European Union (EU) has taken significant steps toward achieving higher renewable energy goals by 2030. The European Parliament recently endorsed the Renewable Energy Directive, a pivotal component of the European Green Deal, which aims to transform the EU into a carbon-neutral bloc by 2050. However, as the EU intensifies its efforts to reduce emissions and accelerate the adoption of renewable energy and electric vehicles, a new concern has emerged – a growing reliance on China for critical materials, including lithium-ion batteries, solar panels, and wind turbines.
The directive, which requires approval from EU member states to become law, sets a more ambitious target of 42.5% for the share of renewable energy in the EU's energy consumption by 2030, up from the current goal of 32%. Despite progress, renewable energy accounted for only 21.8% of the EU's energy consumption in 2021, a slight decrease from 22.1% in the previous year, according to Eurostat.
See also: Renewable Energy Makes Up 21.8% of EU's Gross Final Energy Consumption in 2021
The EU's pivot toward green energy has triggered alarm bells about the bloc's increasing dependency on Chinese-made products, potentially jeopardizing its domestic manufacturing capacity in the green energy supply chain. Chinese products, known for their competitive pricing, pose a challenge to Europe's competitiveness, compounded by concerns surrounding the U.S. Inflation Reduction Act.
“Without implementing strong measures, the European energy ecosystem could have a dependency on China by 2030 of a different nature, but with a similar severity, from the one it had on Russia before the invasion of Ukraine,” warns a paper drafted by the rotating Spanish presidency for an EU summit in early October, as quoted by Reuters.
The paper expressed concern that as the EU ramps up its demand for lithium-ion batteries, electrolyzers for green hydrogen, and fuel cells, China could assume a significant role in these supply chains.
See also: EU and Norway Forge Green Alliance to Accelerate Climate Action and Environmental Protection
European Commission President Ursula von der Leyen recently criticized China for unfair trade practices in the solar panel supply chain, citing the adverse impact on European businesses. In her EU State of the Union address, von der Leyen highlighted the flood of competitively priced Chinese electric cars in global markets, leading to market distortions.
“We have not forgotten how China's unfair trade practices affected our solar industry. Many young businesses were pushed out by heavily subsidized Chinese competitors. Pioneering companies had to file for bankruptcy. Promising talents went searching for fortune abroad,” von der Leyen said.
The Commission responded by initiating an anti-subsidy investigation into Chinese electric vehicles.
“Europe is open for competition. Not for a race to the bottom,” the Commission's president said.
See also: European Parliament Committee Approves Revised EU Renewable Energy Targets Amidst Criticisms
European industry associations have echoed these concerns, emphasizing the importance of supporting and strengthening domestic manufacturing supply chains. WindEurope, for instance, cautioned that the EU could risk losing its European manufacturing base unless policy changes are implemented.
“And the struggles of the European wind supply chain mean Chinese turbine manufacturers are now starting to win orders here. They offer cheaper turbines, looser standards and unconventional financial terms,” WindEurope said, commenting on von der Leyen's address. “There is a very real risk that the expansion of wind energy will be made in China, not in Europe.”
Days before the State of the Union speech, SolarPower Europe raised alarms about record-low prices of solar imports, warning that this trend could undermine the EU's strategic autonomy goals and force more European solar manufacturers into bankruptcy.
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“Right now, we risk losing a key strategic industry in Europe, precisely at the moment when energy transition geo-politics require supply chain diversification, and a revival of the European solar manufacturing sector,” SolarPower Europe wrote in a letter to the EU's top institutions.
