China has the upper hand clean energy technology. Therefore, for Western countries, remove risks from China For products needed for the transition to renewable energy.
batteries, wind turbines, solar panelChina accounts for an overwhelming share of the world’s manufacturing capacity and capacity.
This vast production capacity has created economies of scale and significantly reduced costs. Manufacturing solar panels and wind turbines in China costs a fraction of what they cost in the United States, Europe, and India.
How much will it cost to completely wean ourselves from clean technology products made in China? According to new analysis According to energy consultancy Wood Mackenzie, the global energy transition will cost an additional $6 trillion, on top of the $29 trillion worth of costs needed to reach net-zero carbon emissions by 2050. It is estimated that approximately 100% of capital investment will be required. This represents his 20% addition to the original energy transition bill.
Premium market for non-China supplies
$6 trillion is certainly a lot of money. The combined gross domestic products of India and the UK amount to slightly more than that amount.
But is paying a 20% premium acceptable to achieve the West’s strategic goal of reducing critical dependence on China? It is not our aim to exclude people. Rather, what they are looking for is Diversifying supplies and securing domestic supply chains. It would be reasonable to assume that the additional cost of the China Light approach to clean energy technology would be much less than $6 trillion.
Meanwhile, industry players are already openly talking about persuading consumers to pay more. Minerals outside China Necessary to power products such as electric cars.Several mining companies in Canada, Germany and Australia Plan to set premium prices For major metals, he argued that mitigating geopolitical risks to China exposure was worth the higher price tag.Australian person rare earth Producer Hastings also said,former china [premium] Market development in progress”
costs and benefits
Beyond the direct cost increases associated with non-Chinese clean energy technologies, another consideration for policymakers is the cost of deepening dependence on Chinese manufacturing and hollowing out the domestic industrial base. be.
The dire plight of Europe’s solar industry is a clear example. Last year, we achieved a record solar power generation installation.own solar panel manufacturer There is a risk of going out of business This is due to the rush of importing cheap Chinese-made solar power generation.
“In some ways, some Europeans welcome this.” Matt Turpin writes, a visiting fellow at the Hoover Institution specializing in U.S. China policy. “While this allows for an even cheaper transition to renewable energy, it also creates a series of dependencies in the energy sector that Europeans should know better than to be fooled. The impact of cheaper panels and other green technology components will disrupt Europe’s own green technology manufacturing industry.”
How to weigh the costs and benefits of relying on China for cheap products against the need to strengthen Western industrial capacity is a difficult question at the heart of the risk aversion debate.