Comment: Think international

Go green, go local. That's a message used regularly by lobby groups, political parties and businesses.

But are the two goals - being environmentally friendly and being locally based or sourced - inevitably intertwined? Not always. In some cases, in fact, forcing the clean and green to be local can be counterproductive. Wind energy is one such area.

In the US, President Barack Obama's cash grants for renewables development have helped fund new clean energy deployment, the majority of which is wind. Yet there is disquiet. Most of the companies that have benefited from the US government's grants are not from the US, but from Europe (see page 34). There are murmurings of a growing public perception that public money intended to help re-inflate the battered US economy with home-grown green jobs is slipping over the Atlantic and into the Old World. Yet good policy-making ought not to be about perception, but about economic reality.

Although many of the companies investing in the US wind sector have their headquarters in Europe, their decision to invest in the world's biggest economy and biggest wind market is likely to help the US. Half of the turbines used by investors benefiting from the cash grants are US machines. And major investors point out that their moves into the US are usually run from US hubs, often in run-down areas desperate for high-value jobs. The capital may be foreign, but the resulting boost to infrastructure and supply chains helps at home. In a globalised world, the address on a company's letterhead matters less than the area in which it spends its cash and employs its workers. The US wind grants experience is a good case study, but the lesson that global investment helps locally applies across the world.

Yet even when governments accept that outside investors can help stimulate their economy, they sometimes seek to regulate to ensure the intended results. In some markets, there is now a tendency to insist on "local content" to a wind investment, be it demands that projects employ a certain percentage of local people or that a set proportion of turbine parts are manufactured within state, provincial or national boundaries.

Such an approach is understandable - electorates are often uncomfortable with public incentives they do not see as helping the domestic labour force (see Companies vie for Ontario market, page 40). Yet such policies risk having the opposite effect to that intended, by making local regulations so daunting for potential wind investors that they are scared off and put their cash elsewhere.

At least for now, the ramping up of local content demands on inward investment is more real a challenge for the global wind sector than the prospect of major economies shunning all foreign investors. In the US, there are no immediate plans to insist that grants and other incentives go only to US companies. Yet, for all the good he may have done helping the renewables industry so far, Obama has a protectionist streak. He made "buy American" noises during his election campaign. It is not unthinkable that, faced with the harsh realities of governing in tough times, he may choose to follow an insular path.

One likely result of both macroeconomic protectionism and local economic content regulations is that, even if investors can be persuaded to come, the overall cost of wind rises, putting the sector at a competitive disadvantage to its rivals in conventional energy. How such an outcome suits the needs of the clean energy sector - and the needs of governments keen to reduce carbon emissions - is hard to see.

The right role for government

This is not to make a wholesale attack on government intervention, nor a call for an unbridled global free market for energy. Governments can have a major part to play in helping wind become a major force, just as they did when the old, often nationalised, fossil fuel generators set up shop all those decades ago. Indeed, some countries that chose a more laissez-faire approach to the energy sector, such as the UK, are discovering they may need to take a firmer hand on energy policy to ensure they achieve renewables deployment that is sufficient to help them meet their emissions reduction ambitions (see page 25).

Governments have a role to play as facilitators - by creating a market for wind through setting aggressive carbon targets. In some cases they may need to go further, offering financial incentives for renewables to help rejuvenate broken economies with the clean power of the future. And they have a role as organisers, bringing the key business leaders from all parts of actual or potential supply chains together and helping to create a unified, dynamic sector out of a sometimes fragmented, often hesitant morass. It is rarely necessary, or even possible, for major economies to do these things multilaterally. Indeed, heavy hitters such as the US have a major role to play in setting a good example at key events such as Copenhagen COP 15 (see page 57). In that regard, acting locally, or at least nationally, can help bring global change.

But governments should avoid both local content stipulations and macroeconomic protectionism. Neither are likely to help their economies or carbon reduction ambitions in the long term. In fact, they are likely to damage them. It is strange that the words green and local have come to be connected. In energy, the message should be different: Go green, go global.