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China is doubling down on solar power production, making the West’s chances of catching up even slimmer. China has been outspending the rest of the world in clean energy deployment for years now, out-investing other economic superpowers by a factor of four. Not only is the window closing for the United States and Europe to produce solar energy competitively in China, the West is increasingly dependent on imports of Chinese clean energy components and raw materials for their own renewable energy expansion strategies.
In 2023 China spent more than four times what the U.S. spent and three times what the entire European Union spent on renewables. As a result, Beijing installed more solar panels in a single year than the United States has in its entire history. At the same time, Chinese exports of whole solar panels shot up by 38% while exports of solar panel components increased nearly two-fold.
This is great news for China’s decarbonization trajectory, which in turn means it’s great news for progress toward decarbonization on a global level, as China is the biggest greenhouse gas emitter on the planet. But it’s very, very bad news for renewable energy industries in the West and for energy security worldwide as more and more of global clean energy supply chains are controlled wholly or in large part by Beijing.
China already controls near-monopolies on a vast number of key renewable energy supply chains and nodes. The economic giant produces a whopping 80% of the world’s solar panels, 60% of its electric vehicles, and more than 80% of its electric vehicle batteries. China also produces 60% and processes almost 90% of the world’s rare earth minerals. Rare earths such as lithium and cobalt are essential components for clean energy manufacturing and infrastructure, including (but certainly not limited to) electric vehicle batteries, photovoltaic solar panels, and lithium-ion batteries used for renewable energy storage.
And that dominance is only going to grow and intensify in the coming months and years as China’s juggernaut performance in 2023 hits the market in full force while Beijing also doubles down on manufacturing and production in 2024. In fact, Chinese officials announced last week in the annual national legislature session that the country plans to accelerate construction of massive solar farms alongside major wind and hydroelectric projects.
The announcement comes as part of a new chapter in China’s economy. China has already built pretty much as much infrastructure as its own economy can possibly absorb, and as a result the economy is slowing down. The property bubble is bursting on a national level, and unemployment rates are punishing, and set to soar. With a record 11.79 million students expected to graduate from university this year in China, an already massive pool of job-seekers will face punishing levels of competition for an insufficient number of employment opportunities.
In response to this critical economic contraction, China has laid out a well defined strategy that leans heavily on emerging technologies, and in particular what Beijing’s leaders are calling a “new trio” of industries — solar panels, electric cars and lithium batteries. This forward-facing “new trio” is intended to replace the “old trio” of Chinese manufacturing and exports – clothing, furniture and appliances.
Global leaders find this doubling down on manufacturing in China’s new economic era extremely concerning. In free-market and free-trade focused regions such as the United States and Europe, production comes as a direct response to demand. This is not the way things work in China, which frequently produces for the sake of production, and now risks seriously flooding the global market with a glut of a vast number of “new trio” products, with potentially harsh consequences for the global economy. “China Is Making Too Much Stuff—and Other Countries Are Worried,” blared a recent Wall Street Journal headline.
More specifically, the concern is that China, faced with far more solar panels, electric cars, and batteries than their own economy can possibly absorb, Beijing will dump the products onto the global market at steep discounts. In the worst-case scenario, the result of this predatory pricing (an illegal activity forbidden by the World Trade Organization) would be that no other producer could possibly compete, causing the failure of non-Chinese firms and leaving China with an all-out monopoly. This would leave the global energy supply extremely vulnerable, and give Beijing an unfathomable amount of leverage over its allies and adversaries alike.
Even if free trade and antitrust mechanisms work as they should and prevent this kind of catastrophic takeover, the partial takeover that China has already begun is cause enough for major concern at the global level. Already, the United States and Europe are dependent on China for their own nascent clean energy industries. So far, the response in the United States has been to employ protectionist policies via the Inflation Reduction Act, while leaders in Europe are currently agonizing over whether to follow suit. Whatever the political and economic reaction will ultimately be, however, it seems it will almost certainly be too little, too late.
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The post China’s Solar Power Dominance Threatens Western Clean Energy Dreams appeared first on Energy News Beat.
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