China Is Turning to the Next Battlegrounds for Clean Energy By Ed Ballard

China crushed the competition in battery materials and solar equipment, and has gotten so good at making electric cars that the U.S. imposed tariffs of over 100% to protect its auto industry.

China Is Turning to the Next Battlegrounds for Clean Energy

By Ed Ballard

Western manufacturers currently dominate the European market for offshore wind turbines.
PHOTO: POOL/REUTERS

China crushed the competition in battery materials and solar equipment, and has gotten so good at making electric cars that the U.S. imposed tariffs of over 100% to protect its auto industry.

Now China’s low-cost exports are shaking up two other clean-technology markets.

Last week, a group of European industrial companies warned of an “acute threat” from heavily subsidized Chinese manufacturers of electrolyzers for making green hydrogen. This niche business is expected to boom as governments and industries back hydrogen as a tool to cut emissions.

Companies including Thyssenkrupp Nucera and Nel Hydrogen said it’s “now or never” to avert repeating the collapse of Europe’s solar industry, which like America’s was crushed by Chinese competition.

Then, the next day, a Chinese company was named as the wind-turbine supplier for a big offshore project in Europe, potentially a breakthrough in the country’s push into yet another clean-tech market.

Western governments have a dilemma. They want to protect green industries at home, but hitting ambitious emissions targets is easier with cheap equipment.

The Biden administration is counting on domestic manufacturing to achieve daunting wind and green-hydrogen targets. The far lower EV tariffs Europe just introduced are the latest sign it’s more willing to compromise.

The wind industry is already dependent on Chinese materials, but the country’s turbine manufacturers only became major exporters in recent years.

Besides subsidies, Chinese products cost less thanks to cheap power, cheap labor and a competitive—and massively oversupplied—home market. In China, locally made wind turbines and electrolyzers cost a fraction as much as Western products, although the discount narrows overseas thanks to transportation costs and tougher specifications, analysts say.

By the end of 2024, China will have installed enough electrolyzers to produce more green hydrogen than the rest of the world, Rystad Energy estimates. Four of the top five wind-turbine suppliers are Chinese.

Ming Yang Smart Energy will supply 16 giant wind turbines—the world’s most powerful—for a project off Germany’s coast, with installation scheduled for 2028. That should alarm the Western players that have dominated so far in Europe and the U.S.

WindEurope, a trade association whose members include Western manufacturers Vestas, Siemens Energy and GE Vernova, says wind subsidies should be awarded based on factors like job creation and suppliers’ data-collection practices, not just price.

The European electrolyzer makers want tougher local-content requirements for hydrogen projects that get EU subsidies. A spokesperson for the EU's executive arm said it is exploring how to address the concerns. 

Cost isn’t everything. Western wind-turbine makers have longer—if imperfect—track records, and Chinese electrolyzers are generally less efficient.

But things can change quickly. Marco Alverà, chief executive of TES, a company that wants to use hydrogen to produce an alternative to natural gas, said Chinese electrolyzers are rapidly improving. TES is considering where to buy its equipment.

“It's easier to make an electrolyzer than an EV,” Alverà noted.

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