China to halt wind energy subsidies

"It is understandable that the Chinese government is ending subsidies to an industry that is strong enough to compete with international players," said Shi Pengfei, vice-president of the China Wind Energy Association.

China established a subsidy of 600 yuan ($92.55) a kilowatt (kW) for domestic wind turbines manufacturers to foster the industry during its infancy.

USA Today reported on Monday that China has agreed to stop subsidies to wind power companies that use domestic components instead of imports under its "indigenous innovation" program, citing US Trade Representative Ron Kirk.

The grants ranged from $6 million to $22 million, according to the report. The outcome is considered "significant" and a "victory" in the US because it helps "ensure fairness for American clean technology companies and workers", the report quoted Kirk.

However, Chinese companies said the value of the grants is small when it comes to each maker’s portion and the subsidy’s end is unlikely to make a big splash.

China has more than 80 wind turbine makers whose production has contributed to the country’s rapid growth in the wind power sector. Its total capacity reached 44.7 gigawatts in 2010, overtaking the United States to become the country with the greatest wind energy capacity.

The Obama administration has identified green sectors such as wind power as a promising source of job creation. China is considered the biggest competitor of the US in energy innovation.

Domestic players, such as Sinovel Wind Group Co and Xinjiang Goldwind Science and Technology Co Ltd, said they have a global supply chain and buy from the most suitable suppliers, not just domestic ones.

"We already purchase components globally," said Yao Yu, director of public affairs for Goldwind, adding that the company bought blades from Denmark’s LM Wind Power. Goldwind has sold 200 wind turbines abroad, 80 of them to the US market, according to Yao.

Last year, it established a US unit in Chicago but put off the plan to set up a factory there partly because the US market slowed down in 2010.

"The cancellation of the subsidies should not be interpreted as a shift in the policy to support the green industry," said Zou Ji, China director of the World Resources Institute, a global environmental think tank.

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