US Chooses (More) China Bashing Over Climate
How should the US and allied governments weigh the loss of a few years of progress in limiting climate change against longer and larger dependence on China for the clean-energy equipment needed to displace fossil fuels? It’s rarely put that way, but that’s the tradeoff Western governments and their friends have set up. So far, they’re choosing to fight China.
With global warming and storming accelerating way faster than UN and most other climate scientists had expected, that’s a hugely risky choice. Every month sets a new heat record. The EU’s Copernicus climate-change service in January declared the 1.5℃ heat-rise threshold had been passed for a full year. Climate writer for Medium, Richard Crim, has declared that “’Climate Science’ is BROKEN and the Climate Apocalypse has started.”
It hasn’t just started in the Sahel. Or in Australia. Or in “Other” places. It has started in the US. The Texas Panhandle has been burning for weeks, with wildfire warnings extending through the entire central US in a normally wet, cold time of year. The US Northeast saw its “third 100-year” bout of severe coastal flooding in two months, to quote a local news outlet. California now seems to be perpetually burning, baking, or flooding.
Undeterred, or seemingly even bothered, the US has shifted onto the offensive in its clean-energy trade war with China. A year ago, the Biden Administration’s rhetoric about restricting solar and battery imports from China was mostly focused on the economic and national security benefits of rebuilding US domestic manufacturing.
As the importance of clean energy to China’s economic growth has clarified, however, Washington’s goals have broadened to include deliberately thwarting its chief economic rival’s plans for using post-carbon energy technology to bolster its flagging economic growth, emissions be dammed. Increasingly, for example, the Biden administration is pushing Europe, India, and others to join it in snubbing Chinese solar panels, batteries, and components. No need to wait for a second Trump presidency. No need to worry if solar and EV sales lag as a result.
Meanwhile, the US’s own clean-energy manufacturing drive is stumbling, along with its rate of renewables and EV adoption. For a few years at least, the result will likely be to slow the transition and speed climate change. It’s clear that solar, EVs, and batteries would be spreading much faster and displacing more oil and gas in not just the US, but also in Europe, India and other countries allied to the US if the trading system with China were functioning freely.
Power-Mongering
Prominent liberal economist Adam Tooze in a recent Financial Times commentary describes “brazen, ‘America first’ power-mongering” as part of the “hangover-inducing cocktail that defines the Biden era,” especially when it comes to China. He goes so far as to note that “one of the few saving graces of the first Trump administration was that the president was more interested in doing deals with America’s competitors than knocking them out,” implying a knockout is what Biden has in mind.
Tooze goes on to analyze a policy paper published by Daleep Singh just before Singh returned to the White House in February as deputy national security advisor for international economics, a position he held when he headed up the 2022 sanctions drive against Russia. Singh then took an extended leave, spent in financial advising.
Singh signals in his Atlantic Council re-entry paper that “direct confrontation … in the theater of economics” is a preferred alternative to war — which could turn nuclear, he notes — in confronting China and Russia’s “shared desire to upend the US-led international order.” Tough words. And to be effective in this confrontation, he says the US needs to put more effort and incentives into bringing non-aligned parties onto its side.
Neither Singh nor Tooze spends much time discussing the specifics of clean energy, but it is a leading component of both Beijing’s economic growth plans and of Washington’s strategy for directly confronting China in the theater of economics.
Clean-Energy Contrast
Western energy consultants estimate that China invested some $890 billion in its clean-energy sector in 2023, perhaps accounting for more than two of the percentage points in its 5.2% GDP growth. Exports are vital to this strategy.
Meanwhile, attempts to reduce reliance on Chinese inputs have proved a major constraint on kickstarting a relatively miniscule US clean-energy sector. Growth in US solar installation was strong by local standards in 2023, after plunging 16% in 2022 when Washington interfered with panel and component imports. Even so, additions to US utility-scale solar capacity totaled just 15 gigawatts last year, compared to 217 GW in China. And US installers remain vulnerable to a repeat of such import disruptions by their own government.
US passenger EV sales growth was strong last year, too, but not as strong as some forecasts, and EVs’ share of US car sales remains below 10%. The average cost of EVs sold in the US early this year was reportedly more than $10,000 above the average cost of gasoline cars, with the cheap-and-cheerful Chinese models that are sweeping Europe nowhere to be seen.
The $7,500 upfront rebate that the Biden Administration has loudly trumpeted is unavailable on many models because of restrictions on imported components. The administration apparently sees a slowdown in solar and EV adoption as an acceptable price to pay for thwarting Chinese ambitions and fostering US factory construction.
Unfortunately, the factory buildout Biden administration subsidies are supposed to spur isn’t proving to be a smooth or rapid process either. Construction costs have soared as Asian battery giants join US energy and microchip companies in buying up the meager available amounts of US steel and other construction materials in order to qualify for federal government subsidies, the Wall Street Journal reports. Delays or indefinite postponement of multiple plants has resulted.
Washington seems not to have realized the complexity of modern manufacturing when it dictated that entire lengthy supply chains should immediately appear in the US, after four decades of movement in the opposite direction.
Follow the Leader?
Despite its own mixed record in coping with China’s dominance in clean-energy manufacturing, Washington is increasingly pushing other friendly countries to join in its quixotic campaign to wish non-Chinese sources of solar equipment, batteries, and EVs into existence.
The EU has so far balked at blocking imports of solar panels and components that it sees as central to efforts to transition off fossil fuels. It just set a target of 40% by 2030 for domestic manufacturing of clean technologies including solar, where the EU is 95% reliant on China. Few analysts expect the target to be hit.
The European Commission is moving in more determined fashion against Chinese EVs, investigating whether Beijing has provided “unfair” subsidies to Chinese manufacturers. European carmakers can and want to fill Europe’s own demand for EVs. But it’s unclear when and if they can make lower-priced models competitive with those rushing in from China, and German carmakers worry that action against Beijing may result in less access for them to the Chinese market. The debate continues.
India is also grappling with China’s overwhelming head start and cost advantage in clean energy. It has had a little more success than the US in building solar factories, but much of the output ends up in the US, where Indian companies don’t subject to the same tariffs and other import barriers as Chinese competitors. Solar installers in India, meanwhile, remain heavily dependent on Chinese equipment, on which they must pay 40% tariffs or divert panels and components through Southeast Asian countries that aren’t subject to Indian tariffs. All this adds to costs and slows adoption.
Given time, the US and its buddies can and perhaps will work their way through this residue of globalization and succeed in making their own clean-energy equipment. If the climate crisis would just wait, the tradeoff might be worth it.
But the climate crisis isn’t waiting, and reductions in carbon emissions in the future are worth much less than emission cuts today. If the US is determined to find a non-nuclear theater in which to engage in direct confrontation with China, they should make it something other than clean energy. How about blocking fast-fashion? Or disposable plastic packaging? There’s plenty of trade between China and the West that the world would be better off without.
Clean-energy manufacturing, in contrast, is a field in which the Chinese were clear-headed and far-sighted. For that they should be applauded and appreciated. It could save humanity.
The Earth will, of course, be fine either way.
