China has ‘outsized presence’ in clean energy market, IEA warns in new report – National | Globalnews.ca
China has an “outsized presence” in the current clean energy market, the International Energy Agency (IEA) warns in a new report.
The intergovernmental agency identified Beijing’s influence in its 2023 World Energy Outlook, published Tuesday, where it also said a global shift to clean energy is “unstoppable.”
In its report, the IEA warns that clean energy supply chains could become unstable if investment remains concentrated in China.
“Clean energy supply chains today are highly concentrated. China has an outsized presence. It has huge shares of global manufacturing capacity for solar PV modules and batteries (75 per cent) as well as a very strong position in the refining and processing of critical minerals,” it said.
“This makes the entire system vulnerable to unforeseen changes that could arise due to shifts in national policies, commercial strategies, technical failures or natural hazards.”
The IEA identified major policy announcements that indicate developments will diversify some supply chains, such as the scale-up in planned battery manufacturing capacity in the United States following the adoption of the Inflation Reduction Act.
However, levels of supply chain concentration look likely to remain high, it added.
“Traditional concerns about fuel security do not disappear in energy transitions, and rapid deployment of clean energy technologies requires resilience along a new set of supply chains,” the IEA said, adding that more than half of global electric vehicle sales in 2022 were in China.
Western governments increasing domestic investments
Western governments have been shifting reliance away from countries like China and Russia over recent years amid worries they could leverage market dominance for political gain.
For example, western reliance on Russian oil began to change following Moscow’s unprovoked invasion of Ukraine in February 2022. On Tuesday, the European Union – a major consumer of Russian oil – said it was on pace to end its reliance on Moscow by the end of the decade.
In Asia, tensions are high between Taiwan and China, with the island nation fearing a potential conflict with Beijing, which claims it as its territory under its “one-China principle.”
Ottawa has described China as an “increasingly disruptive global power” in its Indo-Pacific strategy.
“China is making large-scale investments to establish its economic influence, diplomatic impact, offensive military capabilities and advanced technologies. China is looking to shape the international order into a more permissive environment for interests and values that increasingly depart from ours,” it said, adding that investment in China is, however, unavoidable.
“China’s sheer size and influence makes cooperation necessary to address some of the world’s existential pressures … Canada will, at all times, unapologetically defend our national interest, be it with regard to the global rules that govern global trade, international human rights or navigation and overflight rights.”
Canada has devoted billions to clean energy, most recently highlighted by major investments in auto manufacturers Volkswagen and Stellantis.
In March, Ottawa reached a deal that will see Volkswagen get up to $13.2 billion in production subsidies for batteries it produces at a plant planned for St. Thomas, Ont. Stellantis also secured a $15-billion agreement for a plant it’s constructing in Windsor, Ont.
The production subsidies for both plants are supposed to mirror incentives offered by the U.S. through the Inflation Reduction Act. The cost of the Canadian production subsidies is to be shared between the federal and Ontario governments, with Ottawa shouldering two-thirds of the cost.
According to Canada’s 2022-23 Energy Fact Book, last year there were 320 planned energy projects worth $427 billion in the pipeline, and 61 energy projects under construction worth $46.5 billion.
Oil and gas sector projects accounted for the largest portion of project value at $298 billion, while there were more electricity projects overall, with 179 in the works. By comparison, there were 183 clean technology projects valued at $116 billion being planned in 2022.
Clean energy transition ‘unstoppable’ with fossil fuel demand to peak by 2030
IEA executive director Fatih Birol called the clean energy transition “unstoppable” in a statement Tuesday.
“The transition to clean energy is happening worldwide and it’s unstoppable. It’s not a question of ‘if,’ it’s just a matter of ‘how soon’ – and the sooner the better for all of us,” he said.
The IEA said peaks in oil, natural gas and coal demand were visible this decade in its scenario based on governments’ current policies — for the first time ever. While coal use enters a steep decline after 2030, gas and oil use remains close to peak levels for the next two decades.
By 2030, the IEA expects there to be almost 10 times as many electric cars on the road worldwide, and it cited policies supporting clean energy in key markets as weighing on future fossil fuel demand.
For example, the IEA now expects 50 per cent of new U.S. car registrations will be electric in 2030, up from 12 per cent in its outlook two years ago, largely as a result of the U.S. Inflation Reduction Act.
“Governments, companies and investors need to get behind clean energy transitions rather than hindering them,” Birol said.
“There are immense benefits on offer, including new industrial opportunities and jobs, greater energy security, cleaner air, universal energy access and a safer climate for everyone.”
— with files from The Canadian Press and Reuters
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