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You can listen to this episode on the CSIS website, or wherever you get your podcasts.
In this episode of GeoTech Wars, Kirti and Andrew discuss the current state of the green energy technology industry with Dr. Ilaria Mazzocco, senior fellow with the Trustee Chair in Chinese Business and Economics at CSIS. Prior to joining CSIS, Dr. Mazzocco was a senior research associate at the Paulson Institute, where she led research on China’s climate and energy policy.
As Ilaria explains, in contrast to other technologies discussed on GeoTech Wars, China currently leads in green energy technology development and innovation. For example, China manufactures over three quarters of all lithium-ion batteries, along with over 80 percent of cathodes and anodes, two key components in electric vehicle (EV) batteries. This is not just China capitalizing on cheap manufacturing either. In the EV industry, for instance, Chinese vehicles are competitive not just on cost, but on quality.
China cultivated technology leadership in green energy tech in various ways. Direct government interventions such as subsidies, cheap loans, and guidance funds have been instrumental. Also invaluable, however, is China’s immense internal market. While China is a large emitter of greenhouse gases, it is also a massive consumer of green energy technology. China accounts for 60 percent of all new EV sales, along with 50 percent of utility-scale solar capacity and 40 percent of wind capacity. This huge internal market supports the development of many enterprising companies, fostering a highly competitive domestic environment. The firms which survive this intense competition within China emerge stronger because of it, making them formidable competitors internationally.
Given the growing economic competition between the United States and China, there are understandable concerns that China will weaponize its leadership in green energy technologies to suppress progress in the United States and other Western nations. This concern is not unfounded, as China has already restricted the export of critical minerals in the green energy supply chain in response to past U.S. policy decisions.
However, rather than suppressing its competitors, China’s true long-term advantage will likely be its ability to boost its own competitiveness by lowering costs. Today, the primary focus in the green energy industry is making the existing technologies more cost-efficient, rather than developing new cutting-edge technologies. In this way, China’s manufacturing strength is a considerable advantage.
Still, export restrictions from China could be detrimental to the United States’ green energy industry. There is a general understanding post-COVID that supply chain diversification and resilience is vital for economic and national security. Subsequent government initiatives, such as the Inflation Reduction Act, attempt to boost U.S. capacity in green energy technologies by emphasizing supply chain resiliency. But many key nodes in the supply chain are difficult to acquire independently. Over 80 percent of the United States’ supply of critical minerals, for instance, currently come from foreign sources. While there is an ongoing effort to develop domestic supply chains for these minerals, it can take upwards of a decade for new mines to come online. So, the United States will likely remain reliant on China and other nations for certain key inputs some time.
Complicating the situation is the urgency of the problem. Climate change is ongoing, and our current trajectory is insufficient to limit temperature increases to the Paris Agreement target of 1.5 degrees Celsius. “De-risking” may be attractive from an economic and national security perspective, but in the green energy industry it involves some serious tradeoffs that must be considered.
This piece summarizes the discussion in GeoTech Wars, "De-Risking Green Tech with Dr. Ilaria Mazzocco.” It does not represent the opinions of the hosts.
