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China set to dominate clean energy
China is the world’s manufacturer, and increasingly that applies to energy infrastructure as well:
> China vaulted past competitors in Denmark, Germany, Spain and the United States last year to become the worlds largest maker of wind turbines, and is poised to expand even further this year.
> China has also leapfrogged the West in the last two years to emerge as the worlds largest manufacturer of solar panels. And the country is pushing equally hard to build nuclear reactors and the most efficient types of coal power plants.
Chinese manufacturers benefit from three big advantages. The first, of course, is cheap labor. The second is a booming domestic market. China’s demand for electricity is rising 15% per year, and unlike more developed countries, China doesn’t have a lot of legacy infrastructure complicating their investment decisions. Finally, the Chinese government has made energy infrastructure a priority (although this isn’t remotely the same as saying they’ve made climate change a priority).
Naturally, the rise of clean tech in China has triggered protectionist handwringing:
> These efforts to dominate renewable energy technologies raise the prospect that the West may someday trade its dependence on oil from the Mideast for a reliance on solar panels, wind turbines and other gear manufactured in China.
On a very basic level, this analogy is insipid. Oil is a finite resource whose production is partially controlled by a handful of governments. Renewable energy — the sun, wind, tides, etc. — are not, broadly speaking, controlled by anyone. Access to different sources of renewable energy may be somewhat unevenly distributed, but far less so than access to fossil fuels.
Rather, China’s dominance comes in the area of manufacturing the products that allow us to harness renewable energy. This is the type of dominance that is subject to competitive pressure, that can be lost, or that inevitably becomes less important over time as industries age and their growth slows.
Moreover, it’s the type of dominance that benefits China’s trading partners. One of the chief obstacles to the widespread adoption of clean energy is cost. Given the seeming inability of the United States government to put appropriate market incentives in place, we ought to strongly cheer any sign that the market is making progress on its own.
None of this is to suggest that the U.S. is smart to simply cede massive new markets to rising powers. Rather, the problem isn’t so much China’s rise as the U.S.’s ongoing complacency.