Winners and losers of the energy transition
The energy transition has much more to do with global leadership than with fighting global warming. A presentation of “Power” by Marco Dell'Aguzzo on the Appunti di Stefano Feltri newsletter
«The winds are mild and the sun is shining», the Chinese say to indicate a clear spring day. Even in the renewables industry the weather is good in China; It is Europe that risks ending up uncovered by the storm.
In fact, while the major Chinese manufacturers of wind turbines consolidate their position at home, European companies – such as Ørsted and Siemens Energy – find themselves in economic difficulties or even in crisis. The situation is no better in the photovoltaic sector: Meyer Burger, for example, has made it known that it may soon close the factory in Freiberg, Germany, one of the largest manufacturing sites for solar devices in the entire Old Continent.
This is bad news for the European Union, given that solar and wind power are the two central sources in the ecological transition and climate neutrality plans. To date, 95 percent of the solar panels installed in the block were previously imported from China. Wind operators also struggle to compete with the Chinese, whose turbines cost half as much. Carlos Tavares of Stellantis warns that the Western auto industry will "disappear under Beijing's offensive". Tesla's Elon Musk thinks Chinese companies will "demolish" their rivals if trade barriers are not raised. There is obvious opportunism in their words, but also a grain of truth.
In addition to reducing greenhouse gas emissions, the aim of the Green Deal – as heir to the so-called "Energy Union" – is to guarantee Europe greater energy security. Member states have already paid for underestimating this concept with the invasion of Ukraine, which made clear the risks of relying too heavily on a malicious supplier. After the efforts made to free itself from Russian gas, however, the ecological transition could put the European Union back into a condition of dependence on an authoritarian and potentially hostile nation: China.
It will be a different dependence, technological-industrial rather than energetic in the strict sense, but still dangerous. Beijing dominates the supply chains of all the devices necessary for the "sustainability" revolution (batteries, solar panels, wind turbines, electric vehicles…) right from the basic materials (lithium, cobalt, nickel, rare earths, polysilicon…). "Dominates" is the right word, given that Chinese shares of manufacturing and refining of these products are generally above 70 percent of the world total, with peaks even beyond 90 percent.
In short, in the absence or near absence of alternatives, there is the possibility that the ecological transition will put Europe (and not only) in a condition of industrial dependence on China. At worst, this subordination could put national and economic security at risk, should the People's Republic decide to limit or block supplies to gain political advantage. Moscow has done this several times in history; why shouldn't Beijing? Furthermore, the first signs have already been seen with the restrictions on the export of graphite.
Someone might reply, reworking a famous saying by Deng Xiaoping, that it doesn't matter whether the solar panel and battery are Chinese or European; the important thing is that they decarbonize. From a climate perspective, it is true: if the final objective is to cut emissions in the shortest time and at the lowest possible price, protectionism risks, on the contrary, increasing the costs of the transition and discouraging the adoption of clean tech .
It is undoubtedly a sensible reasoning, but it starts from a premise that in my opinion is incorrect: the energy transition has much more to do with world leadership than with the fight against global warming. If this were not the case, why did the United States approve a 369 billion dollar law – the Inflation Reduction Act – to stimulate the national manufacturing of batteries, photovoltaic panels, wind turbines, electrolysers, modular reactors, machinery with public money of carbon capture and so on? Why did the European Commission move in a similar way with the Net-Zero Industry Act? And because Joe Biden said – already in 2021 – that Americans must «develop and dominate the products and technologies of the future. Advanced batteries, biotechnology, computer chips, clean energy"? And why did Ursula von der Leyen want to guarantee that «the history of the clean technology economy will be written in Europe»?
Because, unlike the color of Deng Xiaoping's cat, the provenance of clean tech matters. And it is important because the energy transition is first and foremost an industrial revolution and a geopolitical competition: just as there cannot be sustainability without jobs, there can be no future without technology and industry; not a future as a great world power, at least.
Behind the net-zero emissions formula lies a dispute over resources, innovation and logistics. Energy conversion is accompanied by the desire of states to gain advantages over others: the European Union against China, China against the United States, the United States against the European Union. The losers of this “green industrial revolution” will have to deal with unemployment and irrelevance, while those who prevail will gain economic wealth and international influence. Not only the future of the planet, but the destiny of nations depends on technologies for the ecological transition.
It is the conclusion that I have reached through my work and that I have tried to explain and argue in a book: it is called Power. Technology and geopolitics in the energy transition . The preface is by Simone Pieranni.
(The speech was published in the Appunti di Stefano Feltri newsletter. Sign up here )
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/energia/power-geopolitica-transizione-energetica-appunti-feltri/ on Sat, 16 Mar 2024 06:53:58 +0000.