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The cost of a green economy

By Arthur Thomas - posted Wednesday, 17 February 2010

Climate change has been popular with politicians seeking election on green issues, the greens seeking voter support, and naturally enough those industries in green technology, genuine and otherwise. The politicians run a parallel rhetoric emphasising the benefits in lifestyle, new skills and thousands of new "green jobs" from "green industries".

During his election campaign, Kevin Rudd trumpeted that expertise and innovation would confirm Australia's number one position in leading the world in green technologies, including clean coal, solar power and wind generation. He finally discovered the world of reality at Copenhagen.

Driving the green energy revolution

Profit is the prime motivator in any industry, and the promise of a new financial exchange dealing in carbon credits, the Kyoto Clean Development Mechanism (CDM) incentives and government subsidies, created a rash of investment, opportunism, and optimism.


Germany implemented renewable energy policies with massive wind and solar power generation projects and incentives. Spain, Denmark, the US did likewise with major wind generation projects.

China became the world's fastest renewable energy market, driven mainly by the billions in direct foreign investment due to a poorly regulated CDM.

Like the auto and other industries that relocated to China, the renewable energy industry followed suit, leaving behind vacant factories and unemployed workers, devastating the economies of a number of communities.

Renewable energy corporations from Europe and the US identified massive demand for renewable energy growing in China, only to find that the way into this market was via compulsory technology transfer, and manufacturing within China restricted to joint ventures with mainly state-owned enterprises.

Foreign wind and solar technology fuelled systems began marching across the north west of China, blatantly ignoring the absence of grids, or where access to grids was available, the lack of smart grid technology to accept the wind input.

Balance sheet bottom lines benefitted from the production of cheap renewable energy components and completed items for export back to home markets where they could undercut local competition. Large-scale, stimulus package funded, subsidised projects in Europe, the US and Australia were successful because of the low cost of imported components from China.


The advancement of renewable energy in the developed world received a major boost from the stimulus packages, reliance on government subsidies and the low cost of components made in China.

China's rush to meet demand resulted in a massive manufacturing overcapacity in wind and solar technology.

From early 2009, China began unloading large inventories onto world markets, with claims that these imports into developing countries were below the cost of manufacture. Criticism was subdued, since the cheap renewables made government stimulus incentives "affordable". Australians benefited from China's cheap solar panels and insulation, popularising the Rudd Government's renewable energy subsidy scheme.

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About the Author

Arthur Thomas is retired. He has extensive experience in the old Soviet, the new Russia, China, Central Asia and South East Asia.

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