February 23, 2024

Europe and China Trade Talks End Bitterly

The European Union accuses Chinese firms of selling solar panels below cost in Europe, a practice known as dumping, and has already proposed antidumping tariffs of nearly 50 percent on Chinese solar panel shipments. That is one of the largest categories of Chinese exports to Europe and worth about $27 billion a year.

But Germany’s economy minister said that his country had informed the European Commission, which is the executive branch of the European Union, that it opposed proceeding with the solar panel tariffs. If a majority of the European Union’s 27-member states oppose tariffs during the current consultation period, then the commission could be forced to abandon the tariffs. But that could risk undermining the commission’s long-term ability to negotiate trade deals on behalf of the bloc.

Zhong Shao, China’s vice minister of commerce and chief international trade representative, denounced the European Commission for not reaching a deal at the talks, which were held in Brussels.

The commission’s plan to impose tariffs on Chinese solar panels starting on June 6, together with the commission’s preparations to begin a similar trade case against Chinese exports of wireless communications gear, “would seriously hurt the Chinese industries and workers concerned and seriously sour the climate on bilateral trade and economic engagement,” he said in a statement.

He added, “Such practices of trade protectionism are not acceptable to China,” and asked that the European Union to delay the tariffs.

European officials have said repeatedly that they face statutory deadlines for actions in trade cases and have little or no discretion to delay action.

The commission has been discussing the tariffs with member governments; Germany, with large exports to China that could be vulnerable to retaliation by Beijing in any broader trade conflict, has been particularly vocal in calling for a negotiated deal.

Karel De Gucht, the European Union’s trade commissioner, issued an unusually blunt complaint late Monday that China was bypassing the European Union’s leaders by going to member governments. Mr. De Gucht, “also made it very clear to the vice minister that he was aware of the pressure being exerted by China on a number of E.U. member states,” said John Clancy, Mr. De Gucht’s spokesman.

Mr. Clancy added, “It is the role of the European Commission to remain independent, to resist any external pressure and to see the ‘big picture’ for the benefit of Europe, its companies and workers based upon the evidence alone.”

The United States has already imposed antidumping and antisubsidy tariffs totaling about 30 percent on Chinese solar panels. The Obama administration has recently decided to seek its own negotiated settlement with China to replace the tariffs. Such a settlement could take the form of setting high minimum prices for Chinese exports to the United States, a ceiling on the volume of exports, or both.

While Washington, Brussels and Beijing are all saying now they want a negotiated settlement, Chinese solar companies and their many local government patrons are divided on what a settlement should look like.

James Kanter contributed reporting from Brussels.

Article source: http://www.nytimes.com/2013/05/28/business/global/europe-and-china-trade-talks-end-bitterly.html?partner=rss&emc=rss

DealBook: Vinod Khosla Keeps Long-Term Bet on Clean Technology

Vinod Khosla, founder of Khosla Ventures.Stephen Lam/ReutersThe venture capitalist Vinod Khosla at the TechCrunch Disrupt conference in San Francisco in September.

Vinod Khosla crowed about the clean energy industry last year. Three of the biofuel start-ups in his venture capital portfolio had just gone public, and the stocks had risen considerably after their debuts. “I challenge anybody to claim that clean tech done right is a disaster,” Mr. Khosla said at a conference, rebuffing recent criticism. “We’ve generated more profits there than anybody has.”

Since then, Mr. Khosla, the founder of Khosla Ventures, has watched much of those paper gains evaporate. As the clean energy industry broadly has taken a hit, shares of the biofuel companies — Amyris, Gevo and KiOR — have slumped 70 percent to 90 percent from their peaks. His stakes, once worth as much as $1.3 billion, are now valued at roughly $378 million.

The billionaire investor has been caught in the cyclical downdraft.

The public stocks of solar, wind and biofuel companies are suffering amid industrywide pressures. The price of natural gas remains low. Europe has pulled back on incentives. American subsidies are in question after the bankruptcy of the solar panel maker Solyndra. And China is providing formidable low-cost competition.

“The whole clean tech sector has been out of favor,” said Pavel Molchanov, an analyst at Raymond James Associates, a brokerage firm. “I’d be hard pressed to name one trading above its I.P.O. price.”

Despite the crosscurrents, Mr. Khosla seems unwavering in his commitment. He is pouring money into start-ups. Khosla Ventures recently invested more in LightSail Energy, a three-year-old start-up working to develop low-cost energy storage. He is also sticking with his public companies. His firm, for example, still owns 54 percent of KiOR.

“He’s a visionary who likes to make big bets on ideas that can really change the world,” said Andy Bechtolsheim, who co-founded Sun Microsystems with Mr. Khosla 30 years ago and shares a house with him at Big Sur on the California coast. “I would think he’s made a larger personal bet on green tech than anybody else.”

