Face it, China’s clean energy firms are key to Cop28 climate goals

Despite pressing Cop28 emission ambitions and China’s leading position in the clean energy sector, the US and Europe are shutting out Chinese products and firms
But no other country can produce the clean energy products needed as quickly or on the scale that China is doing

Chris Pereira

Published: 4:30pm, 16 Dec 2023

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This year’s Cop28 UN climate summit in Dubai came right after the International Supply Chain Expo in Beijing, held to strengthen and showcase China’s unbeatable manufacturing and logistics capabilities. Having attended both events, I see China’s connecting role as more important than ever.

Though the supply chain expo was largely hosted to bolster the Chinese economy, it also shows China’s underappreciated role in addressing climate change.

The good news out of Cop28 is a historic agreement to transition away from fossil fuels. This calls for the world to cut greenhouse gas emissions by 43 per cent by 2030 and by 60 per cent by 2035, relative to 2019 levels. Considering the pace (or lack thereof) at which emissions reductions have occurred in the last few decades, this is an ambitious and tight timeline.

While China still has a very long way to go in cutting emissions and the use of coal on the path to carbon neutrality by 2060, no other country has invested more in clean energy technology. Last year, China invested an estimated US$546 billion in clean energy.

If we are to reach the Cop28 targets and continue on the trajectory of increasingly affordable and abundant clean energy, we cannot do it without China.

The global supply chain is evolving into a more complex matrix of production and assembly across countries and continents. The reasons for this are both economic and political. Businesses are looking to maintain profitability as the price of labour in China rises and its production capacity grows increasingly sophisticated, moving more rudimentary tasks elsewhere.

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Chinese premier says Beijing opposes cutting off supply chains amid calls for decoupling

Meanwhile the United States and Europe are also looking to decouple or “de-risk” production away from China as much as possible. In the US, many of the advanced technology products being made in China, especially in clean energy, are increasingly seen as a threat to US security, economic sovereignty and industrial dominance, so companies are forced to reproduce parts of the supply chain in other countries.

While many of these concerns are simultaneously valid and overblown, the reality is that neither the US nor pretty much any other country can cost-effectively produce these products any time soon without China. And the near-universal consensus out of Cop28 on the time we have left to avoid catastrophic climate change is that we don’t have much of it.

For the clean energy transition to go beyond mere stated commitments, marketing campaigns and more “calls for action”, and to instead involve actual action, the world will need Chinese technology, Chinese companies and Chinese supply chains to be even more deeply integrated into the global economy.

Commitments mean nothing if the affordable and abundant clean energy technology is not available – and the companies making this technology at the biggest scale are mostly from China. In fact, 80 per cent of the world’s solar panel manufacturing capacity is in China.

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Cop28 climate summit closes with agreement to ‘transition’ from fossil fuels

Cop28 is part of a series of UN Conferences of the Parties, which are largely political gatherings of climate delegates, but that so many Chinese clean energy companies were in Dubai shows their importance in delivering on climate commitments.

The world’s largest manufacturer of solar equipment is a Chinese company called Longi Green Energy Technology, and its CEO and other executives were at Cop28 showcasing solar mega projects in the oil-rich Middle East, global partnerships with the United Nations and even strategies for developing hydrogen power.

The US can restrict its imports of solar products from Chinese companies like Longi, but given China’s dominance and US President Joe Biden’s goal of a decarbonised power sector by 2035, the prices and delivery times of solar panels produced elsewhere are just nowhere near the scale needed to reach the goal.

Workers inspect solar panels in the early morning at the fishing-solar complementary photovoltaic power generation base in Taizhou, in China’s eastern Jiangsu province, on July 12, 2023. Photo: AFP

For the same reasons as in the solar industry, China’s economy of scale and government support have helped Chinese companies get a leg up on the competition and come to quickly dominate many sectors of the electric vehicle industry.

The US is also trying to limit the role of materials from Chinese companies in electric vehicles that receive US tax subsidies. To avoid this, US automotive manufacturers and other companies are partnering with Chinese companies such as CATL to build production facilities in the US. But even these facilities face so much political backlash that a US$3.5 billion partnership between Ford and CATL to produce electric-vehicle batteries in Michigan was put on hold.

China’s EV lead is unassailable – the Global North simply can’t compete

The reason these partnerships are cropping up in the first place is because the US can’t do it alone right now. Tesla relies on China for an estimated 40 per cent of its battery supply chain for the same reason, and this has allowed it to push electric vehicles into the mainstream of car-dominant America.

The Cop28 fossil fuel deal could provide global momentum to the addressing of climate change. Efforts to restrict Chinese clean-energy companies will only stifle that momentum and, for countries with the most historic responsibility to reduce emissions, cut off access to the solar products, energy storage technology and electric vehicles needed at scale to drive a clean energy transformation. If we can’t figure this out, the talk at Cop28 in Dubai will have been nothing more than empty words.

Chris Pereira is the founder and CEO of North American Ecosystem Institute, a communications and business consulting group