Renewable energy becomes a new US-China dispute prior to COP16

Clean and renewable energy production has become a new dispute between the US and China and centers around Chinese subsidies that unfairly give an advantage to local companies and price US producers out of the market.

Stephen Chu, US Energy Secretary, told the international press that the US government welcomes Chinese green companies but that there has to be a level playing field for US companies as well.

At the center of the dispute are large subsidies to Chinese manufacturers of solar panels and wind turbines that allow them to gain an unfair and competitive advantage over US companies that are not entitled to the same government stimulus.

The US is requesting from China, through the World Trade Organization, that US companies that manufacture green energy components have access to the same stimulus funds as their Chinese owned counterparts.

It is expected that China will ultimately reach an agreement with the US as both countries believe that government subsidies are a key factor in the development and manufacturing of green and renewable energy sources.

The goal of both countries is to further reduce carbon emissions to halt global warming by lowering global pollution.

China holds an advantage over the US as the largest manufacturer of solar panels. The edge in the global market with a very high demand for renewable energy sources is the direct result of China’s near monopoly of the rare earth minerals market.

China controls 93% of the RE market both in raw materials as well as its alloys that are used in solar panel reflection mirrors.

The US has reopened some of its RE mines again after having been absent in the market for 20 years.

That alone may not be sufficient to close the competitive gap with China but subsidies to American producers may result in a better pricing balance.

Discussions between Mr. Chu and his Chinese counterparts have been ongoing since the opening of the US-China Clean Energy Research Center last week.

The center is the largest research center of its kind where scientists from both countries will jointly develop green and renewable technologies.

A permanent agreement may be reached prior to the COP-16 meeting to be held in Mexico from November 29 through December 10.