EU not ready for formal probe into China’s wind industry

BRUSSELS: The European Union still lacks “very clear evidence” of unfair practices to launch a formal probe into China’s wind power industry that has become a cut-price competitor to Europe’s, an EU official said.

In a leaked wind energy proposal last week, the Commission said it would scrutinise foreign subsidies as part of a broader action plan to support its struggling wind industry that is fast losing its leadership position.

The EU official said China feared the EU would immediately look at punitive measures on its wind and hydrogen electrolyser industries after the surprise probe on its automakers.

“The announcement of the investigation on the EVs (electric vehicles) was a bit of a shock because it was announced in such a political speech and a change of tune from traditional openness.

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China interpreted it as a foregone conclusion that they were already taking measures,“ the official said.

EU President Ursula von der Leyen announced an investigation last month into whether to set punitive tariffs on cheaper Chinese electric vehicles that are seen as “flooding” the bloc’s market. As for wind, the EU official said that “at this stage” the Commission lacked sufficient basis to go further.

“You need to have very clear evidence that there is an unfair practice… (the Commission) have received reports and indications that leave you with some doubts, particularly about the financial conditions - deferred payments, you pay only when you produce electricity, etc.,” the official said. “None of the giant European producers would be able to afford not paying for their project for 5-6 years until its producing electricity.

These make you wonder but these are not substantiated evidence that there is a trade violation.“

The EU has seen its star renewable energy industry - wind - take a hit since 2021 in part due to inflation but also sudden and strong global competition particularly from China.

While US President Joe Biden’s Inflation Reduction Act sent shockwaves through the EU last year, the EU official said Asian competition with its “lack of transparency and subsidies” was now seen as a bigger risk to its clean energy industry.

Europe’s main turbine makers all posted operating losses in 2022, putting the EU’s renewable targets and energy security at risk. Final investment decisions on offshore wind farms sank last year.

“The spirit of this package is not something the Commission does very often,” the official added. “We have one of our jewels is at risk. We need to do everything in our power to make sure this story stays a European story.”