In recent years, the European Union has replaced one critical energy and security vulnerability with another heavy dependence for its green energy ambitions.
As the EU has moved to phase out Russian energy imports and reduce the overall dependence on oil and gas, it has rolled out massive renewable energy capacity. But the clean energy transition has become dependent on another global power, which could undermine Europe’s energy security—China.
China Dependence
For its renewable energy buildout, the EU has relied on imports of solar panels, wind turbines, critical minerals, battery materials, and other key equipment from China.
Cheaper Chinese products have flooded the EU market, raising concerns about the EU’s domestic manufacturing, energy security, and national security.
Since the launch of the EU green deal, the Russian invasion of Ukraine, and the Middle East crisis, the EU has moved to slash its oil and gas dependence. But in the process of rapidly rolling out solar, wind, and battery capacity, Europe has moved to replace the fossil fuel dependence with dependence on China for critical minerals and components of clean energy installations.
The EU is realizing this dependence on China is untenable, and has launched measures to reduce the reliance on Chinese clean energy components.
None have made a meaningful impact so far.
Europe has struggled to find the balance between fast green energy rollout to meet its ambitious climate goals and cut fossil fuel dependence, on the one hand, and too much reliance on Chinese products for the energy transition, on the other hand.
The Cost of Reducing Reliance on China
The move away from Chinese dependence will cost the EU, a lot.
Building domestic capacity will reduce the reliance on China, but it will come with high costs in the short term, according to EU Climate Action Commissioner Wopke Hoekstra.
The EU must act now to reduce the outsized dependence on China, Hoekstra told Euronews in an interview this week.
Europe should have acted five or ten years ago, and the longer it delays decisive action, the higher the costs will be in the long term, according to the Commissioner.
“But it will be much cheaper and much more to our advantage to do it now than be wishy washy and wait another five to 10 years,” Hoekstra told Euronews. Related: Asia Spot LNG Prices Hit 5-Month High as Hormuz Blockage Drags On
The high dependence on China is a “dangerous and uncomfortable” vulnerability for both Europe’s climate ambitions and economic security, the Commissioner added.
Chinese parts and equipment are also a vulnerability for Europe’s security of critical infrastructure, Hoekstra said.
Europe’s challenge right now is to build domestic capacities to reduce dependence on China, even at higher costs in the short term, according to Commissioner.
Europe’s Challenges and Struggles
But this is easier said than done.
The EU is struggling to diversify its imports, a report by the European Court of Auditors (ECA) found earlier this year.
“EU action on import diversification is not producing tangible results, bottlenecks hinder domestic production, and recycling is still in its infancy,” the auditors said.
“Against this backdrop, many EU-supported projects are unlikely to succeed in time.”
“Unfortunately, we are now dangerously dependent on a handful of countries outside the EU for the supply of these materials”, said Keit Pentus-Rosimannus, the ECA Member responsible for the audit.
“It is therefore vital for the EU to up its game and reduce its vulnerability in this area.”
The EU this year launched a platform to aggregate demand of raw materials and boost diversification under its Raw Materials Mechanism to diversify supplies of critical raw materials.
The EU is looking to partner with non-EU countries such as Brazil to diversify its supply chains away from China.
Analysts warn that dependence on China, while helping cheaper and faster clean energy installations, is undermining the economic and national security of the EU.
In 2024, China accounted for 98% of European solar panels, 88% of lithium-ion battery imports, and 61% of inverter imports, according to a report by non-profit strategy center Loom from earlier this year.
Despite the EU’s efforts in recent years, policies have not led to any significant de-risking of clean technology manufacturing, said the report, co-authored by Michal Meidan from the Oxford Institute for Energy Studies (OIES) and Michael Collins, a former deputy head of national security strategy at the UK Cabinet Office.
If Europe doesn’t rein in its dependence on China’s clean tech, its economies will suffer, and its AI ambitions could be undermined and risk becoming dependent on Chinese batteries, the authors said.
“The fastest, cheapest route to deploying clean energy at scale — solar panels, battery storage, grid technologies, heat pumps — currently runs overwhelmingly through China,” Loom’s Executive Director Joss Garman said.
“Europe’s response to its oil and gas dependency risks quietly consolidating another dependency: this time on Chinese clean energy technology,” Garman noted in the foreword to the report.
“One chokepoint replaced by another, no less real for being less visible on an energy bill.”
By Tsvetana Paraskova for Oilprice.com
