US, China taking over EU’s green energy transition – Asia Times

US, China taking over EU's green energy transition - Asia Times

The EU’s environment plan is in trouble.

The Green Deal, which aims to reduce the world’s carbon emissions by 55 % by 2030, had a promising beginning thanks to the passage of several significant pieces of legislation, including a new carbon border tax and a ban on the sale of new combustion-powered vehicles starting in 2035.

Increasingly, but, Europeans are rebelling against natural limitations of which they have trouble seeing the benefits. The alarming number of Chinese and US companies entering the EU energy market poses yet another less-discussed but crucial threat to the republic’s shift to green power and energy.

In our book,” Energy: How to Recover Our European Ambition” ( published in French ), we shed light on this overlooked issue ahead of European elections that will be critical for the EU’s energy strategy, and call on the bloc to carefully weigh up cooperation and competition with sovereignty.

China’s clean share

China now has access to 80 % of the world’s clean-tech manufacturing capacity in 11 different industries, including solar wafers and a large number of lithium-ion battery components, despite the lack of any statistical data.

Foreign investors first stepped in in the early 2010s to take advantage of the country’s sovereign debt crisis to buy large stakes in what have long been seen as” republic” industries, such as power transmission and distribution systems.

Major among those was the nation’s largest utility organization, the State Grid Corporation of China (SGCC), generally known as the State Grid – the world’s third- biggest company nevertheless by revenue, behind Walmart, Saudi Aramco and Amazon as of March. The largest hydroelectric energy advanced in the world, Three Gorges Corp., is also becoming more prevalent.

For example, in Portugal, Three Gorges Corp. won the selling for the Portuguese administration’s 21 % interest in EDP- Energias de Portugal SA in 2010. Meanwhile, in Italy, SGCC expanded its presence by collaborating with the Italian government in 2014, acquiring a 35 % share in the CDP Reti fund, thereby attaining a blocking minority at the local gas network operator, SNAM, and electricity transmission network operator, Terna.

In Greece, the State Grid significantly increased its position by acquiring a 24 % interest in the Greek government’s federal power distribution network operator in 2016.

While Portugal, Italy, and Greece were major goals, Chinese investors have even acquired systems in Luxembourg. Last but not least, let’s not forget that China’s green-tech sector has supplied Europe with affordable solar panels and electric vehicles ( EVs ).

US making advances

The United States is even hoping to benefit from the EU’s ill thought-out energy plan, which raises the stakes even further.

Russia’s conflict with Ukraine has never diminished the United States ‘ standing in terms of power, particularly in the EU. In fact, the EU was fast to impose sanctions against its long-term trading partner to lessen its dependence, even though Russian gas was anticipated to serve as a bridge fuel in the move to electricity, especially for Germany.

The United States has grown to be the largest LNG exporter and supplier in Europe, partially filling the gap left by Moscow. This development encourages US trade while keeping home energy costs low, thereby widening the price gap as energy inflation in Europe undermines its standing as a resource-intensive industry’s comparative competitiveness and appeal.

Beyond these issues with power supply, EU member states are struggling to articulate a common vision, which raises concerns with strategic autonomy and independence.

With an attempt to form a European nuclear alliance established in November 2023, French companies, particularly those in France, have made an effort to develop fourth-generation small modular nuclear reactors ( SMR ).

However, countries like Italy, Belgium, and Romania are currently working with Westinghouse Electric Company to create lead-cooled fast reactors.

The coordination gap is another way that John Kerry’s confirmation of American influence in Europe can be benefited by. The Czech Republic, Slovakia, and Poland were chosen to participate in the” Clean Fuel from SMR” international consortium, which includes American companies and will provide funding for coal-to-SMR feasibility studies.

These EU nations are turning to Americans to construct new nuclear power plants despite the EU’s continued opposition to any support for nuclear projects developed on its soil, primarily because of their funding and technical expertise.

Cracks in net- zero

At a time when the bloc is considering decarbonizing, the size of these foreign investments in renewable energy, new nuclear facilities, and grid development may have a significant impact on its strategic independence.

These investments raise concerns over continental energy security, given the still fragmented nature of Europe’s energy landscape:

  • Short-term, supply issues caused by the energy crisis only lead to a shift in our energy dependence issue and a turning point for the EU.
  • In the face of Chinese dumping and US protectionionism, Europe will need to defend its domestic energy producers or grid operators after being neglected for a while.

One dependency must be eliminated before it becomes a new one, which is Europe’s biggest challenge. To replace imports of fossil fuels ( coal, gas, and oil ) that are harmful to the climate, the EU member states must accelerate and coordinate the development of their “green” technologies.

Toward green sovereignty

Due to these risks, the bloc must not only pay more attention to non-EU companies, but also assume greater responsibility for its own energy system. How can it do this, all while pursuing the vision of the “green, secure and affordable energy supply” set out in its Green Deal?

We advise that EU member states put forth more effort to create truly European energy grids. Our electricity system will increasingly rely on a variety of renewable energy sources as we move toward decarbonization. These arrangements will require extensive, interconnected networks that must be developed and strengthened by EU member states themselves.

A second emergency is green energy financing. The European Climate Neutrality Observatory warned in November that the bloc’s failure to reach its net-zero goals could be brought on by a lack of public investment in green energy and other advances.

Member states cut the Strategic Technologies for Europe Platform (STEP ) fund, which is intended for renewable energy and clean technology, to 1.5 billion euros in February, as opposed to takingheed of the warning.

Our book calls for a radical change of course by establishing a” European transition savings account” to attract private savings, on the one hand, and a” European sovereign fund” that receives proceeds from carbon-priced revenues, on the other.

The upcoming European elections will determine whether these will actually be implemented. Results that point to a higher European ambition might be useful for us to identify safe, affordable, and affordable solutions.

At the other end of the spectrum, further veering to the nationalistic right could carry harmful effects for the bloc’s economic clout and, paradoxically, sovereignty.

Michel Derdevet, president of the organization Confrontations Europe, coauthored this article. Patrick Criqui is the director and energy economist at Université Grenoble Alpes ( UGA ), and Caroline Sebi is the chair of the Grenoble École de Management ( GEM).

The Conversation has republished this article under a Creative Commons license. Read the original article.