Russia’s invasion of Ukraine has uncovered the European Union’s dependence on Russian fossil fuels and accelerated the bloc’s transition into renewables.

However whereas no nation has a monopoly on the solar and wind, the EU is very depending on China for the know-how to seize their energy.

Greater than 80% of the world’s provide of photovoltaic modules produced yearly since 2010 have been manufactured in Asia. China alone equipped 67% of the module manufacturing in 2020, in response to the Fraunhofer Institute for Photo voltaic Power Techniques.

In reality, eight of the world’s 10 largest photo voltaic panel firms and producers are actually Chinese language with Canadian Photo voltaic and the US firm First Photo voltaic occupying the eighth and tenth locations respectively.

In wind, European firms nonetheless have an edge with Denmark’s Vestas and the Spanish-German Siemens Gamesa on the rostrum’s two prime rungs whereas Germany’s Nordex ranks because the eighth largest producer worldwide.

However China can be shortly gaining floor with six of its firms included within the prime ten.

‘We can not afford to be depending on China’

Beijing’s management over the renewable sector is now felt all through all the provide chain. About 80% of the elements wanted to fabricate a wind turbine are produced in China as are 97% of the silicon wafers crucial to construct a photo voltaic panel.

Forty-five p.c of the world’s manufacturing of polysilicon, a key uncooked materials within the photo voltaic photovoltaic provide chain, is produced in Xinjiang, the area in north-west China the place the Chinese language regime is accused by the US authorities of finishing up a genocide in opposition to the Uighur Muslim minority.

China can be a key participant in different uncooked supplies together with uncommon earth minerals that go into renewable applied sciences. Greater than 70% of the lithium-ion batteries that entered the market final yr have been produced in China.

“Because the geopolitical setting is altering, these dependencies now are creating actual dangers,” Dr Janka Oertel, director of the Asia programme and senior coverage fellow at European Council for Overseas Relations (ECFR), instructed Euronews.

“We can not afford to be depending on China in essentially the most type of viable industries and essentially the most viable networks like telecommunications and our vitality infrastructure that’s more and more sooner or later going to be extremely linked and really a lot digitalised, very a lot pushed by type of software program the place danger is simply greater,” she added.

‘Malicious behaviour’ from China

However the EU has up to now tended to keep away from any main commerce tussle with China.

Again in 2012, the European Fee, following a petition by European photo voltaic producers, launched an anti-dumping and anti-subsidy investigation on Chinese language photo voltaic panels, which have been beginning to inundate the European market at a big low cost in comparison with the locally-produced equal.

China retaliated by launching its personal anti-dumping and anti-subsidy probe into EU wine imports and signalled an identical investigation into luxurious vehicles might comply with and a settlement was reached in 2013 establishing a minimal value for Chinese language merchandise. European professionals branded the deal a “capitulation” from EU authorities and a failure to guard their very own trade.

There have since been fairly a number of “circumstances of what we are able to name political blackmail,” mentioned Maria Pastukhova, senior coverage advisor on the Berlin-based local weather suppose tank E3G, with China leveraging its financial clout to stress different nations.

She cited Beijing’s resolution in 2010 to ban all uncommon earth exports to Japan over a fishing trawler dispute or its newer refusal to clear customs for Lithuanian merchandise after the EU member state allowed the opening of a de-facto Taiwanese embassy. Chinese language state-sponsored hackers are additionally suspected of getting carried out cyberattacks in opposition to the Indian energy grid over skirmishes at a border space disputed by the 2 nations.

“So there was some malicious behaviour from the facet of China that has been linked to political conflicts with nations,” Pastukhova emphasised.

Subsidies and economies of scale

Europe is a big client of renewable know-how.

Over a fifth of the whole cumulative world photovoltaic installations have been carried out on the continent in 2020 and this might speed up sharply because the EU goals to grow to be the primary carbon-neutral continent by 2050.

To realize this, the bloc plans to chop its greenhouse gasoline emissions by a minimum of 55% in comparison with Nineties ranges by the top of this decade and enhance the share of renewables within the energy technology to a minimum of 40%. This may require the set up of wind and photo voltaic vitality capability to triple within the coming seven years.

That is prone to imply loads of Chinese language-produced renewable know-how. Over the previous few months, two massive European wind farms — in Italy’s Taranto and Croatia’s Senj — have been powered by Chinese language generators.

