BAKU, Azerbaijan, December 19. In an attempt to counter China's control of global clean energy supply chains, Western nations are striving to boost their manufacturing capacity for a secure and cost-effective supply, Rystad Energy, an independent energy research and business intelligence company from Norway, said, Trend reports.
Yet, according to research by Rystad Energy, these endeavors may prove insufficient and come with a hefty price tag of up to $700 billion. Furthermore, any meaningful impact is unlikely until at least the next decade.
Since the Russia-Ukraine war started in early 2022, there has been a heightened emphasis on energy security in the West. This has compelled governments to assume greater responsibility for the supply chains of renewable and clean technologies. Notably, China holds a dominant position in the manufacturing of solar and battery cells. Concerns about reliability have prompted the EU and the US to launch significant initiatives to reduce their dependence on Chinese production.
In addition to focusing on domestic sources, China is expanding its reach beyond its borders to secure raw materials. For example, China has made substantial investments in rare earth mineral mining projects in Africa, including lithium extraction in countries like Namibia.
At the same time, mainland China has substantially increased its annual investment in manufacturing and processing capacity, from $10 billion in 2016 to $140 billion in 2023. This has resulted in significant growth in solar PV and battery cell capacities. In contrast, the combined annual investment in all other nations has only risen from $7 billion in 2016 to $20 billion in 2023.
Efforts in the EU and the US aim to level the playing field, but the projects outside China represent less than a quarter of the necessary investments to fully decouple from China. A total of $700 billion in mining and manufacturing investments is required to break Chinese dominance in these markets.
China not only has a head start in manufacturing and mining but also possesses a know-how and intellectual property advantage, with Chinese companies holding numerous patents and leading in technology development. This will impede the EU and the US from catching up quickly, extending their self-sufficiency timeline into the 2030s. Large-scale mineral recycling, including decommissioned equipment, is essential, with the EU targeting to source 25 percent of its mineral demand from recycling.