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It Should Be A Breeze

Harnessing the Potential of Open Trade and Investment Flows in the Wind Energy Industry

This working paper maps out the structure and value chains of the wind power industry, analyzes its increasing globalization via cross-border trade and investment flows, and formulates recommendations for policymakers for the design of investment and trade policies to help realize wind energy's potential.

Key Findings

Executive Summary

The political debate concerning climate change and global trade and investment flows has increasingly taken on a defensive posture in the United States and other developed countries. The spotlight has been on the competitiveness of energy-intensive industries and potential border adjustment mechanisms to prevent carbon leakage, as well as on the need to grow and protect industries that will gain from a low-carbon future and create millions of new “green jobs” at home.

This paper analyzes the global wind power industry in light of the latter debate and shows that global integration—broadly defined as increasing cross-border trade and investment flows —can make a strong positive contribution in the form of green technology cost reductions and innovation while still creating predominantly local jobs. As such, national trade and investment policies that promote increased global integration of the wind industry are a powerful ally in the fight against climate change.

Our analysis starts with a brief summary of current and future global demand for wind turbines and the role of government support in this demand picture. Next, we show how the wind energy sector is developing into a truly global industry characterized by high levels of growth and competition and how this process is increasingly driven by cross-border investment rather than trade. Then we map out the globalization potential of different components in the value chain and analyze existing barriers to further global integration. Finally, we discuss the distributional consequences of greater globalization and especially the outlook for green job creation along the wind value chain, before we conclude with a set of policy recommendations.

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