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Hear more from Lili Pike about this story:
Now the U.S. is embarking on a crucial mission of climate investment catch-up. As Washington prepares to unleash its long-awaited climate spending, these charts show the gap between the U.S. and China when it comes to clean energy. The U.S. sees closing that gap as critical for the climate, geopolitical leadership and the future of the American economy.
How China surpassed the U.S. on renewables
China’s top rank in clean energy investment and production is the result of more than a decade of cutthroat entrepreneurship and government subsidies. The initial drivers of China’s solar industry were actually subsidies and incentives offered by other governments — Germany’s in particular. Then, in the wake of the 2008 global financial crisis, the Chinese government decided to invest in building these alternative energy sources at home.
“There was both a climate and a pollution drive there,” said Ilaria Mazzocco, a fellow at the Center for Strategic and International Studies who focuses on Chinese energy policy. “But also I think, maybe even more importantly, these were industries that the government saw as strategic.”
The Chinese government set targets for wind and solar capacity, extended credit lines to the private companies that largely dominate the sectors, and put in place subsidies to allow these clean energy sources to compete with cheaper coal-generated power.
Progress in the U.S. looks modest by comparison. American solar and wind tax credits in the U.S. have led to growth in solar and wind, but overall financial and regulatory support for renewable electricity generation has been higher in China. And efforts to speed the U.S. transition to clean electricity through stronger regulation, such as President Obama’s Clean Power Plan, were thrown out under the Trump administration.
The difference between the two countries’ green energy growth is clear in another metric: the share of electricity generated from renewables. China’s renewable electricity share leapt from 16 percent in 2005 to 28 percent in 2021; in the U.S., the share of electricity derived from renewable sources remains lower than in China.
But China’s clean energy trend is still a significant climate story. “China continues to have a massive challenge ahead of it, because of its reliance on coal,” Mazzocco told Grid. “But what we are seeing is a record build-out of renewable energy and the infrastructure that supports the energy transition. The trends point to the fact that China may end up building enough renewable energy to actually start supplanting the coal, which is actually really good news.”
China has zoomed ahead of the U.S. on electric cars, too
China had never been able to outcompete foreign manufacturers in the conventional auto industry, but the EV business offered a fresh opportunity. “There was a clear interest in promoting a new type of technology,” Mazzocco said, “with the thought that would help Chinese manufacturers leapfrog Western and other global multinationals.”
2021 was a breakout year for electric vehicles in China, with 3.3 million sold in the country alone – half of the global total. That amounted to 16 percent of car sales in China. Meanwhile, in the U.S., consumers have had access to electric vehicle tax credits, but the subsidies have been less generous. Electric car sales reached just 5 percent of total U.S. auto sales in 2021.
Green tech: Made in China vs. Made in the USA
The boom in China’s renewable energy industries has set off alarm bells in Washington. And those alarm bells were an important driver for the new legislation.
But U.S. lawmakers are wary that China’s success in building out clean energy supply chains will mean that China will increasingly reap the economic benefits of the U.S. clean energy transition, and the U.S. will become ever more reliant on its rival.
“I think there’s been a concern that if we really invest in climate policy, and we want to ramp up the use of all of these technologies,” said Jonas Nahm, an assistant professor who focuses on energy policy at Johns Hopkins University, “we need to make sure that we also get some of the economic benefits of making the stuff and don’t just import it.”
“I think there’s been this really anti-China sentiment in the U.S. for a long time, and I think a lot of that comes from this resentment that China has been able to build all of these things, and we haven’t,” Nahm told Grid. In the past, he said, that hasn’t been enough to motivate serious investments at home, but this bill changes that. “The great thing about this, even if it’s motivated by a competition with China, actually it’s about investments in domestic capabilities, and less finger pointing at Beijing … I think that really is sort of a hopeful thing.”
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