EU Probes Foreign Subsidies For Chinese Wind Turbines

EU Probes Foreign Subsidies For Chinese Wind Turbines

After the US, now European Union (EU) Commission recently announced the launch of an inquiry into Chinese suppliers of wind turbines under the new Foreign Subsidies Regulation. This announcement came as Chinese wind turbine manufacturers pushed hard and won some orders in Europe. They offered cheap turbines and generous finance which distorts the integrity of the European market and disrupts fair competition.

Earlier, the US Department of Commerce issued an advance notice of proposed rulemaking (ANPRM). It informs of the potential development of regulations to secure and safeguard the information and communications technology and services (ICTS) supply chain for connected vehicles (CVs).

In pursuit to increase its wind energy capacity from 220 GW in the EU and add to the currently achieved capacity of 425 GW by 2030 and 1,300 GW by 2050. Nearly all the wind turbines built in Europe are European – produced by European manufacturers and assembled in Europe. But there is a risk that the expansion of wind the EU wants to be made in China, not in Europe.

Europe wanted to strengthen its energy security and maintain its technology leadership in strategic clean tech sectors such as wind energy. Last year the EU adopted its Wind Power Package to strengthen Europe’s wind industry. Since then, the EU has closely monitored possible unfair trade practices which benefit foreign manufacturers.

The commission’s Executive Vice-President for competition Margarethe Vestager announced that the EU plans to use its new ‘Foreign Subsidies Regulation’ to launch an inquiry into Chinese wind turbine manufacturers. The EU also initially investigated unfair trade practices in 5 markets: Bulgaria, France, Greece, Romania, and Spain.

Announcing the new inquiry Commissioner Vestager said that the large excess capacities of subsidized Chinese wind turbines “is not only dangerous for our competitiveness. It also jeopardized our economic security.” She added that the EU must not repeat the mistakes it did in losing its solar manufacturing industry. The EU needs to defend the integrity of the European market, ensure fair competition, and create a level playing field between European and Chinese turbine manufacturers.

“We fully understand the Commission’s rationale,” said WindEurope CEO Giles Dickson. “Chinese wind turbine manufacturers are offering much lower prices than European manufacturers and incredibly generous financing terms with up to 3 years deferred payment. You can’t do that without unfair public subsidy. What’s more the European manufacturers aren’t allowed to offer deferred payment like that under OECD rules.”

Chinese wind turbines are being offered in Europe at up to 50% lower prices than Europe-made turbines. The deferred payments effectively mean that Chinese manufacturers offer their turbines for free until the wind farm operator has 3 years of revenue.