ITIF Report Warns Global Energy Innovation Undermined By Unfair Trade Practices
WASHINGTON - Unfair and often illegal trade practices not only hurt the U.S. clean energy economy but also significantly slow the transition to a global low-carbon economy, according to a report released today by the Information Technology and Innovation Foundation.
Green Mercantilism: Threat to the Clean Energy Economy, is a first-ever catalogue of how many nations, including China, are manipulating the global trading system to gain unfair economic advantage in the competition for what could be a $2.2 trillion market for clean energy.
"We all know the U.S. clean energy industry has been hurt by unfair trade practices," said Matthew Stepp, ITIF Senior Policy Analyst, the report's chief author. "But what is less understood is how these practices are stifling the clean energy innovation needed so badly to stem climate change. If "green mercantilism" dominates clean energy policy, we will have less innovation and relatively more greenhouse gas emissions."
"Green mercantilism" is a major departure from rules-based trade. Countries use an array of mercantilist practices to boost exports and limit imports, including IP theft, forced technology transfer, export subsidies, discriminatory standards, tariffs and preferential treatment of domestic firms.
These practices hurt, not help, clean energy innovation, which is needed because non-fossil fuel alternatives will not be commercially viable without major breakthroughs that lower costs and increase performance. According to the report, "green mercantilism" impedes progress toward such breakthroughs as innovators are undermined by foreign competitors propped up by government policy and face mounting disincentives to invest in RD&D. Among the many examples of "green mercantilism" in the report are the following:
- South Korea requires all solar panels to be certified before being sold, yet its standard effectively excludes thin-film solar PV designs largely exported by the United States, shutting those products out of the market.
- China has made forced technology transfer from foreign firms a central policy in its "New Energy Vehicles" strategy to create a domestic electric vehicle industry.
- Ukraine, Italy, India and Brazil all utilize domestic content requirements to provide preferential treatment to domestic firms and discriminate against foreign competitors.
The report calls for both the United States and other free-trade oriented nations to aggressively work to roll back "green mercantilism" while also working to negotiate a global Clean Technology Agreement to eliminate tariffs and create a new global climate treaty so nations meet their commitments by expanding investment in clean energy R&D.