Going green without China? : the EU's clean tech tighrope.
Date: 2024-05-23
Institutions: European Union Institute for Security Studies
Subjects: China, EU industrial policy, clean technology, green economy, innovation, management of resources, raw material, sustainable development

GOING GREEN 
WITHOUT 
CHINA?

The EU's clean 
tech tightrope

by

Lukas Trakimavičius
Associate Analyst, EUISS

For years, the EU has played a prominent role in lead-
ing the world’s transition to clean energy through its 
robust  backing  for  green  technologies  and  a  deter-
mined policy push to reach net zero. Initiatives such 
as the European Green Deal, ‘Fit for 55’ and the Net 
Zero Industry Act (NZIA) not only advance ambitious 
emissions  reduction  targets,  but  also  promote  clean 
tech that is made in Europe.

All the while, China has established itself as a clean 
energy juggernaut, increasingly dominating the sup-
ply  chains  of  clean  tech  on  which  the  EU  relies  (1). 
China’s meteoric rise in the clean tech sector has also 
coincided with an increasingly bellicose approach to 
diplomacy,  exemplified  by  recurrent  threats  to  ban 
critical  mineral  exports  and  the  imposition  of  con-
trols on exports of certain materials (2). Going forward, 
the EU will have to walk a fine line between meeting 
its climate and energy goals, while also managing its 
dependencies on Chinese supply chains.

© European Union Institute for Security Studies, 2024.
The views expressed in this publication are solely those of the author(s)  
and do not necessarily reflect the views of the European Union.

BRIEF / 6

May 2024

Summary

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The  EU  has  ambitious  goals  for  acceler-
ating  the  energy  transition  through  lo-
cally manufactured technologies. However, 
Beijing’s  grip  on  the  clean  tech  industry 
makes  it  difficult  for  the  EU  to  go  green 
without Chinese equipment or its extensive 
supply chains.

China’s  advantage  lies  in  government  in-
centives, access to critical materials, highly 
efficient manufacturing ecosystems, lower 
labour  costs  and  less  stringent  environ-
mental regulations.

To advance its energy goals, the EU should 
pursue a multi-pronged strategy. It needs 
to ensure a level playing field for its clean 
tech  companies  and  prioritise  innovative 
technologies  that  rely  less  on  imported 
materials  and  Chinese  supply  chains.  It 
also has to secure access to critical materi-
als through trade deals and consider estab-
lishing stockpiles of these.

Lukas Trakimavičius

Clean tech hubs
Clean tech hubs
The EU trails far behind China 
The EU trails far behind China  in manufacturing clean 
in manufacturing clean technologies
technologies

China

2023

2030

Solar

Other

India

Wind

Batteries

EU

US

Electrolysers

Heat pumps

25

0
Current and projected geographical concentration
2023-2030

50

75

100

Data: IEA, 2023

MAKING THE ENERGY 
TRANSITION WORK

To ascertain if the EU can go green without China, a 
clear-eyed  assessment  of  its  industrial  landscape  is 
crucial. This can be done by examining the technolo-
gies that are key for the energy transition: solar pho-
tovoltaics (PVs), wind turbines, batteries, electrolys-
ers and heat pumps.

T he continent’s 

ailing solar PV 
industry sources most 
of its components 
from China.

Solar PVs and wind turbines are expected 
to cover the lion’s share of the EU’s new 
renewable  electricity  production  capac-
ity  over  the  coming  decades.  Batteries 
should  enable  the  electrification  of  the 
EU’s  vehicle  fleet  and  play  an  impor-
tant  role  in  energy  storage.  Meanwhile, 
electrolysers are key for the production of green hy-
drogen,  which  can  clean  up  hard-to-abate  sectors 
like steel and cement, whereas heat pumps will play 
a  pivotal  role  in  decarbonising  buildings  and  light 
industries.

When  it  comes  to  manufacturing  capacity,  the  EU’s 
industries are a mixed bag. The continent’s ailing so-
lar PV industry sources most of its components from 

2

China  (3).  In  contrast,  wind  turbine  and  electrolyser 
manufacturers have the capacity to produce well be-
yond  internal  needs (4).  Europe  also  has  a  reasonably 
strong  heat  pump  industry,  having  met  60  %  of  its 
own demand in 2022 (5).

For batteries, the verdict is not as clear-cut. At first 
glance, domestic battery producers were able to meet 
around  50  %  of  the  EU’s  needs  in  2022 (6).  However, 
most of these batteries were produced by Korean and 
Chinese companies that have set up their manufac-
turing bases in the EU.

Going forward, the International Energy Agency (IEA) 
predicts an uptick in the EU’s global share of battery 
and  heat  pump  manufacturing  by  2030,  alongside  a 
slight dip in the EU’s wind turbine output, while pro-
duction  of  other  technologies  is  expected  to  remain 
largely  unchanged.  Initiatives  like  the  NZIA,  which 
aim to scale up the production of clean energy tech-
nologies, might change these projections in the EU’s 
favour, but it is still too early to say to what extent 
this will be the case.

