Caught in a Cold War time warp, China’s clean energy transition is getting a bad wrap
There’s been a lot of noise in the news about China recently. It ranges from openly racist or war mongering (“China’s Window for War” story in Forbes) to kinda cute, kinda silly musings (“Will China squander its moment in the sun?” by writer Noah Smith) from otherwise quite serious people about over a billion others known collectively in the West as “Tchiina” (add Trump hand gestures).
Signal from Noise
No doubt there’s a lot to cover in such a wide and wonderful country, so full of contradictions. Scrutiny is deserved on everything from the share of prosperity afforded folk of all colors and classes and human rights to foreign affairs and the imposition of values on others, including quasi and former colonies, by force or softer forms of influence. The propensity of their state apparatus to listen to the needs and views of a plurality of their people in something like a democratic process is also high on the list.
Of course, if we asked those questions of “Ahmerika” we might come up wanting on inequalities for minorities, injustices for places like Puerto Rico and Guam, victims of our just wars from Iraq to Vietnam and our dubious electoral college voting exercise this November. But this piece is about China and for me the biggest issue of our time, this decade and even this century, is the transformation of our energy system to avert the worst of climate change forced by fossil fuel interests where China is the most important nation.
Let’s look at what the nation of China has done so far.
China ended up adding 217GW of solar power last year, according to Bloomberg. This is more than the U.S. has ever done in its history! China also added 76GW of wind. This was over half the world’s new renewables. In the coming years, current revised expectations of the International Energy Agency (IEA) have China adding as much clean energy to the system as the rest of the world…combined!
Due to learning curves and economies of scale, this helps lower the cost of electricity from low carbon sources. Some will argue whether that’s good but will have a hard time showing that it is not the greatest response to climate pollution we’ve created yet. Put simply, China is creating a lot of the good news that the world can claim on this existential issue.
By the numbers, on a problem we’ve been confronting in earnest since the turn of the century, China’s contribution is outsized on all counts.
This is not to diminish the hard work of activists to make Biden realize LNG markets are saturated in a low carbon world, nor the efforts to bring clean energy access to the grassroots of India or Tanzania. But by the numbers, on a problem we’ve been confronting in earnest since the turn of the century, China’s contribution is outsized on all counts. The country has made wind, solar, EVs and batteries – the tools of the energy transition – available and affordable.
Peaking way early
And yes, China’s contribution of CO2 from the burning of coal has caught up and surpassed that of the U.S. and the rest of the world in that time too, meaning the country has become a huge source of the problem as well as the solution at this critical time. This is noted. The good bit and the “new” bit about the China news then is that it looks like they’re now stopping that juggernaut and turning it around – i.e. peaking coal and emissions this year…2024!
Will the Wood Dragon survive?
That peak is way earlier than many serious people deemed even possible a few years ago. It is earlier than President Xi pledged in Paris and since, and it is an about turn of what many seem to think is a Titanic of dirty industry. What this may mean is that China is setting up to form titans of clean industries, in ways we can only dream about in the U.S. and west, where building clean is proving hard. (More in a future column on the results of the U.S. IRA and other big Biden spending bills – his attempt at an industrial strategy – where we need to be cautious about “checkism”, as Noah calls it in the story above – all announcement, no delivery.)
Why do I think China’s new energy transition will continue? Because it’s now squarely in the national self-interest and probably the political survival interests of their President Xi and his politburo. Clean energy was the top driver of China’s economic growth in 2023. Clean energy sectors contributed 9% of China’s GDP, up 30% y-o-y according to a remarkable study by CarbonBrief, just out. This looks like a pivot in China’s macroeconomic strategy, with the real estate sector contracting & investment shifting into manufacturing – primarily clean, or what they call in Mandarin, “new energy.”
From an author of the report, Lauri Myllyvirta I took this tweet storm: In one year, China: *added >300 GW of solar manufacturing *added >200 GW solar and >60GW of wind power *added battery making capacity equal to 16 Tesla Gigafactories *started building 50 GW of pumped hydro *produced 9.5mn EVs (vs 7.2mn in 2022) *approved 10 new nuclear reactors. The largest contributors to economic growth were solar power, EVs, energy storage and rail transportation, which all saw strong growth both in investment and in production of goods and services.
How astounding! Global emissions trajectories have been upended, he continued. China’s supply boom pushed down the prices of solar panels by 42% and batteries by 50% y-on-y. This, in turn, has encouraged much faster take-up of clean-energy technologies. The IEA projects that if they keep this up and global deployment of solar power and grid-connected batteries follows the expansion of manufacturing capacity, then global power-sector coal use and carbon dioxide emissions could be a sizable 15% lower than in the base case by 2030.
Whether or not this will all work depends on the receptivity of the rest of the world to Chinese products and its openness to continue to trade in these low cost technologies.
