China was once again the world leader in clean energy investments last year.
Nearly half of global low-carbon spending took place in China, according to a recent analysis by market research firm BloombergNEF. The country spent her $546 billion in 2022 on investments like solar energy, wind energy, electric vehicles and batteries.
This is almost four times the US investment of $141 billion. The European Union was second only to China in clean energy investments with her $180 billion.
China also dominates low-carbon manufacturing, accounting for more than 90% of the $79 billion invested in the sector last year, according to the report.
The findings come as the US and Europe work to expand domestic manufacturing capacity. In recent months, the United States has begun rolling out the benefits of her $369 billion incentive-laden Inflation Reduction Act aimed at building a clean energy industry in the United States.
But competing with Chinese networks is not easy.
Antoine Banure-Jones, head of trade and supply chain research at BloombergNEF, said, “China is looking to build these truly integrated and efficient systems to make things like solar panels, to make things like battery cells. We have succeeded in cultivating a strong value chain.”
Both now account for a sizeable share of China’s export earnings, he added. Vagneur-Jones said it has also invested heavily in
The Inflation Reduction Act aims to counter Chinese dominance by providing billions of dollars in subsidies to domestic manufacturing. For example, there is a major provision that offers consumers thousands of dollars in tax credits when purchasing electric vehicles, but only if the majority of battery components are manufactured or assembled in North America.
These incentives have sparked strong international criticism, especially from the European Union. But President Joe Biden made it clear what he’s aiming for in a speech last week, saying, “The supply chain starts here.”climate wireJanuary 27).
Bloomberg NEF figures do not take into account the dozens of planned US factories announced in recent months. , Vagneur-Jones said it would happen gradually.
“I think even in some optimistic scenarios, China will remain dominant over the next decade or more. There is,” he said.
Consider the manufacture of battery cells. China’s market share is projected to drop from its current 79% to just 70%, despite a 6-fold increase by 2030, according to a BloombergNEF study.
This is because China plans to expand its battery manufacturing capacity even though supply chains are being built elsewhere. There are also barriers to launching clean energy manufacturing in the US, including rising costs and the challenge of developing new sectors from scratch.
The task could become even more difficult if tensions between China and the United States escalate, reducing the ability of US companies to access China’s expertise in clean energy development, Vagneur-Jones said. .
“Derivatives can be very difficult to actually scale things up quickly, not only because they are more expensive to produce in places like the US, but because of the fact that they are not available. China’s expertise,” he said.
There are risks in having a supply chain so concentrated in one region. Geopolitical tensions, like the effects of climate change, could more easily disrupt trade. Last August, for example, a massive heatwave caused power shortages in China’s provinces that supply the world’s bulk of solar panels and components, driving up prices for these commodities.
Vagneur-Jones says the next few years will be decisive. The United States, Europe, India and Indonesia have all stepped up their efforts to domestic manufacturing. The question is whether those plans will come to fruition.
“We could see a tipping point in this trend that we saw, it was China’s dominance not only in existing capabilities built, but also in ongoing investments,” he said.