A closer look at the entire value chain reveals the EU’s 
acute reliance on China. Beijing accounts for around 
70 % of the global supply of graphite and rare earth 
elements and holds a near-monopoly on the process-
ing stage of critical minerals (7). By contrast, the EU is 
almost entirely reliant on imports to meet its critical 
material  needs.  Graphite,  lithium,  nickel  and  cobalt 
play an important role in the production of batteries, 
while rare earths are needed for permanent magnets, 
which are vital for wind turbines and electric vehicle 
(EV) motors, among other technologies.

COULD THIS CHANGE?

In theory, the EU has many of the ingredients needed 
to go green without China. It has the know-how, the 
industrial  foundations,  and  the  policy 
support  to  pursue  ambitious  reshoring 
initiatives.  Yet,  for  the  time  being,  an 
energy  transition  without  China  would 
be impossible. For a start, it would take 
a colossal amount of investments to prop 
up  the  EU’s  clean  tech  industry  to  the 
point  where  it  could  substitute  Chinese 
components.  According  to  Bloomberg 
NEF,  Europe  would  need  to  invest  an  eye-watering 
€136.3 billion in manufacturing plants to meet 100 % 
of its clean energy demand locally by 2030 (8).

Moreover, it is not just the cost of building factories 
that would make this effort difficult. Replicating the 
vast, vertically integrated manufacturing ecosystems 
present  within  China  would  take  determination  and 

A ny Chinese effort 

to weaponise clean 

tech exports would 
quickly backfire.

time. Also, even if the EU were to succeed in replicat-
ing China’s manufacturing capability, it would likely 
struggle to keep this industry competitive. The man-
ufacturing costs of solar PVs, battery packs and wind 
turbines  in  China  are  50  % (9),  40  % (10),  and  20  % (11) 
lower than in Europe, respectively. This is attributed 
not only to government incentives, but also reduced 
costs of materials, electricity and labour.

Reducing the EU’s dependence on criti-
cal  materials  sourced  from  third  coun-
tries — as envisioned by the EU’s Critical 
Raw Materials Act — will also be no easy 
task.  While  the  EU  might  find  some  of 
these minerals at home, strong local op-
position to new mining projects casts doubt on their 
feasibility.  Also,  even  if  approved,  any  new  mine 
would  not  become  operational  for  about  a  decade. 
Moreover,  this  does  not  even  account  for  the  EU’s 
lack  of  mineral  processing  capacity,  or  the  higher 
operating  costs  associated  with  domestic  mining 
due  to  stricter  environmental  regulations  compared 
to  China.  Ultimately,  recycling  minerals  from  used 
equipment will not be a scalable solution until large 
quantities  of  batteries  or  wind  turbines  reach  their 
end of life, which estimates suggest will not happen 
until the second half of the next decade (12).

ALL DOOM AND GLOOM?

At  this  point,  there  is  no  doubt  that  the  EU  will  be 
unable to go green without Chinese equipment or at 
least  access  to  its  supply  chains.  While  this  raises 
valid  concerns  about  associated  geopolitical  risks,  it 
does not pose an existential threat.

For starters, being dependent on solar panel imports 
is  not  the  same  as  being  dependent  on  natural  gas. 
This is because even if new solar PV shipments from 
China ceased today, the EU could still generate elec-
tricity  from  existing  panels.  In  fact,  most  modern 
solar  panels  have  an  average  lifespan  of  around  30 
years,  while  solar  inverters  (another  market  domi-
nated by China) last for up to 15 years. If China lim-
ited access to equipment containing rare earths, like 
permanent  magnets,  the  deployment  of  new  wind 
turbines would drastically slow down, posing a very 
serious  challenge  to  their  developers (13).  Yet,  as  dis-
ruptive  as  this  would  be,  it  would  not  cause  peo-
ple to freeze to death or push the EU to the brink of 
economic  collapse  as  the  bloc  could  rely  on  existing 
power generation sources.

Furthermore,  any  Chinese  effort  to  weaponise  clean 
tech  exports  would  quickly  backfire.  This  is  be-
cause it would turbocharge the EU’s efforts not only 
to  de-risk,  but  to  decouple  from  China,  providing  a 

GoinG  Green wiThouT  China? | The eu's CLean TeCh TiGhTrope

boon for clean tech manufacturers in Europe and be-
yond,  all  while  threatening  the  revenues  of  China’s 
export-reliant 
industries.  For  example,  Europe 
alone  spent  €18.5  billion  on  Chinese  solar  products 
in 2022 (14). Efforts to choke off access to rare earths 
would also fuel the rise of alternative suppliers. The 
historical  precedent  is  clear:  in  2010,  when  Beijing 
threatened to halt rare earth exports to Japan due to 
a  territorial  dispute  over  the  Senkaku/
Diaoyu  Islands,  Tokyo  responded  by 
implementing  a  decisive  diversification 
strategy. It invested in an Australian rare 
earths mining company with a process-
ing  plant  in  Malaysia,  helping  reduce 
Japan’s rare earth reliance on China from 

90 % to 60 % (15).

