May 6, 2024 - Energy & Environment

China's clean tech in focus ahead of U.S. meeting

Illustration of 4 narrow solar panels side by side, with a red marker drawing a fifth line diagonally across similar to a tally mark.

Illustration: Aïda Amer/Axios

New data on Chinese "clean" energy dominance highlights the stakes as climate diplomats from the world's two largest economies are set to face off.

Why it matters: Biden aides fear China's export of cheap solar, electric vehicles, and more could blunt the economic impact of U.S. climate policies.

The latest: The International Energy Agency just dropped a report on solar PV, wind, batteries, hydrogen electrolyzers, and heat pumps.

  • Last year, manufacturing investment rose over 70% to roughly $200 billion.
  • The on-the-ground impact is apparent — around 40% of this spending is on plants slated to come online this year, the agency notes.

Clean manufacturing accounted for 4% of global GDP growth and almost 10% of investment growth.

The intrigue: China remains the preeminent force, though its lead slipped last year.

  • It accounted for three-fourths of 2023's investment, down from 85% in 2022, as the U.S. and Europe made "significant inroads."
  • China is by far the cheapest place to build, which costs the U.S. and Europe an average 70%-130% more per unit of output capacity.
  • The U.S. is competitive with China on electricity costs and more attractive on gas, but labor is far costlier.

State of play: U.S. manufacturing is growing, aided by the 2022 climate law.

  • However, Biden officials like Treasury Secretary Janet Yellen bristle at subsidized Chinese products flooding markets — and are weighing new trade actions.
  • John Podesta, the top U.S. climate diplomat, recently said China's "non-market" practices have "distorted" clean tech markets.

Catch up quick: Liu Zhenmin, China's climate envoy, last week criticized U.S. and EU efforts to stem his nation's dominance.

  • Low-cost Chinese materials help speed the energy transition, he told Bloomberg.

What we're watching: Podesta and Liu are slated to meet in D.C. later this month.

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