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Tensions in the US-China tech war have shifted to green technology and climate efforts. Reports last month suggested Beijing had revised its export/import guidelines to limit the export of solar panel equipment (not the panels themselves). China exports the most solar panels in the world and dominates the solar panel supply chain; The top ten suppliers of solar PV manufacturing equipment reside in China, and Chinese manufacturers account for at least 80 percent of the solar panel manufacturing process.
In particular, the move to limit the export of equipment used to make key technology (here, solar panels) foreshadows US moves to do the same with semiconductors. This reflexive approach is in line with Beijing’s usual tit-for-tat approach when responding to controversial events with the United States in recent years. As US-China geopolitical tensions hit the green tech sector, heightened competition will bring both benefits and harm to the industry.
The beautiful…
The bottlenecks and exposures caused by the Covid-19 pandemic have contributed to a global push to re- and partner offshore supply chains, thereby increasing investment in key technologies. The Biden administration has increased spending on semiconductors and STEM education, as well as on batteries and related components. Not only will America’s green technology sectors receive greater policy priority, but they will also benefit from new funding initiatives and investments in STEM-related human capital and infrastructure. Moreover, diversified technology supply chains reduce the geopolitical advantage of third-party countries such as China in the medium to long term.
Additionally, the recognition of supply chain dominance in countries of concern is useful in stimulating research and developing alternative technologies to reduce dependence on vulnerable supply chains. China’s dominance in the production of silicon — a key mineral currently used in commercial solar panels — helps ensure research and commercialization of other materials for solar panels, such as perovskites (although Chinese companies still play a major role in developing the technology), and the U.S. Lead cadmium-telluride.
… and the ugly
China watchers traditionally point to climate as an area of cooperation with China, but in an increasingly geopolitical environment, it has pushed environmental efforts into competition. Secretary Raimondo’s speech on US-China relations on November 30 mentioned competition twenty-six times, but cooperation only six times. Democrats’ initial rush to divest from China’s domestic clean energy industries has temporarily strained relations with allies, while Republicans such as Rep. Cathy McMorris Rogers want to slow the transition to clean energy for fear of over-reliance on China (and then focus on comparing China) — both strategies addressing climate change. They prioritize geopolitical competition over defense. As Ilaria Marzocco noted, the National Security Initiative to develop these technologies is covering climate change needs.
Even an escalation of non-technological US-China tensions could threaten progress on climate efforts and green technology development. A conflict between the two in a flashpoint like Taiwan could distract these giants and force green technology developments to take a backseat to conventional security priorities. Following Nancy Pelosi’s visit to Taiwan, China suspended high-level US-China bilateral climate talks (although talks resumed in November). As the United States and China trade off, further tightening of the relationship threatens the spread of green technology and emissions reductions.
Looking ahead: Pushing the beautiful and minimizing the ugly
The Inflationary Reduction Act (IRA) provides billions for clean energy initiatives. Rapid implementation of various financing methods allows green technology companies to gain competitive advantages. Already the Environmental Protection Agency has made progress; In the year He expects to start accepting proposals this summer. Ensuring the implementation of U.S. industrial policies avoids a common climate problem that can reduce the pain of failing to implement commitments and change supply chains.
Policy makers should expect the reverse of technological tensions. The Biden administration has more technology restrictions planned with bilateral support to protect China in various sectors. Beijing could respond in kind with its own restrictions on more than just solar panel equipment. China also controls wind energy supply chains, for example Beijing is concerned that the Ford-CATL deal could share core battery technology with the US company. Biden’s potential foreign investment executive order has been expected for months, but it will come as no surprise to Beijing. Communicating with Chinese counterparts about U.S. policy changes—when necessary—helps reduce reactions to competing policies.
Meanwhile, as Pelosi’s visit to Taiwan interrupts months of high-level US-China climate change talks, easing concerns about other areas of the relationship could help protect green technology from the negative effects of geopolitical competition. Maintaining bilateral dialogue and cooperation on other common interests — such as AI-powered weapons management, the illegal fentanyl trade, North Korea and Iran’s nuclear threats — can counter some of the growing tensions in the green technology sector.
China and the United States are the two largest emitters, accounting for about 40 percent of global carbon emissions.2 Emissions will foster a healthy level of competition and the adoption of clean energy and protect supply chains, but officials must be careful that antagonism between green technologies slows development and prevents markets around the world from finding the best equipment. To combat emissions. How the two governments manage their relationship and domestic policies will affect outcomes for green technology companies and global climate security.
Jennifer Lee is a member of the Atlantic Council’s Women Leaders in Energy and Climate Alliance. She is an associate of the Scowcroft Group.
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Image: Microcontroller above printed circuit board (Vishnu Mohanan, Unsplash, Unsplash License) https://unsplash.com/license
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