Martin Rosenberg | Sep 16, 2010

China will produce half of the world's solar panels this year, muscling its way into a young but sure-to-be significant generation resource in coming decades. And it will also produce half of the globe's wind turbines this year, dominating an already important segment of the power industry.

Some are charging that China may have leaped to the front of the renewables sector through massive subsidies that may violate international agreements.

China's leap to the head of the pack when it comes to the young renewable power industry has enormous implications to the United States, the global economy and the future of the world power industry.

The rise of China in renewables, as chronicled last week in the New York Times, has been accomplished by a massive wave of subsidies that may well be in violation of international trade agreements. As China's renewables fortunes soar, manufacturers in the United States, Europe and elsewhere are harmed.

Denise Bode, the chief executive of the American Wind Energy Association, said AWEA is huddling with hundreds of wind sector manufacturers in the United States to craft a response to the charge that China may be violating agreements in the way it is nurturing its wind sector. "Any practice that tilts the global playing field unfairly would be of serious concern," she said.

One wind turbine manufacturer, Vestas, of Denmark, believes it can distinguish itself from the Chinese by its product performance. In response to EnergyBiz Insider, Aili Jokela, vice president of communications, Vestas Americas, said, "There will be opportunities for existing and new entrants in the market, and we expect some will be from China."

On the solar side of the fence, the Solar Electric Power Association notes that China's surging solar manufacturing has brought down product costs, making the still expensive technology more competitive in more places. In response to an inquiry from EnergyBiz Insider, Julia Hamm, head of the association, said, "While not all the product coming out of China is of the highest standards, companies like Suntech Power and Trina Solar are setting a high bar for manufacturers worldwide both in terms of quality and price."

The beneficiaries are energy consumers, Hamm said, ".utilities and other end users are benefiting from lower installed costs and power purchase agreement prices."

Boris Schubert,president of Q-Cells International, owned by the German firm Q-Cells, recently was interviewed in EnergyBiz magazine, and said that it was possible that solar power will rapidly ramp up and generate one-fifth of America's electricity by 2020

That kind of potential growth will attract many foreign manufacturers of solar panels to the U.S. market.

Trade rules bar export subsidies that help companies conquer foreign markets. They also requires countries to report all subsidies - local, regional and national - every two years for others to review if exports from the country suddenly surge. China has ignored this since joining the World Trade Organization nine years ago.

The Obama administration has been using federal stimulus funds to try to help jumpstart a domestic renewable energy manufacturing sector. Many states have adopted renewable portfolio standards with a similar objective, and to address climate change.

Congress and the administration have tangoed for several years now on national energy policy and the possible need for establishing a price on carbon. These have been complex issues that have defied progress.

Now it is increasingly clear that another layer of complexity has been added to energy policy and the need for renewables.

Renewables are fast emerging as an international trade issue and that does not bode well for the future. One million of China's 1.3 billion citizens now work in renewables. The wind and solar sector is helping to swell China's trade surplus with the rest of the world.

Sorting this all out will now take not just energy policy experts but also the economic and trade officials of countries around the world. The answers that emerge will have sweeping consequences as to how we power our industry and lives, our economy and society.

AWEA's Bode said that Congress should respond to China by immediately enacting a national renewable energy standard. "The RES is necessary to drive investment in wind energy manufacturing here in the US, and ensure continued growth of domestic content in wind turbines," she said.

That would probably have the effect of prompting China to expand its renewable energy production in the United States. Japan's auto sector did the same thing in the 1970s and 1980s.

But what policies will be needed to make sure that American companies prosper from the coming surge in renewable deployments? We will be covering that story for years to come.

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