While the public markets are raising short-term doubts, the long-term investment thinking remains unchanged. Governments around the globe are pushing to find alternative sources of energy in an effort to reduce their dependence on fossil fuels that may hurt the environment. In a television interview in 2007, Mr. Khosla said “mainstream solutions” could replace up to 80 percent of oil-based power. Without them, he said, “this planet is history the way we know it today.” After Hurricane Sandy, the subject of global warming — and changing climate conditions — has again come to the forefront.

In a recent blog post on the Forbes Web site, Mr. Khosla acknowledged the shift in market sentiment. “Clean tech went through a time when it was in vogue and now it is not,” he wrote. “The financing environment for clean tech companies is tough today,” he added. But he said he still expected “to do better than industry averages by keeping our losing companies to a minority.”

Since founding his venture capital firm in 2004, Mr. Khosla has become one of the most vocal advocates for clean tech innovation, buying stakes in about 60 industry start-ups. Ausra, a solar thermal start-up that had drawn $130 million in venture backing, was sold in 2010 to the French nuclear plant builder Areva for about $250 million, according to one industry estimate. And SeaMicro, a low-power server maker, was bought this year by Advanced Micro Devices for $334 million, more than five times the amount invested by its venture backers, according to a SeaMicro co-founder, Andrew Feldman.

It’s unclear how the broader clean tech portfolio has performed at Khosla Ventures. Mr. Khosla declined to disclose the firm’s returns or to comment for the article.

But one of his funds, which raised $1 billion to invest in clean tech and other start-ups, shows gain of 30 percent since its inception in 2009, according to filings by the California Public Employees’ Retirement System, the largest state pension fund. In his Forbes blog post, Mr. Khosla said a recent fund, which raised $1.05 billion in October 2011, was oversubscribed, and his firm’s broader performance since 2006 had “well exceeded typical venture funds.” In that period, venture funds over all have returned 7.25 percent annually after fees, according to industry data.

Mr. Khosla’s commitment is an outgrowth of his three decades at the cutting edge of technology.

A native of India, Mr. Khosla, 57, earned a master’s degree in biomedical engineering from Carnegie Mellon and an M.B.A. from Stanford in 1980. After starting the design automation company Daisy Systems in 1982, he co-founded Sun Microsystems, then a growing technology company.

At Sun, he supplied drive and vision. But Mr. Khosla, who is known for his blunt talk and intense manner, was replaced as chief executive two years later and left the company shortly thereafter.

In 1986, he joined the venture capital firm Kleiner Perkins Caufield Byers. Over the next two decades, Mr. Khosla scored sizable returns betting on the growth of fiber optic networks. Two companies, Cerent and Siara Systems, were sold for a combined $15 billion-plus at the height of the late-1990s dot-com bubble.

Mr. Khosla was looking into alternative fuel technologies at Kleiner Perkins when a business plan for an ethanol start-up crossed his desk in 2003. The plan “sat on a corner of my desk for nearly 18 months while I read everything I could about petroleum and its alternatives,” he wrote in an article for Wired magazine in 2006.

When he branched out on his own in 2004, Mr. Khosla invested millions in the ethanol start-up, Celunol. He soon established himself as a top venture capitalist in clean tech, attracting prominent outside investors like Microsoft’s founder, Bill Gates. Former Prime Minister Tony Blair of Britain joined the firm as a senior adviser.

Over the years, Mr. Khosla has experienced his share of blowups.

In September 2011, Khosla-backed Range Fuels, a wood-chips-to-ethanol company, went bankrupt after receiving a $44 million grant from the Department of Energy and $33 million under a Department of Agriculture loan guarantee. When The Wall Street Journal editorial page criticized Range Fuels as an “exercise in corporate welfare,” Mr. Khosla lashed back, saying the authors inhabited an “ivory tower” that was “full of people who don’t understand technology.”

Sometimes, Mr. Khosla’s companies had to pivot from their original plans and focus on new markets. For example, Calera was founded in 2007 with plans to use power plant exhaust to make cement. Mr. Khosla called its technology “game changing” in 2008.

But the company encountered some setbacks. It postponed plans for commercial-scale production in 2010 pending further research and later cut its 145-employee work force by two-thirds. Since then, Calera has broadened its focus, developing other products like fillers for paper and plastics.

Like many venture capital investors, Mr. Khosla will risk a few strikeouts for the chance to hit home runs. “My willingness to fail is what gives me the ability to succeed,” the investor has said frequently.

