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Haley Zaremba

Haley Zaremba

Haley Zaremba is a writer and journalist based in Mexico City. She has extensive experience writing and editing environmental features, travel pieces, local news in the…

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China Is Crushing The Competition In Clean Energy Spending

  • China’s unmatched spending on clean energy infrastructure has helped it become the global renewable power leader.
  • It is also a key player in global clean energy supply chains, with a stranglehold on key rare earth mineral markets.
  • The United States is struggling to catch up, and may not be able to compete with CHina for at least another decade.

The United States has been falling behind in the clean energy race for well over a decade now. Way back in 2010, a report from the President's Council of Advisors on Science and Technology warned that the United States desperately needed to accelerate the pace of investment and advancement in clean energy technologies, and even offered a pathway to do so. But now, 13 years later, the United States is still trailing in green energy research, development and deployment. 

According to the World Economic Forum’s annual insight report Fostering Effective Energy Transition, not only has the United States failed to lead the charge toward global decarbonization, it’s actually steadily losing ground. For three consecutive years, from 2019 to 2021, the United States slid in the WEF rankings that measure key issues at the national level such as energy security, environmental sustainability and preparedness for the energy transition. As of the last ranking of the Energy Transition Index, the United States was in 24th place. 

The Biden administration has made unprecedented efforts to bring the United States up to speed, most notably through last year’s Inflation Reduction Act. While the Act does little, if anything, to actually curb inflation, it is a milestone piece of legislation representing the single biggest and most aggressive climate policy ever passed by the  United States congress. While this marks a major leap forward for the United States (and for mankind), however, it’s nowhere near enough to bring the United States’ clean energy sector up to speed with the rest of the developed world after decades of neglect. 

In fact, despite the major price tag associated with last year’s Inflation Reduction Act, the United States’ spending on clean energy didn’t hold a candle to China. According to recent figures from a BloombergNEF analysis, China alone was responsible for nearly half of global spending in the renewable energy sector in 2022, at a whopping $546 billion. That’s nearly four times the $141 billion that the U.S. spent. The European Union came in second place, at $180 billion. Together, these three entities were responsible for more than 80% of global clean energy spending for the year, according to the WEF 2022 Fostering Effective Energy Transition report

Of course, all of this spending is great news for the global fight against climate change. It’s still not nearly the amount needed to curb emissions enough to meet the goals set by the Paris climate accord, but it marks a major turning point: the world is finally getting serious about the clean energy transition. However, the change is taking place extremely unevenly, and the lopsided competition is creating a whole new set of geopolitical problems and imbalances, pushing more and more power into the hands of Beijing and leaving the developing world behind

China isn’t just crushing the competition in terms of clean energy spending. Beijing is also dominating a number of key clean energy infrastructure supply chains and rare earth minerals markets – essential components for electric vehicle batteries, solar panels, and more. “China has managed to nurture these really integrated, efficient value chains for making things like solar panels, for making things like battery cells,” Antoine Vagneur-Jones, head of trade and supply chains research at BloombergNEF, was recently quoted by Scientific American. Vagneur-Jones went on to say that he thinks China will continue to dominate for at least the next decade, if not longer.

While the United States is finally making a concerted effort to begin closing this gap, they have a very long way to go, and it’s not going to be easy. China is years ahead of the curve and still making gains. What’s more, the Inflation Reduction Act’s major incentives for domestic clean energy production and manufacturing is creating new geopolitical tensions. According to European leaders, the bill’s focus on domestic production over trade smacks of protectionism and flies in the face of free market trading and the economic ties between the United States and Europe. Indeed, the Act has a very ‘America first’ flavor to it, as President Biden has proclaimed that “the supply chains are going to start here.”

But clean energy investment in the United States is simply not as easy as it is in China. The Inflation Reduction Act was barely passed in congress, and that was only after the bill was watered down to gain the support of West Virginia Senator Joe Manchin, who pushed for greater support for fossil fuels in the legislation. In China, there are no such political hurdles. An authoritarian regime and a laser-focus on energy security and independence have allowed Beijing to pour ever-increasing amounts of cash into dominating clean energy markets. And so far, it’s paying off. 

By Haley Zaremba for Oilprice.com 

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