More than a decade ago, back in 2010, Scientific American asked, “Is the U.S. Falling Behind in the Clean Energy Race?” In the twelve years following, that question has been answered: unequivocally, yes. While other countries around the world have been developing renewable energy technology as their best hope at energy independence and security, the United States has been enjoying a flood of cheap domestic shale oil and gas. The shale revolution allowed the country to be energy independent for the first time since 1957, and turning its back on shale in favor of nascent and pricey technologies seemed unthinkable.
But then renewables got cheap. And as solar and wind have taken over and transformed the energy industry, The United States has found itself holding on to an anachronistic energy infrastructure that has become decreasingly relevant on the global stage. Now, while solar and wind are expanding across the globe, including in the United States, the U.S. lacks the infrastructure and the know-how to gain any serious foothold in renewable energy supply chains.
There was a time that the United States was at the vanguard of solar energy infrastructure in the decades after the cold war, controlling over 90% of the market. But “the Carter administration didn’t prioritize solar, and the Reagan administration rejected it entirely, crippling the industry with meager investment, record-high interest rates, and environmental deregulations,” nationalist news source the National Interest reported last year. Now, U.S. production of solar cells is just 1% of the global share. As of 2019, China produced 78% of the solar cells in the world, marking a complete turnaround of sector dominance.
Indeed, China has positioned itself as a global pioneer of renewable energies, dominating technological advances and production at nearly every node of the renewable supply chain. The Chinese central government has led a massive push to accomplish the country’s twin goals of energy security and decarbonization by ramping up renewable energy production to new heights. And now, as the West tries to wean itself off of Russian energy imports, they are forced to turn to another authoritarian regime to keep the lights on. Europe is currently setting new records for solar power production, but without cheap Chinese components, the expansion would not be possible.
While the West is finally waking up to the issue of Chinese control of major renewable energy supply chains at the dawn of the renewable era, China is celebrating its newfound dominance and moral high ground as the leaders of decarbonization technologies. As the Chinese Communist Party's oft-propagandized news outlet the “Global Times” reported last week: “In contrast to the US government's retreating commitment to the industry under former president Donald Trump and the lip service paid by incumbent President Joe Biden, China has the political courage, economic incentive, technological capability and moral consensus to lead the global renewable energy drive and the fight against climate change.”
Western government and industry leaders are scrambling to increase their own photovoltaic production capacities in a hurry, but they have a daunting amount of catch-up to do in terms of scale, cost, and technological knowledge. BloombergNEF calculated in a recent report that it will cost Europe $149 billion and the US $113 billion to manufacture enough solar panels, batteries and electrolyzers to meet domestic demand by 2030.
The United States and Europe would like to become competitive with China without involving China, but that will be much easier said than done. Regarding the growing gap in knowledge and capacities, Bloomberg recently reported that “some of this knowledge could be more quickly transferred outside of the country if Chinese companies faced less resistance setting up manufacturing sites in the US and EU.” But this is a politically sticky approach.
It won’t be easy or cheap to catch up with China and compete in the global renewable energies market, but the alternative is much worse. We’ve seen what can happen to global energy markets when the world relies too heavily on volatile leaders with spotty human rights records in the fallout from Russia’s invasion of Ukraine. Relying on Chinese exports to keep the lights would be – and already is – a very dangerous game.
By Haley Zaremba for Oilprice.com
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