The odds can be especially brutal in clean technology. The projects are often capital-intensive — like $200 million or more for a biofuels plant — and they can take years to pay out, said Sam Shelton, a research engineer at Georgia Institute of Technology. By comparison, social media start-ups often require little upfront money and few employees. “The economics are totally different,” Mr. Shelton said.

In part, Mr. Khosla aims to take stakes when the companies are still getting off the ground, rather than waiting until they’re more mature and more expensive. He first bought a stake in KiOR, which aims to convert wood chips to gas and diesel fuel, in 2007. The company is now completing the first of five planned plants in Mississippi with the help of a $75 million interest-free loan from the state.

Mr. Khosla is “always thinking at a very high level about the potential of an idea,” KiOR’s chief executive, Fred Cannon, said. “He has a very good feel for when to step on the gas.”

After jumping in early, Mr. Khosla appears willing to ride out the swings, in both directions. Over the years, public filings indicate he has plowed roughly $80 million into KiOR, amassing a 54 percent stake in the company. Although the stock is off its peak levels and I.P.O. investors are still underwater, his holdings are worth $356 million — a threefold gain.

This post has been revised to reflect the following correction:

Correction: November 30, 2012

An earlier version of this article mischaracterized Mr. Khosla’s return on his investment in KiOR. He invested roughly $80 million and his holdings are worth $356 million — a threefold gain, not a fourfold gain.

Article source: http://dealbook.nytimes.com/2012/11/29/despite-setbacks-investor-is-bullish-on-clean-technology/?partner=rss&emc=rss

G.E. Plans to Build Largest Solar Panel Plant in U.S.

“For the past five years, we’ve been investing extremely heavily in solar,” said Victor Abate, vice president for G.E.’s renewable energy business. “Going to scale is the next move.”

The plant, whose location has not been determined, will employ 400 workers and create 600 related jobs, according to G.E. The factory would annually produce solar panels that would generate 400 megawatts of energy, the company said, and would begin manufacturing thin-film photovoltaic panels made of a material called cadmium telluride in 2013. While less efficient than conventional solar panels, thin-film photovoltaics can be produced at a lower cost and have proven attractive to developers and utilities building large-scale power plants.

G.E. has signed agreements to supply solar panels to generate 100 megawatts of electric power to customers, including a deal for panels generating 60 megawatts with NextEra Energy Resources.

G.E., a manufacturing giant, operates in a range of energy businesses, from nuclear power plants to natural gas turbines. It has been aggressively expanding its energy portfolio, particularly through acquisitions.

Mr. Abate said G.E. had completed its purchase of PrimeStar Solar, the Arvada, Colo., company that made the thin-film photovoltaic panels. G.E. said the Energy Department’s National Renewable Energy Laboratory recently certified that a PrimeStar solar panels manufactured at its factory in Colorado had set a 12.8 percent efficiency record for cadmium telluride technology. Conventional solar panels typically are 16 to 20 percent efficient at converting sunlight into electricity.

“We believe we’ll be a cost leader, a technology leader and we’re excited about our position in a 75-gigawatt solar market over next five years,” said Mr. Abate.

The global conglomerate’s entry into the highly competitive photovoltaic market is likely to prove a significant challenge to First Solar, the thin-film market leader and the dominant manufacturer of cadmium telluride panels.

Also at risk are start-ups like Abound Solar, a Colorado company that in December obtained a $400 million federal loan guarantee to build factories to manufacture cadmium telluride panels.

G.E.’s initial panel manufacturing capacity will be a fraction of the more than 2,300 megawatts of capacity that First Solar, based in Tempe, Ariz., plans to have online by the end of 2011.

But Mr. Abate said that G.E.’s solar effort would parallel the rise of its wind energy business.

“It’s a $6 billion platform and it was a couple of hundred million dollars in ’02,” he said of the company’s wind division. “When you look at G.E., we’re very good at scale. In ’05, we were building 10 turbines a week. By ’08, we were doing 13 a day.”

But as with its wind business, G.E. will face competition from low-cost, government-subsidized Chinese manufacturers.

The United States government has offered a range of subsidies to help American solar panel makers, including loan guarantees for new factories. G.E. said it was not applying for a loan guarantee but was exploring applying for state and federal manufacturing tax credits. 

Prices for conventional silicon-based solar modules have plummeted 50 percent in recent years and are expected to continue to fall, in large part because of the rapid expansion of Chinese manufacturing capacity. That has put particular pressure on thin-film companies to increase the efficiency of their panels and maintain a technological edge.

Mr. Abate said G.E. would focus on improving the 12.8 percent efficiency of its panels as well as lowering costs.

“We see our way to much higher efficiencies than that,” he said. “We probably can cut costs 50 percent over the next several years.”

Article source: http://feeds.nytimes.com/click.phdo?i=b6df25a7c4c5dfdb41c30fbecb0f7274