Renewable energy economics meets trade protectionism in a fantastic applied example for your Year 13 macroeconomics!

Siemens Gamesa’s chief executive Jochen Eickhol is reported in the Financial Times calling for the introduction of import quotas on cheaper Chinese-manufactured wind turbines.

The EU turbine industry is making heavy losses amplified by increases in the world price of steel and copper which is raising the variable costs of supplying new turbines.

Eickhol argues that turbines should be considered as critical and strategically important infrastructure, with trade barriers introduced to support the industry and reduce dependence on Chinese supplies.

How strong is the claim? Is there a long run economic justification for this type of import protectionism?

Siemens is an iconic German manufacturing business heavily invested in building equipment across many industries not least in the renewable sector.

An import quota would restrict the volume of Chinese-made wind turbines that would be allowed into the European Union single market each year.

The main aim is to encourage import substitution - to give support to European suppliers. The trade diversion effects mean that renewable energy suppliers would probably have to pay more for the turbines.