Should the U.S. subsidize green investments that create jobs overseas?

The “Chinese” West Texas wind farm kicked off the debate about whether the stimulus is subsidizing green jobs overseas. At least initially, the project’s Dallas- and Austin-based developers and investors said the wind turbines would come from China , while Chinese banks would finance the project. The project’s owners would receive about $450 million if they pursue a stimulus grant available to them.

Now, two advocacy groups have issued a report (pdf) that says theTreasury Department has rewarded other companies that appear to make most of their clean-energy goods overseas. Treasury awarded tax credits to 17 foreign-based companies “with operations in low-wage countries,” the report says. Their share of the $1.6 billion in tax credits amounts to $406 million. The report also says that 6 U.S.-based firms that benefited from the stimulus program have made “significant new expansions of clean-energy manufacturing operations in low-wage countries.”

It should be noted that one of the authors, the Apollo Alliance , includes labor backing. The other author, Good Jobs First, has frequently criticized government-funded incentives for business.

Still, its conclusion is provocative, and seems credible: it appears that some of the companies that have won tax credits appear to be “putting their primary emphasis” on expanding production overseas. The authors cite filings by firms such as Advanced Energy Industries of Colorado , which says the majority of its manufacturing is done in Shenzen, China. First Solar, another beneficiary of stimulus tax credits, operates a Malaysian plant that is 10 times the size of its Ohio facility, the report says.

That was nails-on-a-chalkboard to Sen. Charles Schumer, who has criticized the West Texas wind farm and wants the Treasury Department to suspend the program. Schumer said the report shows “there can be no more disputing that this program is giving a leg up to overseas manufacturers at the expense of jobs here at home.”

Energy Secretary Steven Chu has told lawmakers the situation is more complex. Chu says renewable-energy companies developed first in European and Asian countries that offered them stable, valuable incentives. He says the stimulus incentives have spurred foreign manufacturers to set up shop in the U.S., and that suspending the program as Schumer wants would be counterproductive.

The Apollo Alliance’s report says Chu’s view is possibly true, but offers another possibility as well: “While the 48C credits are likely leading these companies to pay more attention to U.S. production, it is also possible that their U.S. manufacturing activities are little more than fig leaves meant to hide the fact that they are mainly relying on offshore, low-wage activities.”