joined forces with supporters of renewable energy to create groups with names like the BlueGreen Alliance that press for ambitious jobs and climate legislatio­n, in the vein of the $2.3 trillion proposal that Biden is calling the American Jobs Plan.

But much of the supply chain for renewable energy and other clean technologi­es is in fact abroad. Nearly 70% of the value of a typical solar panel assembled in the United States accrues to firms in China or Chinese firms operating across Southeast Asia, according to a recent report by the Center for Strategic and Internatio­nal Studies and BloombergN­EF, an energy research group.

Batteries for electric vehicles, their most valuable component, follow a similar pattern, the report found. And there is virtually no domestic supply chain specifical­ly for offshore wind, an industry that Biden hopes to see grow from roughly a half-dozen turbines in the water today to thousands over the next decade. That supply chain is largely in Europe.

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

“It is valuable to have flexible global supply chains that let us move fast,” said Craig Cornelius, who once managed the Energy Department’s solar program and is now chief executive of Clearway Energy Group, which develops solar and wind projects.

Those emphasizin­g speed over sourcing argue that most of the jobs in renewable energy will be in the constructi­on of solar and wind plants, not making equipment, because the manufactur­ing is increasing­ly automated.

But labor groups worry that constructi­on and installati­on jobs will be low paying and temporary. They say only manufactur­ing has traditiona­lly offered higher pay and benefits and can sustain a workforce for years.

Partisans of manufactur­ing also point out that it often leads to jobs in new industries. Researcher­s have shown that the migration of consumer electronic­s to Asia in the 1960s and ’70s helped those countries become hubs for future technologi­es, like advanced batteries.

As a result, labor leaders are pressing the administra­tion to attach strict conditions to the subsidies it provides for green equipment. “We’re going to be demanding that the domestic content on this stuff has to be really high,” said Thomas M. Conway, the president of the United Steelworke­rs union and a close Biden ally.

The experience of New York reveals how delicate these debates can be once specific 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 the union represents in Schenectad­y, N.Y., near Albany. The factory has shed thousands of employees in recent decades.

Around the same time, the state was close to approving bids for two major offshore wind projects. The eventual winner, a Norwegian developer, Equinor, promised to help bring a wind-tower assembly plant to New York and upgrade a port in Brooklyn.

“All of a sudden I focus on the fact that we’re talking about wind manufactur­ing,” said Bob Master, the communicat­ions workers official who contacted Fahy, the state legislator. “GE makes turbines — there could be a New York supply chain. Let’s give it a try.”

In early February, the union produced a draft of a bill that would ask developers such as Equinor to buy their wind equipment from manufactur­ers in New York state “to the maximum extent feasible” — not just towers but other components, like blades and nacelles, which house the mechanical guts of a turbine. Fahy, a member of the Assembly, and state Sen. Neil Breslin, a fellow Democrat from the Albany area, signed on as sponsors.

Environmen­talists and industry officials quickly raised concerns that the measure could discourage developers from coming to the state.

Reynolds, the head of the environmen­tal and industry coalition in New York, worried that going beyond the existing arrangemen­t could make the cost of renewable energy unsustaina­ble.

“If it became bigger and more noticeable on electric bills, the common expectatio­n is that political support for New York’s clean-energy programs would erode,” she said.

The communicat­ions workers sought to offer reassuranc­e, not entirely successful­ly. “I said to them, ‘We’re trade unionists: We ask for everything, the boss offers us nothing, and then we make a deal,’ ” Master said. “‘But I do think there’s no reason why turbines should be coming from France as opposed to Schenectad­y.’ ”

The final language, a compromise negotiated with the state’s building trades council and passed by the Legislatur­e in April, allows the state to award additional points in the bidding process to developers that pledge to create manufactur­ing jobs in the state, a slight refinement of the current approach. (It also effectivel­y requires that workers who build, operate or maintain wind and solar plants either receive union-scale wages or can benefit from union representa­tion.)

While the law included a

“buy American” provision for iron and steel, the state’s energy research and developmen­t agency, known as NYSERDA, can waive the requiremen­t.

The agency’s chief executive, Doreen Harris, said she was generally pleased that the existing approach remained intact and predicted that the state would have blade and nacelle factories within a few years.

Some analysts agreed, arguing that most offshore wind equipment is so bulky — often hundreds of feet long — that it becomes impractica­l to ship across the Atlantic.

“There’s a point at which importatio­n of all goods and services doesn’t make economic sense,” said Jeff Tingley, an expert on the offshore wind supply chain at the consulting firm Xodus.

But that has not always reflected the experience of the United Kingdom, which had installed more offshore wind turbines than any other country by the start of this year but had manufactur­ed only a small portion of the equipment.

All of which leaves the Biden administra­tion with a difficult choice: If it genuinely wants to shift manufactur­ing to the United States, doing so could require some aggressive prodding. A senior White House official said the administra­tion was exploring ways of requiring that a portion of wind and solar equipment be American-made when federal money was involved.

But some current and former Democratic economic officials are skeptical of the idea, as are clean-energy advocates.

“I worry about local content requiremen­ts for offshore wind from the federal government right now,” said Kathleen Theoharide­s, the Massachuse­tts secretary of energy and environmen­tal affairs. “I don’t think adding anything that could potentiall­y raise the cost of clean energy to the ratepayer is necessaril­y the right strategy.”

 ?? Theophile Trossat, © The New York Times Co. file ?? A wind-turbine assembly line in Saint-Nazaire, France, in 2018. A plan for a wind-tower factory in upstate New York has raised concerns about the lack of a domestic supply chain.
Theophile Trossat, © The New York Times Co. file A wind-turbine assembly line in Saint-Nazaire, France, in 2018. A plan for a wind-tower factory in upstate New York has raised concerns about the lack of a domestic supply chain.
 ?? Suzie Howell, © The New York Times Co. ?? Wind turbines off the coast of East Anglia in England in 2020. Importing parts has made economic sense for Britain, which had installed more offshore wind turbines than any other country by the start of this year but had made little of the equipment.
Suzie Howell, © The New York Times Co. Wind turbines off the coast of East Anglia in England in 2020. Importing parts has made economic sense for Britain, which had installed more offshore wind turbines than any other country by the start of this year but had made little of the equipment.

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