EU Launches Anti-Subsidy Probe Into Chinese Wind Turbine Industry
The Lede: On Tuesday, the European Commission announced that it would be launching a new anti-subsidy probe into China’s wind turbine industry in the latest Western move against Beijing’s domination of the global green industry market.
What We Know:
- The European Commissioner for Competition and Executive Vice President for the European Commission for a A Europe Fit for the Digital Age Margrethe Vestager announced the new measures in a speech delivered at the Institute for Advanced Study in Princeton. The Commissioner referred to the new EU Foreign Subsidies Regulation.
- This round of investigations specifically targets wind parks in five EU member countries: Spain, Greece, France, Romania, and Bulgaria. European wind industry lobbying groups point to China’s generous financing with up to three years deferred payment allowing them to offer turbines at half the price of domestic manufacturers.
- China responded with accusations that the EU’s policies are protectionist and distort the definition of subsidies to the detriment of fair competition and the EU’s own commitments to reducing greenhouse gas emissions.
The Background: Denmark and Spain previously led the domestic wind turbine market. European producers have been urging EU leaders to protect them from unfair competition. Meanwhile, China has taken increasing market share in the export of components such as castings, forgings, slewing bearings, towers and flanges while increasing investments into EU supply chains. In a wind power ‘action plan’ published last October, the European Commission warned of possible future competition probes, as well as measures regarding permitting obstacles, a shortage of skills, and access to critical raw materials for the industry. China accounts for by far the world's largest wind turbine production capacity at roughly 60% globally in 2023. Last week the EU also announced investigations into two Chinese solar panel makers bidding for a solar park in Romania. There was also an earlier EU probe into the procurement of electric trains in Bulgaria that was dropped last month after the Chinese bidder withdrew from the bidding process.
Likely Outcomes:
- This move likely sours any potential climate-related progress in the diplomatic and economic spheres between the West and China. It also builds upon the tensions between the EU and China as the Commission already launched an anti-subsidy probe on the Chinese EV industry. As is the case with EVs and solar panels, China’s lead in producing wind-turbines has been rapid and the EU may again be too late to significantly alter the dynamics of the market environment as the desires for a green transition continue forward.
- The U.S. and EU will likely aim to cooperate on green industry matters in opposition to China. This contrasts with Vestager’s notoriety for protectionism against U.S. tech giants in previous years. The way forward for the EU in this regard is likely to involve standards among its member states, the U.S., and other cooperating countries to use ‘clean tech’ that is produced with criteria regarding environmental impact, labor rights, and security.
Quotables:
“We have a dilemma here because now at the moment it’s solar, the next could be maybe wind power, etc. So this is a balance the politicians need to find.” - Maximillian Butek, the head of the German Chamber of Commerce in East China
“We hope the EU will not keep stressing the importance of fighting climate change on the one hand and yet damage the global efforts to deal with the issue on the other. Protectionism does not solve one’s own problems. Protectionism only protects backwardness. It costs the future and results in lose-lose. We urge the EU to observe WTO rules and market principles. China will firmly protect the lawful rights and interests of Chinese companies.” - Mao Ning, spokeswoman of the Chinese Ministry of Foreign Affairs
Good Reads:
EU pushes to curb China’s green tech market lead (Politico)
China protests EU’s investigation of subsidies in green industries, calling the move protectionist (AP)
China says EU's wind turbine subsidy probe 'discriminatory' (Reuters)
EU to probe Chinese wind turbine subsidies (Euronews)