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The cold war in clean energy

The Obama administration challenged China's support of its solar, wind, battery, and electric-car industries. Such disputes can be avoided with clear global rules on government aid to these necessary energy technologies.

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Last week the United States blew a cold wind into a once-friendly contest among a few nations to dominate global markets in renewable energy. It decided to probe China’s benefits for its electric-car, battery, solar, and wind industries – with the implied threat of trade sanctions.

This US challenge to China runs counter to their recent cooperation on clean-energy research and to the mutual trade and investment in renewables by American and Chinese companies. That explains why Beijing erupted in surprise and anger to the Obama administration’s move. It accused the US of also subsidizing its own budding clean-energy industries and President Obama of simply playing for union votes before November’s election.

The dispute underscores the need for clear global rules on how governments can boost these industries while also not discriminating against foreign competitors – mainly to make sure that all nations can help wean consumers and businesses off fossil fuels.

This won’t be easy. Current procedures of the World Trade Organization may not be adequate to resolve disputes over what is a subsidy, a trade barrier, or an otherwise unfair advantage. Also, these new industries may not be able to live with the uncertainty and the time it takes for WTO decisions. Pressures are strong on each country to favor their clean-energy industries and create jobs in this new market.

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