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US faces new challenge in critical market

China represents the second biggest market for US renewable energy exports, trailing only Canada, but it is a market with "considerable barriers", according to a US Commerce Department agency report.

Despite the growth of China's renewable energy market, it can be a difficult one for US exporters to enter because of the marketplace's complexity and US-based firms' general lack of market share, the report said.

The renewable energy market in China "presents unprecedented opportunities for US exporters" although it remains a "frustrating market with considerable barriers", according to the 2014 Renewable Energy Top Markets Report released Tuesday by Commerce's International Trade Administration (ITA), an agency that promotes US exports of nonagricultural US services and goods.

Chia earned the No 2 ranking on ITA's list of top renewable energy export markets through 2015 despite "several ongoing competitiveness challenges, including insufficient property rights enforcement and a strong predilection to purchase technology at the lowest possible cost regardless of quality," the report said.

Trailing China were Brazil, Chile and Mexico. The UK was ranked sixth, while India was 15th and Japan 17th.

While some US exporters can find "enormous success in China, others are confronted with extensive barriers and disappointment", the report said.

As both the top supplier of and market for renewable energy technology, China will install more wind, solar and hydropower capacity than any other country over the next two decades, according to the report, making it a critical market for US exporters "well into the future".

China's leadership made encouraging renewable energy generation a priority in the 12th Five-Year Plan announced in 2010. The plan created a number of ambitious targets, including 100 gigawatts (GW) of grid-connected wind capacity and 21 GW of solar capacity by 2015.

In early 2013, the solar capacity target was revised upward to 35 GW to boost domestic adoption and aid China's solar industry. The plan also called for 420 GW of hydropower and 200 GW of wind, 50 GW of solar and 30 GW of biomass (wood, plants and other living organisms) and waste-to-energy by 2020 - some of the highest targets in the world.

China's National Energy Administration reaffirmed those targets last year, announcing that China was on pace to meet or exceed each mandate.

Despite the growth expected in China's renewable energy market, US exporters face challenges that limit competitiveness, according to the report.

China is still recovering from oversupply in its wind and solar markets created by the size of its domestic manufacturing base. It has moved forcefully to promote domestic consumption, the report said.

The US and China have been engaged in a trade war over solar power components. Last month, the US moved toward potentially extending import duties on Chinese solar energy products to also cover panels made with parts from Taiwan in a case that could have a major impact on the fast-growing US solar market.

"As China shifts its focus to small and medium-sized wind farms, increased technical and safety standards, and newer technologies, the demand for innovative products and technical components may provide new opportunities for US companies," the report said. 

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