Meanwhile,  there  are  valid  cybersecurity  concerns 
about using Chinese-built components in critical in-
frastructure like power grids (16). However, the risks of 
using similar equipment (e.g. solar inverters) in less 
critical areas, while non-negligible, are less clear.

ROLLING UP THE SLEEVES

The  green  transition  will  not  be  easy.  Not  only  be-
cause the continent will need to overhaul its energy 
system,  but  also  because  it  will  have  to  live  with  a 
troubling reliance on Beijing. Even if this dependence 
may  not  be  as  dangerous  as  it  initially  might  seem, 
the EU must pursue a de-risking strategy. Failure to 
do  so  would  undermine  the  EU’s  goal  of  becoming 
the home of industrial innovation and the champion 
of clean tech.

At  least  four  strategies  are  available  for  Brussels  to 
tackle its dependence on China.

First, level the playing field for clean tech companies. 
Concerns  have  existed  for  years  regarding  potential 
market  distortions  caused  by  Chinese  government 
incentives. They are suspected of  creating an unfair 
advantage  for  Chinese  clean  tech  producers,  poten-
tially  flooding  the  market  with  lower-priced  goods. 
The EU needs to double down on its existing efforts to 
investigate if illegal Chinese subsidies have been used 
to distort the competition for technologies like wind 
turbines and EVs.

Second,  prioritise  innovation.  Pouring  funding  into 
established technologies like solar PVs in an already 
over-supplied  market  and  playing  catch-up  with 
China  is  one  way  of  mitigating  this  risk,  but  may-
be  there  is  a  better  way  forward.  After  all,  there  is 
the  unintended  likelihood  that  taxpayers’  money 
could end up going to ‘zombie companies’ that could 

3

Lukas Trakimavičius

not  survive  without  subsidies  and  compete  on  the 
global market.

An alternative approach would be to invest in emerg-
ing technologies that could reduce reliance on imports 
and  Chinese  supply  chains.  Sodium-ion  batteries 
represent  a  potential  example  of  such  technologies. 
They replace lithium with sodium – salt – and do not 
require critical materials such as cobalt, graphite and 
nickel for their anodes and cathodes. While these bat-
teries come with their drawbacks, such as lower per-
formance, they nonetheless could play an important 
role in the EU’s bid for greater strategic autonomy.

Third,  focus  on  international  cooperation.  Despite 
efforts  to  boost  domestic  production  and  encourage 
material substitution, the EU will likely remain heav-
ily  reliant  on  critical  material  imports  for  the  fore-
seeable  future.  Signing  strategic  partnerships  with 
international partners is a promising start, but many 
of  these  agreements  lack  binding  commitments. 
Therefore, the EU should pursue long-term measures 
such as fully-fledged trade or investment agreements 
with resource-rich countries, while also discouraging 
trade  partners  from  adopting  dual  pricing  mecha-
nisms, export restrictions, quotas and other tools that 
could prevent market access and equal treatment.

Furthermore,  the  EU  should  harness  the  full  po-
tential  of  initiatives  like  the  Critical  Raw  Materials 
Club,  which  aim  to  strengthen  global  supply  chains 
among like-minded partners. Although it is still un-
clear  to  what  extent  such  initiatives  can  encourage 
deal-making, they can nonetheless promote knowl-
edge  exchange,  best  practices  sharing  and  support 
capacity building.

Fourth, consider stockpiling critical materials. A crit-
ical  materials  stockpile  would  serve  to  cushion  the 
impact of short-term supply disruptions. This stock-
piling  could  be  done  either  through  direct  govern-
ment  action  or  public-private  partnerships.  In  fact, 
the EU would not need to reinvent the wheel. Japan 
has  a  long-standing  cooperative  stockpiling  system 
operated  between  the  government  and  private  sec-
tor, ensuring natural resource and economic security. 
Managed  by  the  Japan  Oil,  Gas  and  Metals  National 
Corp  (JOGMEC),  the  government  prioritises  and  de-
cides on the exact stockpiling quantities out of a list 
of 34 minerals (17).

In  the  end,  even  though  going  green  without  China 
may be impossible at the moment, this does not have 
to be a reason for despair. If one thing is abundantly 
clear,  it  is  that  the  EU  has  a  wide  array  of  strategic 
options at its disposal to advance its green agenda.

4

Cover image credit: American Public Power  
Association/Unsplash

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 (2) 

 (3) 

 (4) 

 (5) 

 (6) 

 (7) 

 (8) 

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Abnett, K. and Chestney, N., ‘With solar industry in crisis, Europe in 
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the European Battery Alliance’, 1 March 2023, (eba250.com/
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 (14)  Rystad Energy, ‘Europe hoarding Chinese solar panels as imports outpace 
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 (15)  Terazawa, T., ‘How Japan solved its rare earth minerals dependency 

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prinT

isBn  978-92-9462-245-7  
CaTaL oGue  numBer  Qn-ak-24-006-en-C  
issn 2599-8943  
Doi  10.2815/679393

pDF

isBn  978-92-9462-244-0  
CaTaL oGue  numBer  Qn-ak-24-006-en-n  
issn 2315-1110  
Doi  10.2815/868231

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