US, Europe worried about China’s dominance in clean energy technologies

Tongwei now has even bigger ambitions: It is rapidly expanding and upgrading six production facilities and, by the end of this year, aims to produce 130 gigawatts worth of cells annually – set in the United States by 2023. Four times the total solar capacity. ,

China – through such solar companies – will without a doubt be “the main force leading the global energy transition,” said Liu Hanyuan, founder and chairman of Tongwei.

Tongwei explains how China has come to dominate global clean technology markets. China produces 80 percent of the world’s solar panels – compared with 2 percent for the United States – and makes about two-thirds of the world’s electric vehicles, wind turbines and lithium-ion batteries.

This could be good for the Earth, which desperately needs to move away from fossil fuels to slow global warming.

Climate activists hope China’s growing investment in clean technology will soon tip the balance and prevent the country’s carbon dioxide emissions — which are nearly double those of the United States — from rising further. Last year, China installed more solar panels than the rest of the world combined.

But China’s overwhelming dominance has alarmed officials in the United States and Europe, who say they are worried that a flood of cheap Chinese products will undermine their efforts to develop their own renewable energy industries — especially If Chinese companies have what they consider an unfair advantage.

Treasury Secretary Janet L. Yellen, who is expected to soon make her second visit to Beijing in less than a year, said in a speech on Wednesday that she would press China to address “excess capacity” including solar, electric cars and batteries . This “distorts global prices” and “harms American firms and workers.”

Combined, this raises fears of another trade war, which activists say could fuel protectionism against the planet.

Green tech grows as economy slows

China’s transformation into a clean-tech giant was ordered from above. Leader Xi Jinping last month made supporting “essentially green” industries a priority as he tries to prevent the world’s second-largest economy from slowing down.

Clean energy is a bright spot in an otherwise gloomy economic landscape: China’s exports of electric vehicles, lithium-ion batteries and solar products rose 30 percent last year to $146 billion. BYD overtakes Tesla to become the world’s best-selling electric-car maker in 2023.

According to the Center for Research on Energy and Clean Air, a think tank, this helped make the renewable energy industry the largest contributor to the country’s economy, ahead of every other sector.

This change has come about largely due to state support. For more than a decade, Beijing has used measures including subsidies and tax breaks to create dozens of giant conglomerates that dominate sustainable energy industries.

The Tongwei facility visited by The Washington Post is 15 percent owned by two state-owned investment companies in the city of Chengdu. In the first nine months of last year, the company was given a $125 million subsidy by the state, a 240 percent increase from 2022.

This has saturated the domestic market – a good thing, climate activists say, as the world’s biggest polluter transitions to renewable energy – with manufacturers producing electric cars, batteries, solar panels and wind turbines in excess of China’s needs. After preparing fast.

This has forced them to seek profits abroad, where there are more buyers willing to pay higher prices.

Critics say it could drive American and European competitors out of the global market.

Western governments have expanded scrutiny of unfair Chinese trade practices such as subsidies and dumping.

Yellen will take this message home in her upcoming visit. This month, the European Commission said it found substantial evidence of subsidies boosting Chinese electric-vehicle exports and warned it would likely raise tariffs later this year. It came as European Commission President Ursula von der Leyen warned of a “race to the bottom” in clean tech amid alleged unfair competition by Chinese companies.

As trade temperatures rise, Beijing has begun to accuse Western governments of trying to choke off its most advanced companies – in what it sees as a broader campaign to keep China down.

Concerns about Chinese exports are “nothing more than an attempt to use unfair means to stifle China’s industrial upgrading and protect the vested interests of some Western countries,” the official Xinhua news agency said in a recent article.

Tongwei Chairman Liu also urged an end to “protectionist measures.”

China’s solar industry has “vastly surpassed” those of Europe and the United States, he said in a written response to questions from The Post after declining an interview. It is “really not realistic” for the world to reach net zero carbon emissions by mid-century without adopting Chinese manufacturing, he wrote.

China’s defensiveness is driven by a sense that its big bet on low-carbon technologies is just beginning to pay off.

“From the Chinese perspective, their industrial policy actually works,” said Nis Grunberg, a researcher at the Mercator Institute of China Studies, a Berlin-based think tank. “Now they’re starting to hit the walls.”

Beijing may return to economic retaliation

This could mean China will now turn to “well-rehearsed tactics of pressure and stealth,” said Yanmei Xie, an analyst at Gavekal, a research firm.

It turned to that playbook in the 2010s during solar panel trade disputes to keep trade barriers low, and it has recently threatened to ban key minerals like graphite, a metal needed to power electric vehicles. .

These concerns are most serious for solar energy, which scientists predict will become the world’s leading source of energy by the middle of the century. China controls more than 80 percent of manufacturing and makes more than 95 percent of the world’s silicon wafers, a key component.

But breaking China’s monopoly on parts of the renewable energy supply chain will not be easy or cheap.

According to global energy consultancy Wood Mackenzie, rich countries will need to spend about $6 trillion between 2023 and 2050 to create viable alternatives to Chinese clean tech products.

This is because Chinese companies have already made such a huge lead in creating well-integrated supply chains and have gained significant foothold in international markets.

Ilaria Mazzocco, an expert on China industrial policy at the Center for Strategic and International Policy, said while the United States has been able to maintain its global lead in critical technologies such as semiconductors by focusing on advanced research, this approach does not apply to renewable energy. Study, a think tank.

The main way to make gains in clean energy is to increase and cut costs, which is “really to China’s advantage,” he said.

However, there are some signs of inflammation in this area. Longyi, one of China’s largest solar companies, is reportedly planning to cut 30 percent of its workforce. The company told The Post that prices were falling due to “extreme competition” and “huge new investment and rapid additions to production capacity.”

But it appears Beijing won’t be moving away from renewable gas anytime soon, Mazzocco said. “China is going to fight to maintain its dominance by reducing costs and expanding manufacturing capacity within China.”

Vic Chiang and Pei-Lin Wu in Taipei, Taiwan contributed to this report.