The West needs China for clean energy. It will pay a price to break free

The United States and Europe are competing with China in clean energy technologies. They are offering subsidies to local manufacturers and raising tariffs on Chinese imports, taking a protectionist stance. China’s dominance in clean energy supply chains poses a challenge for governments trying to green their economies while protecting industries and jobs. Without China’s electric vehicles, solar panels, wind turbines, and batteries, reducing pollution could take longer and become more expensive. However, the West wants to avoid overdependence on a single supplier and aims to develop its own technologies of the future. Rising global competition in green technologies is increasing tensions between China and its major trading partners. China leads the race, accounting for three-quarters of global investment in clean technology manufacturing. This year, China is set to invest more than the US and the EU combined in clean energy. China has become the world’s largest and lowest-cost supplier of many clean energy technologies and critical minerals. Local manufacturing capacity for electric vehicles, batteries, wind turbines, and solar panels is concentrated in China. China also has a significant share in the processing of critical minerals needed for green technologies. Tariffs imposed by the US and the EU may protect local manufacturers, but they can harm the transition to green energy and increase costs. Experts argue that extensive tariffs make it harder to reduce emissions using solar panels or batteries. Delaying the transition to clean energy will have severe consequences for the planet and exacerbate the costs of climate change. To protect the environment and local jobs, policymakers should focus on areas of genuine national security concern. They should also invest in innovation and emerging technologies, diversify supply chains, and reduce the onshoring requirements for critical minerals. Diversification in energy sources and trade partners is also essential for energy security and competitiveness.