Oct 13, 2017

Why China is winning the clean energy race

U.S. politicians have been warning for years that America couldn't let China win the clean energy race. That's exactly what has happened, with the trends most stark in electric cars, solar and nuclear energy.

Why it matters: Building for the last decade, these trends have accelerated in the last couple of years. Politicians and business leaders said America's dominance in this space would bring jobs to the U.S. and security to our clean-energy resources, and now both of those goals are at risk.

Data: Rhodium Group; Chart: Chris Canipe / Axios

Why China is doing this:

  1. It needs to literally energize its 1.4 billion people, both how they travel and how they power their homes.
  2. Its leadership feels compelled to do it in a cleaner way than the U.S. did. Air pollution is at dangerously high levels across many of China's cities. People are seeing and feeling health repercussions of China's dependence on fossil fuel-fired cars and power plants in an acute way. Traditional air pollution, not climate change, is a big driver.
  3. China sees this as a national security and geopolitical strategy to both make and deploy clean-energy technologies.

Why America is losing:

  1. As a Democratically run nation, it can't push policies and subsidies by fiat. "China is able to simply mandate things in a way that would take us much longer to do," said Ethan ZIndler, head of Americas at Bloomberg New Energy Finance.
  2. The United States has no long-term, coordinated energy and environment strategy, unlike China. "It's very obvious the U.S. would have all the technology, innovation potential and money to be the leader," said Paolo Frankl, head of the renewable energy division at the International Energy Agency, a Paris-based group tracking global energy trends. "Ultimately, it's a question of strategic choices."

The U.S. is still creating technologies, the dozen experts interviewed for this article said. But China has blown past the U.S. in actually deploying them, and it's beginning to edge out America on the innovation front too. Let's take a look at three key areas:

Electric vehicles

Chinese manufacturers made nearly half of all electric vehicles sold in the world last year, a big change from just two years ago, according to newly released data from the IEA.

"There really is a concerted effort, central government led and provincial government supported, to push an electric vehicle policy that is one order of magnitude more aggressive than what's taken place in the U.S.," said Trevor Houser, partner at the Rhodium Group, a research firm.

Check out this recent piece by my colleagues Steve LeVine and Ben Geman for a deeper dive into China and it's electric vehicles push.

Solar energy

For the last several years, China has been the world's leader in solar panel manufacturing, driven by its expertise in broader manufacturing. Chinese companies account for around 60% of total annual solar cell manufacturing capacity globally, the IEA says.

More recently, China has blown past other countries as the top deployer of solar energy too, accounting for about 50% of deployment and demand.

China's dominance in this space is at the heart of a brewing trade battle between two U.S.-based (but foreign-owned) solar cell manufacturers and most of the rest of the industry. The two companies are asking the Trump administration to impose tariffs or another kind of remedy against a flood of cheap solar imports, mostly from China or Chinese-owned companies, while most of the industry is worried about prices going up.

Nuclear power

TerraPower, a company founded by Bill Gates, decided to test and ultimately deploy its new advanced nuclear technology in China. The project will include a partnership with the Chinese government and financial backing. Marcia Burkey, TerraPower's chief financial officer, said China has two things it needs to make the investment work that the U.S. doesn't: sizable electricity demand growth and long-term policy.

NuScale, a company developing another kind of advanced reactor that's smaller than what's operating today, says it's designing in the U.S. because of the safety gold standard certified by the U.S. Nuclear Regulatory Commission. Ultimately, NuScale is also eyeing China for its booming electricity market.

"Right now the focus is getting deployed and licensed in the U.S.," said Chris Colbert, chief strategy officer for NuScale. "We do think that once we do that our ability to scale this technology across the globe, including in China, could happen pretty rapidly."

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