Why are we not dancing in the streets? China now has a major stake in the success of clean energy not just in China but in the rest of the world and also in building export markets. Per CarbonBrief, expect intensified efforts to finance and develop clean energy projects overseas. Whether or not this will all work depends on the receptivity of the rest of the world to Chinese products and its openness to continue to trade in these low cost technologies. Sadly, this is an openness which I fear is fading.
Don’t forget that trade wars lead to cold wars lead to hot wars
I get the problem. Their manufacturing boom also cements China’s dominant position in many critical supply chains. Single source dependency on one country for anything is not good. Other countries now face a choice of benefiting from the low-cost supply, or paying the cost of building new supply. The good part about some countries choosing to try to catch up with China is that all such efforts would further increase supply and push down global prices. I also think that energy independence is different in a solar-powered world – China cannot hold the supply of solar panels or batteries over other countries like an oil embargo. Once we have the machines, the fuel falls free from the sky.
But despite this positive reality that we’re building in ways that might tackle climate change at the “speed and scale” required as the likes of John Doerr like to say, China’s efforts on the energy transition are increasingly getting a bad wrap. The cover of the Economist, literally, set a new bar for how we should not be considering these market developments: us vs them.
Last week at an airport I had to reach for Google to remind myself of the definition of “yellow press.” This is the way in which the media can stoke saber-rattling through the color of their coverage. It is a style of journalism that emphasizes sensationalism and is famous for dragging the U.S. into war with Spain over Cuba and the Philippines (Ahmerika’s forgotten Iraq/Afghanistan quagmire).
The Economist’s coverage screams of EVs hurtling towards some sleeping, unexpecting country – America, Germany, the UK. It was accompanied by the alarming headline: “China’s EV Onslaught.” The message I saw: those cars are being sent to destroy the American way of life, the German and UK auto sectors, hell even Japan and Korea, car-making countries we are used to!
This is based on the fact that China has suddenly become the largest exporter of cars. Suddenly in the sense that they’ve been working hard on innovating whole new categories of EV and building the battery capacity needed to electrify mobility for decades now…suddenly, like the sun rising…slowly then all at once. The Financial Times had slightly more sober coverage of the same realization about the same time, showing how this has been coming for years.
What will be sudden now is the abandonment of “free market principles” and neoliberal commitments. I won’t rehash the mistakes of unfettered free trade unleashed on people and the planet in the Uruguay Round of the General Agreement on Tariffs and Trace (GATT), China’s ascension into the World Trade Organization (WTO), GE’s Jack Welch and other’s outsourcing America’s core competencies, nor how we got here. Just to note, I fear we are headed into a time of trade barriers and protectionism. Better or worse – and I have long been a proponent of this on social and environmental grounds – but worryingly I think what comes next in the age of climate change will be of the worst kind.
And what comes with it, in the streets and cities of countries facing the onslaught from foreign devils unfairly beating them at competitive markets, is my bigger worry. Germany’s far-right AfD meeting, held near the venue of the final solution convention, vowing to remove migrants from Deutschland and Donald Trump dog whistling in the news sends shivers up my spine about how this translates in the streets of our civilized nations. Remember Vincent Chin? Next it might be a man of Japanese or Korean descent mistaken for one of Chinese heritage in a weird echo of Chin’s killing in the U.S. in 1982. The only difference is that then it was Toyota not China’s BYD taking all the jobs from Ford, not Tesla, right?
Working with the dragon
So we seem headed to a trade war. As we get into it, let’s remember not to fall into knee-jerky or just straight jerk behavior, assigning collective attributes to nations and guilt by association of ethnicity. And let’s celebrate what is working as far as climate solutions go. Instead of beating up on the Chinese state and industry and workers and entrepreneurs, we could be celebrating their remarkable achievements and emulating them.
Instead of beating up on the Chinese state and industry and workers and entrepreneurs, we could be celebrating their remarkable achievements and emulating them.
The technical competencies of new energy industries in China are beyond good. Just to install 1GW of photovoltaics every two days is an Herculean achievement. While we in the U.S. have trouble interconnecting one tenth as much. And as we and the rest of the world struggle with balancing variable renewables and fossil fuel interests doing everything to slow the transition down, Chinese grid operators are tackling both scale and storage. Shouldn’t we be grateful they are doing this?
Given the size and impacts of the climate challenge, doesn’t it make sense to collaborate. Rather than letting your dinner table conversation, car buying or local, state and national politics fall into the trap of othering and jingoism, how do we work with the dragon!?
It’s Chinese lunar new year and 2024 is the year of the wood dragon, a very auspicious sign for the year ahead. It signifies unprecedented opportunities to foster growth, progress and abundance. Those born in this year are said to be extremely inquisitive and creative. Perhaps that’s how we should all be: open-minded to fostering innovation and possessing a positive vision for how we can find the solutions to the climate challenge as our window of time diminishes.
Jí xīng gāo zhào…May good fortune fall upon you. Shine on!
Featured photo: Danny Kennedy. Source: Bioneers
