U.S., Europe alarmed at China’s dominance of clean energy technologies

On Mar 29, 2024

CHENGDU, China — A decade ago, Tongwei Group was a maker of fish food and livestock feed. Today, the company, based in this famously overcast corner of southwest China, is the world’s largest producer of solar cells, the components of panels that turn sunlight into electricity.

At its $2.8 billion facility on the outskirts of Chengdu, robotic arms stacked the delicate cells on autonomous carts that zipped between production stages. Productivity has gone up 161 percent — and the number of workers down by 62 percent — thanks to 5G equipment from homegrown technology giant Huawei, the company says.

Tongwei now has even grander ambitions: It is rapidly expanding and upgrading six production facilities and, by the end of this year, aims to churn out 130 gigawatts’ worth of cells annually — four times the total solar capacity installed in the United States in 2023.

China — through solar companies like this — will be without doubt the “main force leading the global energy transition,” said Liu Hanyuan, Tongwei’s founder and chairman.

Tongwei encapsulates how China has come to dominate global clean technology markets. China produces 80 percent of the world’s solar panels — compared with the United States’ 2 percent — and makes about two-thirds of the world’s electric vehicles, wind turbines and lithium-ion batteries.

That may be good for the Earth, which desperately needs to move away from fossil fuels to slow global warming.

Climate activists hope that China’s surging investments in clean technology will soon tip the balance and stop the country’s emissions of carbon dioxide — which are nearly double those of the United States — from rising any further. Last year, China installed more solar panels than the rest of the world combined.

But China’s overwhelming dominance has alarmed officials in the United States and in Europe, who say they are worried that a flood of cheap Chinese products will undercut their efforts to grow their own renewable energy industries — especially if the Chinese companies have what they consider an unfair advantage.

Treasury Secretary Janet L. Yellen, who is expected to soon make her second visit to Beijing in less than a year, said in a speech Wednesday that she will press China to address “excess capacity” — including in solar, electric cars and batteries — that “distorts global prices” and “hurts American firms and workers.”

Combined, this raises the specter of another trade war, one that activists say could pit protectionism against planet.

Green tech grows as economy slows

China’s metamorphosis into clean tech giant was ordered from the very top. Leader Xi Jinping made supporting “essentially green” industries a priority last month as he tries to stop the world’s second-largest economy from slowing.

Clean energy is a bright spot in an otherwise gloomy economic outlook: China’s exports of electric vehicles, lithium-ion batteries and solar products soared 30 percent to $146 billion last year. BYD overtook Tesla in 2023 to become the world’s top-selling electric-car maker.

This helped make the renewable energy industry the biggest contributor to the country’s economy, ahead of every other sector, according to the Center for Research on Energy and Clean Air, a think tank.

That shift has come about thanks in no small part to state support. For over a decade, Beijing has used measures including subsidies and tax breaks to create dozens of huge conglomerates that dominate sustainable energy industries.

The Tongwei facility, toured by The Washington Post, is 15 percent owned by two of Chengdu city’s state-run investment companies. In the first nine months of last year, the company reported being subsidized with $125 million by the state, a 240 percent rise from 2022.

This has led to saturation in the domestic market — a good thing, climate activists say, as the world’s largest polluter transitions to renewable energy — after manufacturers churned out electric cars, batteries, solar panels and wind turbines faster than China needs.

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

This, critics say, could push American and European competitors out of the global market.

Western governments have expanded investigations into unfair Chinese trade practices like subsidies and dumping.

Yellen will hammer home this message in her upcoming visit. This month, the European Commission said it found sufficient evidence of subsidies boosting Chinese electric-vehicle exports and warned it will probably raise tariffs later this year. This came after Ursula von der Leyen, the European Commission president, warned of a “race to the bottom” in clean tech amid alleged unfair competition by Chinese firms.

With the trade temperature mounting, Beijing has begun accusing Western governments of trying to hobble its most advanced companies — part of what it sees as a broader…