European Union (EU) is facing a conundrum regarding whether to launch a formal investigation into China's wind power industry. Despite mounting concerns about China's cut-price competitiveness in the European wind energy sector, an EU official has stated that the EU still lacks “very clear evidence” of unfair practices to initiate a formal probe.
This uncertainty comes in the wake of a leaked wind energy proposal from the European Commission, which outlined plans to examine foreign subsidies as part of a broader strategy aimed at supporting the EU's struggling wind industry. Europe's once-dominant position in the global wind energy market has been under threat in recent years.
The EU official explained that China's apprehensions about the potential probe are rooted in the EU's recent surprise investigation into Chinese automakers, which raised concerns in Beijing. “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. China interpreted it as a foregone conclusion that they were already taking measures,” the official remarked.
In a related move, EU President Ursula von der Leyen had previously announced an investigation into the possibility of imposing punitive tariffs on low-cost Chinese electric vehicles that have flooded the EU market. However, when it comes to the wind sector, the EU official indicated that, “at this stage,” the European Commission lacks sufficient evidence to proceed with a formal probe.
The official emphasized the necessity of having “very clear evidence” of unfair practices before launching an investigation. While reports and indications have raised doubts, particularly regarding financial conditions such as deferred payments and payment upon electricity production, they do not constitute substantiated evidence of trade violations.
The EU's wind energy industry has faced challenges since 2021, partly due to inflation and intensified global competition, particularly from China. The official noted that competition from Asia, characterized by a “lack of transparency and subsidies,” is now perceived as a more significant threat to the EU's clean energy sector than inflation.
In 2022, Europe's major turbine manufacturers reported operating losses, posing a risk to the EU's renewable energy targets and energy security. Moreover, investment decisions in offshore wind farms declined sharply last year.
In conclusion, the EU is grappling with the decision of whether to launch a formal investigation into China's wind power industry. While concerns persist about China's competitive practices, the EU emphasizes the need for clear evidence of unfair practices before taking further action. This issue is of paramount importance to the EU, as it seeks to safeguard its position in the global wind energy market and ensure the success of its renewable energy initiatives.