The primary difficulty stays value which supplies Chinese language firms an enormous benefit internationally.

For Pastukhova, the problem is twofold. The primary one is the financial system of scale i.e. that Chinese language authorities have roughly lower off entry to their market to overseas firms, giving renewable contracts to homegrown companies which have subsequently grown way more shortly.

The opposite problem is manufacturing prices. “European firms clearly are producing at a lot greater price as a result of we’re speaking about greater environmental requirements, greater labour requirements, greater wages,” she added.

‘Europe nonetheless has a innovative’

Nevertheless, in relation to precise know-how, Europe remains to be main the way in which.

“There are nonetheless very modern developments within the US, in Japan and in Europe, notably in relation to versatile panels, in relation to the high-end scale of solar energy manufacturing effectivity,” Pastukhova harassed.

The prognosis is similar for wind the place “Europe nonetheless has a innovative”, in response to Luke Patey, senior researcher in overseas coverage and diplomacy on the Danish Institute for Worldwide Research.

One strategy to measure innovation is thru patent manufacturing, he defined. China produces over a 3rd of patents in wind know-how — the best quantity by far — with the US and Germany producing about 10% every. But, when taking a look at world-class patents, the sort that actually pushes the know-how ahead, Germany submits about half of them whereas solely about 2% of all of the Chinese language patents are thought-about as such.

Moreover, manufacturing is only one a part of renewable vitality initiatives, servicing and operational upkeep of wind turbine farms, are one other vital element.

“The Chinese language so far have been focussing on getting the worth down of the merchandise and never effectively managing a wind farm over a number of many years. They should acquire expertise in that. And that is going to maintain builders from wanting to have interaction with the Chinese language as a result of they do not have the identical expertise in managing initiatives,” Patey additionally mentioned.

Buddy-shoring, tariffs and entry to world markets

Nonetheless, time is of the essence to struggle in opposition to local weather change and world warming and to guard European renewable know-how firms. But time is exactly what the EU might want to mitigate its publicity to China. 

Adopting a Chinese language technique of giving native firms preferential therapy for native initiatives isn’t a lot of an choice, in response to Oertel as a result of “this isn’t within the European DNA. This isn’t how we function and this isn’t the authorized framework that we have now.”

However a technique could be tariffs based mostly on particular environmental and labour requirements to make sure the panels and generators that energy Europe aren’t constructed off the again of pressured labour or practices damaging to the setting, consultants instructed Euronews. These might additionally goal merchandise made cheaply largely because of state subsidies which distort competitors.

The EU can be more and more taking a look at “friend-shoring” key provide chains, together with vitality.

Fee President Ursula von der Leyen, as an illustration, addressed the Worldwide Photo voltaic Alliance when she visited India in April. New Delhi is at the moment making an attempt to place itself as an alternative choice to China and ramping up renewable manufacturing.

Peer-to-peer partnerships with creating nations which have uncooked supplies and wish to increase their manufacturing industries also needs to be one of many instruments utilized by the EU, Pastukhova mentioned.

This is able to permit for extra manufacturing hubs worldwide and cheaper costs whereas nonetheless permitting these creating nations to spur their home industrial development and finally purchase extra renewable applied sciences themselves. Additionally it is one thing that China already does itself with manufacturing centres in Malaysia and Indonesia, amongst others.

However European manufacturing also needs to be protected, Patey highlighted, deploring “rising numbers of closures in (wind turbine) factories in Europe.”

“The EU can go on the offence and help firms as they attempt to promote to the worldwide markets and doing what, you realize, China does to a sure extent by providing nations in third markets low finance or low-interest loans in order that buyers in Siemens Gamesa and different (European) wind firms can type of increase their attain globally and compete with China on the identical stage,” he argued.

The 27-country Union should make onerous selections now as a result of these will not have an effect immediately however fairly in a pair or 5 years’ time, Oertel mentioned.

And these selections should be clearly communicated to the 450 million inhabitants within the bloc who are actually sensitised to the difficulty of vitality dependency as a result of Russia’s invasion of Ukraine in order that they know the dangers and what may very well be coming. 

“I feel that is doable. But it surely takes honesty by policymakers to acknowledge that different dependencies exist and that not all is ok so long as we get out of Russian oil and gasoline,” Oertel mentioned.