Biden’s push for green energy pits American jobs against lower costs
By Noam Scheiber
Patricia Fahy, a New York state legislator, celebrated when a new development project for the Port of Albany — the country’s first assembly plant dedicated to building offshore wind towers — was approved in January.
“I was doing cartwheels,” said Fahy, who represents the area.
But she was soon caught in a political bind.
A powerful union informed her that most of the equipment for New York’s big investment in offshore windmills would not be built by American workers but would come from abroad. Yet when Fahy proposed legislation to press developers to use locally made parts, she met opposition from environmentalists and wind industry officials. “They were like, ‘Oh, God, don’t cause us any problems,’” she recalled.
Since President Joe Biden’s election, Democrats have extolled the win-win allure of the transition from fossil fuels, saying it can help avert a climate crisis while putting millions to work. “For too long we’ve failed to use the most important word when it comes to meeting the climate crisis: jobs, jobs, jobs,” Biden told Congress last month.
On Tuesday, his administration gave final approval to the nation’s first large-scale offshore wind project, off Martha’s Vineyard in Massachusetts, again emphasizing the jobs potential.
But there is a tension between the goals of industrial workers and those of environmentalists — groups that Democrats count as politically crucial. The greater the emphasis on domestic manufacturing, the more expensive renewable energy will be, at least initially, and the longer it could take to meet renewable-energy targets.
That tension could become apparent as the White House fleshes out its climate agenda.
“It’s a classic trade-off,” said Anne Reynolds, who heads the Alliance for Clean Energy New York, a coalition of environmental and industry groups. “It would be better if we manufactured more solar panels in the U.S. But other countries invested public money for a decade. That’s why it’s cheaper to build them there.”
There is some data to support the contention that climate goals can create jobs. The consulting firm Wood Mackenzie expects tens of thousands of new jobs per year later this decade just in offshore wind, an industry that barely exists in the United States today.
And labor unions — even those whose members are most threatened by the shift to green energy, like mineworkers — increasingly accept this logic. In recent years, many unions have joined forces with supporters of renewable energy to create groups with names like the BlueGreen Alliance that press for ambitious jobs and climate legislation, in the vein of the $2.3 trillion proposal that Biden is calling the American Jobs Plan.
But much of the supply chain for renewable energy and other clean technologies is in fact abroad. Nearly 70% of the value of a typical solar panel assembled in the United States accrues to firms in China or Chinese firms operating across Southeast Asia, according to a recent report by the Center for Strategic and International Studies and BloombergNEF, an energy research group.
Batteries for electric vehicles, their most valuable component, follow a similar pattern, the report found. And there is virtually no domestic supply chain specifically for offshore wind, an industry that Biden hopes to see grow from roughly a half-dozen turbines in the water today to thousands over the next decade. That supply chain is largely in Europe.
Many proponents of a greener economy say that importing equipment is not a problem but a benefit — and that insisting on domestic production could raise the price of renewable energy and slow the transition from fossil fuels.
But labor groups worry that construction and installation jobs will be low paying and temporary. They say only manufacturing has traditionally offered higher pay and benefits and can sustain a workforce for years.
Partisans of manufacturing also point out that it often leads to jobs in new industries.
Researchers have shown that the migration of consumer electronics to Asia in the 1960s and ’70s helped those countries become hubs for future technologies, like advanced batteries.
As a result, labor leaders are pressing the administration to attach strict conditions to the subsidies it provides for green equipment. “We’re going to be demanding that the domestic content on this stuff has to be really high,” said Thomas M. Conway, the president of the United Steelworkers union and a close Biden ally.
The experience of New York reveals how delicate these debates can be once specific jobs and projects are at stake.
Late last year, the Communications Workers of America began considering ways to revive employment at a General Electric factory that the union represents in Schenectady, New York, near Albany. The factory has shed thousands of employees in recent decades.
Around the same time, the state was close to approving bids for two major offshore wind projects. The eventual winner, a Norwegian developer, Equinor, promised to help bring a wind-tower assembly plant to New York and upgrade a port in Brooklyn.
“All of a sudden I focus on the fact that we’re talking about wind manufacturing,” said Bob Master, the communications workers official who contacted Fahy, the state legislator. “GE makes turbines — there could be a New York supply chain. Let’s give it a try.”
In early February, the union produced a draft of a bill that would ask developers like Equinor to buy their wind equipment from manufacturers in New York state “to the maximum extent feasible” — not just towers but other components, like blades and nacelles, which house the mechanical guts of a turbine. Fahy, a member of the Assembly, and state Sen. Neil Breslin, a fellow Democrat from the Albany area, signed on as sponsors.
Environmentalists and industry officials quickly raised concerns that the measure could discourage developers from coming to the state.
Reynolds, the head of the environmental and industry coalition in New York, worried that going beyond the existing arrangement could make the cost of renewable energy unsustainable.
“If it became bigger and more noticeable on electric bills, the common expectation is that political support for New York’s clean-energy programs would erode,” she said.
The communications workers sought to offer reassurance, not entirely successfully. “I said to them, ‘We’re trade unionists: We ask for everything, the boss offers us nothing, and then we make a deal,’” Master said. “‘But I do think there’s no reason why turbines should be coming from France as opposed to Schenectady.’”
The final language, a compromise negotiated with the state’s building trades council and passed by the Legislature in April, allows the state to award additional points in the bidding process to developers that pledge to create manufacturing jobs in the state, a slight refinement of the current approach. (It also effectively requires that workers who build, operate or maintain wind and solar plants either receive union-scale wages or can benefit from union representation.)
While the law included a “buy American” provision for iron and steel, the state’s energy research and development agency, known as NYSERDA, can waive the requirement.
The agency’s chief executive, Doreen Harris, said she was generally pleased that the existing approach remained intact and predicted that the state would have blade and nacelle factories within a few years.
Some analysts agreed, arguing that most offshore wind equipment is so bulky — often hundreds of feet long — that it becomes impractical to ship across the Atlantic.
“There’s a point at which importation of all goods and services doesn’t make economic sense,” said Jeff Tingley, an expert on the offshore wind supply chain at the consulting firm Xodus.
But that has not always reflected the experience of the United Kingdom, which had installed more offshore wind turbines than any other country by the start of this year but had manufactured only a small portion of the equipment.
All of which leaves the Biden administration with a difficult choice: If it genuinely wants to shift manufacturing to the United States, doing so could require some aggressive prodding. A senior White House official said the administration was exploring ways of requiring that a portion of wind and solar equipment be American-made when federal money was involved.
But some current and former Democratic economic officials are skeptical of the idea, as are clean-energy advocates.
“I worry about local content requirements for offshore wind from the federal government right now,” said Kathleen Theoharides, the Massachusetts secretary of energy and environmental affairs. “I don’t think adding anything that could potentially raise the cost of clean energy to the ratepayer is necessarily the right strategy.”