US and Europe wary of China’s superiority in clean energy technology

CHENGDU, China — Ten years ago, Tongwei Group was a manufacturer of fish feed and livestock feed. Today, the company, based in this notoriously cloudy corner of southwestern China, is the world’s largest producer of solar cells, the components of panels that convert sunlight into electricity.

At the $2.8 billion facility outside Chengdu, robotic arms stack delicate cells on autonomous carts that zip between production stages. The company said 5G equipment from homegrown technology giant Huawei has increased productivity by 161 percent and reduced the number of employees by 62 percent.

Tongwei now has even grander ambitions. We are rapidly expanding and upgrading our six production facilities and aim to be producing 130 gigawatts worth of cells annually by the end of this year. This is equivalent to four times the total solar capacity installed in the United States in 2023. .

Through such solar power companies, China will definitely become “the main force leading the global energy transition,” said Liu Hanyuan, founder and chairman of Tongwei.

Tongwei summarizes how China came to dominate the global clean technology market. China produces 80% of the world’s solar panels (compared to 2% in the United States) and about two-thirds of the world’s electric vehicles, wind turbines, and lithium-ion batteries.

That could be a good thing for the planet, which is desperate to transition away from fossil fuels to slow global warming.

Climate change activists say China’s surge in investment in clean technology could soon tip the balance and prevent further growth in the country’s carbon dioxide emissions, which are nearly twice that of the United States. I hope that. Last year, China installed more solar panels than the rest of the world combined.

But China’s overwhelming dominance has alarmed U.S. and European officials, who fear a flood of cheap Chinese products could undermine efforts to grow their own renewable energy industries. They are concerned, especially when Chinese companies have what they consider to be unfair. advantage.

Treasury Secretary Janet L. Yellen, who is soon scheduled to visit Beijing for the second time in a year, will call on China to address “overcapacity” in solar power, electric vehicles, batteries and more in a speech Wednesday. said. It “distorts world prices” and “hurt American businesses and workers.”

Taken together, this could lead to another trade war, which activists say could pit protectionism against the planet.

Green technology grows as economy slows

China’s transformation into a clean technology giant was a direct result of orders from above. Last month, leader Xi Jinping made supporting “inherently green” industries a priority to stem a slowdown in the world’s second-largest economy.

Clean energy is a bright spot in an otherwise bleak economic outlook. Last year, China’s exports of electric vehicles, lithium-ion batteries and solar products surged 30% to $146 billion. BYD will overtake Tesla in 2023 to become the world’s best-selling electric car maker.

This has made the renewable energy industry the biggest contributor to the country’s economy, ahead of other sectors, according to the Center for Energy and Clean Air Research think tank.

This change was made possible in no small part thanks to state support. For more than a decade, the Chinese government has used subsidies, tax breaks and other measures to create dozens of giant conglomerates that dominate the sustainable energy industry.

The facility, which was inspected by The Washington Post, is 15% owned by two state-run investment companies in Chengdu city. In the first nine months of last year, the company reportedly received $125 million in state subsidies, a 240 percent increase from 2022.

Manufacturers churned out electric cars, batteries, solar panels and wind turbines faster than China needed, leading to saturation of the domestic market — as the world’s biggest polluter transitions to renewable energy. Climate change activists say that’s a good thing.

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

Critics say this could force American and European competitors out of global markets.

Western governments are widening investigations into China’s unfair trade practices, including subsidies and dumping.

Yellen will hammer home this message during her next visit. The European Commission said this month it had found enough evidence that subsidies were boosting China’s electric vehicle exports and warned it could raise tariffs, possibly by the end of the year. This comes after European Commission President Ursula von der Leyen warned of a “race to the bottom” in clean technology amid allegations of unfair competition from Chinese companies.

As trade temperatures rise, Beijing has begun accusing Western governments of trying to undermine its cutting-edge companies, a move it sees as part of a broader campaign to rein in China.

Concerns about China’s exports are “nothing more than an effort to suppress China’s industrial advancement and use unfair means to protect the vested interests of some Western countries,” state news agency Xinhua said in a recent article. Stated.

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

China’s solar power industry has “completely overtaken” Europe and the United States, he said in a written response to questions from the Post, after declining an interview. It is “unrealistic” for the world to reach net-zero carbon emissions by mid-century without embracing Chinese manufacturing, he wrote.

China’s defensive posture is spurred by a sense that its big bets on low-carbon technologies are finally starting to pay off.

“From a Chinese perspective, China’s industrial policy has worked really well,” said Nis Grünberg, a researcher at the Mercator China Institute, a Berlin-based think tank. “Now they’re starting to hit a wall.”

Beijing may return to economic retaliation

Yangmei Xie, an analyst at research firm Gabekal, said this could mean China turning to a “well-thought-out strategy of pressure and avoidance.”

It pivoted to this strategy during the solar panel trade dispute in the 2010s to keep trade barriers low, and recently threatened to limit critical minerals such as graphite, a metal needed to power electric cars.

These concerns are most acute for solar energy, which scientists predict will become the world’s primary energy source by mid-century. China controls more than 80% of the manufacturing industry and produces more than 95% of the world’s silicon wafers, a key component.

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

Rich countries will need to spend about $6 trillion between 2023 and 2050 to create viable alternatives to China’s clean technology products, according to global energy consultancy Wood Mackenzie.

That’s because Chinese companies already have a huge head start in building well-integrated supply chains and a strong foothold in international markets.

Ilaria Mazzocco, an expert on China industrial policy at the Strategic and International Center, said that while the United States has been able to maintain its global lead in key technologies such as semiconductors by focusing on advanced research, this approach has been slowing down renewable energy. stated that this is not the case. Research, think tank.

The main way to gain an advantage in clean energy is to increase scale and reduce costs, which “really works to China’s advantage,” he said.

However, there are some signs of growth in this field. Longi, another of China’s largest solar power companies, is reportedly planning to cut its workforce by 30 percent. The company told the Post that prices are falling due to “excessive competition” and “significant new investment and rapid increases in production capacity.”

But the Chinese government is unlikely to pull away from renewable gas anytime soon, Mazzocco said. “China will fight to maintain its advantage by lowering costs and expanding domestic manufacturing capacity.”

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

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