President Joe Biden has just signed into law the biggest clean energy investment in US history. It includes nearly $370 billion in grants for the development of solar and wind energy in the United States, electric vehicles and much more.
After decades of struggle and failure by Democrats to rally political support for serious climate action, the bill is a big step forward for the United States. But Congress also had economic and geopolitical goals in passing the legislation: namely, to catch up with a rival superpower.
China occupies a paradoxical place in the global fight against climate change. On the one hand, the country is perhaps best known as being by far the world’s largest coal consumer and the world’s largest emitter of carbon dioxide. On the other hand, China has become a global clean energy champion over the past decade, aided by large-scale government support. In total, between the private and public sectors, China invested $380 billion in clean energy in 2021, more than any other country. Beyond the sheer amount of money, the country has proven that solar and wind power plants can be built on a large scale and at rapid speed. And the country has reaped the economic rewards of its foresight: Chinese companies now dominate many of the clean energy industries that the world is finally embracing in the fight against climate change.
The United States is now embarking on a crucial mission to catch up on climate investment. As Washington prepares to unleash its long-awaited climate spending, these charts show the clean energy gap between the United States and China. The United States views closing this gap as critical to the climate, geopolitical leadership, and the future of the U.S. economy.
How China Leapfrogged the United States on Renewables
China’s leadership in clean energy investment and generation is the result of more than a decade of relentless entrepreneurship and government subsidies. The initial drivers of the Chinese solar industry were actually the subsidies and incentives offered by other governments, especially that of Germany. Then, following the global financial crisis of 2008, the Chinese government decided to invest in building these alternative energy sources at home.
At the time, the Chinese were increasingly worried about air pollution caused by Chinese coal-fired power plants. in large cities, air quality had become a problem that the government could not sweep under the rug. Renewables were an attractive substitute and they also held economic promise.
“There was both a climate campaign and a pollution campaign there,” said Ilaria Mazzocco, a researcher at the Center for Strategic and International Studies who focuses on China’s energy policy. “But I also think, perhaps more importantly, that these were industries that the government saw as strategic.”
The Chinese government has set wind and solar capacity targets, extended lines of credit to private companies that largely dominate the sectors, and implemented subsidies to allow these clean energy sources to compete with cheaper electricity generated at low cost. from coal.
In the decade that followed, these government policies paid huge dividends: solar and wind power generation took off. Last year, China accounted for almost half of the world’s new renewable energy capacity, and the country recently built the world’s largest solar power plant – a vast array of solar panels covering the desert in the Chinese province of Qinghai. 2022 is set to be another banner year, with projections suggesting new solar capacity could double to an all-time high.
Progress in the United States seems modest by comparison. US solar and wind tax credits in the United States have driven solar and wind growth, but overall financial and regulatory support for renewable power generation has been higher in China. And efforts to accelerate America’s transition to clean electricity through tougher regulations, like President Obama’s Clean Power Plan, have been abandoned under the Trump administration.
The difference between the two countries’ green power growth is clear in another measure: the share of electricity generated from renewables. China’s share of renewable electricity has increased from 16% in 2005 to 28% in 2021; in the United States, the share of electricity from renewable sources remains lower than that of China.
Of course, it’s important to note that other trends in China have not been so climate-friendly: coal is still king when it comes to power and electricity generation – powering steel mills, cement production and Chinese factories. The country’s carbon dioxide emissions have actually soared in recent years to a new high in 2021, following a pandemic-induced stimulus that briefly fueled construction (and production of these energy-intensive materials). carbon, steel and cement, which go into the building).
But China’s clean energy trend remains an important climate story. “China continues to have a huge challenge ahead of it, due to its dependence on coal,” Mazzocco told Grid. “But what we are seeing is record production of renewable energy and infrastructure that supports the energy transition. Trends indicate that China may eventually produce enough renewable energy to start supplanting coal, which which is actually very good news.
China has also overtaken the United States on electric cars
With solar and wind, China is now the undisputed leader in electric vehicles. Just as China was quick to support its renewable energy industries, the government also bet on electric vehicles early on. Over the past decade, the Chinese government has provided more than $100 billion to what it calls the “new energy” vehicle industry (which includes electric and hydrogen fuel cell vehicles). This includes generous subsidies and tax breaks for buyers.
China has never been able to outperform foreign manufacturers in the conventional auto industry, but the electric vehicle sector offered a new opportunity. “There was a clear interest in promoting a new kind of technology,” Mazzocco said, “with the idea that it would help Chinese manufacturers leapfrog Western multinationals and other global multinationals.”
2021 has been a banner year for electric vehicles in China, with 3.3 million vehicles sold in the country alone, half the global total. This accounted for 16% of car sales in China. Meanwhile, in the United States, consumers have had access to tax credits for electric vehicles, but the subsidies have been less generous. Electric car sales only reached 5% of total US auto sales in 2021.
Green Technology: Made in China or Made in USA
The boom in China’s renewable energy industries has set off alarm bells in Washington. And these alarm bells were an important driver for the new legislation.
China has developed a huge market for clean energy products by creating strong domestic demand for wind, solar, electric vehicles and other climate-friendly technologies. The result is that China has also become a manufacturing hub for green technologies, some of which are exported around the world. The components of electric vehicle batteries and solar panels are the most convincing examples. The vast majority of solar panels produced around the world, including those used in the United States, are made by Chinese companies.
The United States retains some advantages in clean technology manufacturing: Tesla is the world’s leading electric vehicle company and the United States retains its place in wind turbine manufacturing.
But U.S. lawmakers worry that China’s success in building clean energy supply chains will mean that China will increasingly reap the economic benefits of America’s clean energy transition, and that United States will become increasingly dependent on its rival.
“I think there’s been a concern that if we really invest in climate policy, and we want to accelerate the use of all these technologies,” said Jonas Nahm, an assistant professor who focuses on energy policy at Johns Hopkins University, “we need to make sure that we also get some of the economic benefits of making the products and not just importing them.”
The United States hopes the new bill will help. The legislation is designed to give consumers and utilities greater financial incentives if they buy American-made solar panels, wind turbines and electric vehicle components. While it remains to be seen to what extent the United States can gain ground on China, experts are optimistic about the country’s ability to expand manufacturing of some of these technologies. And at a time of historically deep acrimony between the US and China, they see this clean energy race as a healthy product of US-China competition.
“I think there’s been this really anti-Chinese sentiment in the United States for a long time, and I think a lot of it stems from this resentment that China has been able to build all these things, and we don’t. ‘didn’t,’ Nahm told Grid. In the past, he said, that has not been enough to motivate serious investment here, but this bill changes that. “The great thing about this, even though it’s driven by competition with China, actually it’s about investing in domestic capabilities, and less pointing the finger at Beijing… I think it’s really a kind of hope.”
Thanks to Dave Tepps for writing this article.