Why the EU is investigating China’s wind turbines

Transcript:

SYLVIE DOUGLIS, BYLINE: NPR.

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DARIAN WOODS, HOST:

Yesterday, in a speech at the Institute for Advanced Study in Princeton, N.J., the European Union’s antitrust commissioner announced an investigation into Chinese wind turbines.

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MARGRETHE VESTAGER: We’re investigating the conditions for the development of wind parks in Spain, in Greece, in France, in Romania and in Bulgaria.

WAILIN WONG, HOST:

The question she was asking wasn’t whether they were faulty or bad value for the money. No – the question basically was, are the wind turbines too cheap? More specifically, has China played unfairly by subsidizing its wind turbines to the point of pushing out its European competitors?

WOODS: Or are they just more efficient and have a cheaper supply chain? In the case of at least one BYD electric vehicle, that largely seems to be the case according to the bank UBS. Either way, you can look to the dominance of Chinese solar panels to see why the EU’s antitrust commissioner is concerned.

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WONG: All of this raises a fundamental dilemma that both the European Union and the Biden administration in the U.S. are facing. They want to decarbonize as fast as possible, but they also want to build their own green tech industries. This is THE INDICATOR FROM PLANET MONEY. I’m Wailin Wong.

WOODS: And I’m Darian Woods. Today’s show – my conversation with that EU Commissioner for Competition, Margrethe Vestager.

WONG: We learn about how the European Commission is trying to build and maintain a competitive green tech industry in Europe and how this might apply to the U.S.

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WOODS: Commissioner Margrethe Vestager, welcome to THE INDICATOR.

VESTAGER: Well, thank you very much for having me.

WOODS: Did you see yourself becoming an executive vice president and commissioner for competition at the European Union when you were, say, 12 years old?

VESTAGER: Oh, no, no. Never. Never, ever. Actually, I dreamt about being an engineer because I love bridges.

WOODS: So instead you’re building, I guess, more kind of intangible infrastructure politically.

VESTAGER: I think so. Yes, I think so.

WOODS: (Laughter) To set the scene, the Chinese government has been heavily subsidizing solar panels, electric vehicles, battery production for years now. Now, Europe has access to super cheap solar panels and electric vehicles and wind turbines coming into the region from China. Given Europe’s urgent move to decarbonize its economy, is this not a great thing?

VESTAGER: Well, it is a great thing, but it comes with some quite annoying strings attached because we think that we recognize sort of a Chinese playbook here. First, you know, European investors and businesses invited to China very often to establish joint ventures. Technology was transferred not all over the board.

WOODS: Right. So China got access to those technologies from the foreign investors.

VESTAGER: Then, progressively, the markets closing from foreign businesses, while massive subsidies going into production facilities. And now, a lot of that production being exported at very, very low prices, very much, I think, due to the fact that the establishment of the production facilities have been so heavily subsidized. And I’m all about competition. You’re more than welcome to do business in Europe. But it must be with some sense of fairness because, otherwise, you know, you may get a cheap solar panel, but someone else is paying for it, and European businesses do not get the business.

WOODS: And on the topic of potentially unfair competition from China, what is the European Commission doing?

VESTAGER: Well, our legislator has given us a new tool which is called the Foreign Subsidies Regulation so we can investigate if, in a tender, we think that there are foreign subsidies enabling a maybe too-affordable bid. We have had one closed investigation that made a Chinese state-owned train business withdraw from a tender in Bulgaria, and now we have two investigations – one in solar and one in wind – to see if the Chinese are coming in with subsidies on their books that makes it very, very difficult to compete against them.

WOODS: So your comment about being too affordable is a really interesting one. I want to know if you consider there is a trade-off between price of decarbonizing and supporting European Union companies.

VESTAGER: Well, I think there is a trade-off here between short-term and long-term because, of course, it’s very nice to get a bargain here and now. But if that means that competition sort of dwindles, then maybe, mid to long term, prices will go up because there’s no one to compete against the company who gave you those very, very affordable prices earlier on.

WOODS: Are you worried about these European Union investigations sparking reciprocal investigations and maybe even leading to some kind of worsening trade war?

VESTAGER: Well, I think that is a risk that we will have to take. All of that is WTO-compliant with all the problems that WTO, the World Trade Organization, is having because we’re not trying to wage a war or to confront anyone. We are trying to level the playing field because fair competition serves everybody. But unfair competition, and especially if it is state-run and may target areas where our economic security is also put at stake – here, of course, we need to make sure that we can properly defend ourselves and, preferably, of course, doing that with partners like the U.S.

WOODS: On the topic of the U.S., the U.S. is heavily subsidizing its own industry at the moment with the big climate bill, the Inflation Reduction Act. How concerned are you about U.S. policy in this regard?

VESTAGER: Well, the first thing is a good thing because, with the Inflation Reduction Act, you know, the U.S. really arrived in the fight against climate change. And that is really, really important because no one can fight climate change on their own. And with the understanding that we have reached after it passed, it will also be beneficial for European businesses doing green business in the U.S.

So I think, by now, you know, tension has eased to some degree. It’s, I think, unavoidable that we are also having sort of matching subsidies in order to prevent, you know, the same investment to go to the U.S. instead of being established in Europe. If you can have, you know, a second investment in the U.S., perfectly fine with us, but we also need an investment in Europe. But I think it’s – all in all, China is leading in a lot of these green tech areas. Europe is a strong second. It’s important the U.S. gets on board because, otherwise, we will definitely not be successful in fighting climate change, and everybody is feeling the consequences already now.

WOODS: What lessons could the U.S. learn from Europe’s approach to building a low-carbon economy?

VESTAGER: Well, one of the things that we think work well for us is that subsidies are checked to make sure that you only use taxpayers’ money when necessary and only in such an amount that it will actually make the investment take place. Asking the taxpayer to step in where the market cannot deliver yet and, at the same time, sort of watching the market to say, well, when is that market sort of ready to deliver so that taxpayers are not going to support sort of perpetual, like, forever – because there will be other things to do rather than to support industry that, by then, will be perfectly profitable.

WOODS: We are in this – what seems like quite a shift in how the world is thinking about industrial policy and also the urgency of climate change. It sounds like this is a task even more challenging than building very large bridges.

VESTAGER: I think so, but maybe also, in the long run, more promising because, if we work together, if we manage, actually, to fight climate change, you know, we will have bettered the living conditions of people all over the planet. And being part of that is just a privilege, I think, beyond what I could ever have imagined when I was 12 and wanted to build bridges.

WOODS: Commissioner Margrethe Vestager, thank you so much for joining THE INDICATOR.

VESTAGER: Well, it was a pleasure. And thank you very, very much for the focus because the green transition is the must-do for our generation.

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WONG: This episode of THE INDICATOR was produced by Cooper Katz McKim and engineered by Maggie Luthar. Julia Ritchey fact-checked this episode. Kate Concannon is our editor, and THE INDICATOR is a production of NPR.

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