China’s Wind Power Push threatens US strategic interests
China’s Wind Power Push threatens US strategic interests

China’s Wind Power Push threatens US strategic interests

The war in Ukraine has pushed energy markets – driving oil and gas prices to their highest levels for over a decade, leaving governments struggling to secure energy supplies. In the months following Russia’s invasion, politicians have faced a harsh truth: Energy policy is security policy, and it has been neglected for far too long.

The government’s priorities have a prominent place in the discussions on the transition to renewable energy. Enthusiasm may abound for wind power, but if the US is serious about its future, it needs to address critical supply chain disruptions and market-distorting foreign competition. Western companies will falter if these issues are not resolved, while their state-subsidized Chinese competitors do better than them. The United States can expect major consequences if Chinese companies expand further in this critical market.

Global wind turbine manufacturers experienced large losses in Q1 2022 due to production costs and downward pressure on prices. GE Renewable Energy

Siemens Gamesa and Vestas, which control 70% of the market outside China, all reported disappointing results for the first quarter.

Industry profits began to decline in 2017 as governments embraced competitive bidding for contracts to adapt to new tariffs – leaving companies struggling to reduce costs and squeeze profit margins. The surplus has been further affected by high metal prices, import duties and widespread economic turmoil from the war in Ukraine. Disappointing profits continue despite worldwide interest in wind development, but low profit margins discourage future investment.

For Chinese companies, wind power is not just a growth market; it is a political project. China’s cities are notoriously polluted. For years, Beijing has been investing heavily in wind power, trying to turn the market into a corner, as they did in photovoltaic panels.

After President Xi Jinpings calls for an “energy revolution” and a “fight against pollution”, the country’s energy sector has changed drastically. This transformation is not only one of domestic production; it is also about foreign trade policy, investment and influence.

China wants to become a Saudi Arabia of renewable energy. In March, Beijing stated that it aims to create 450 GW solar and wind capacity in Gobi and other desert regions. China is taking advantage of the vast landscapes of Tibet, Xinjiang and Inner Mongolia in connection with offshore turbines for electricity generation. By comparison, President Biden has promised to create 30 GW of offshore wind by 2030.

If you disregard profits and losses, you can get yourself somewhere. China build more offshore wind turbines in 2021 than all other countries did in the last five years. That installed 55.8 GW turbines in 2021, beating its own record in 2020 of 52 GW – an increase of 19.4%. China now have 344 GW value of wind turbine electrical production. During the same period, the United States grew 12.5 GW for a total capacity of 135 GW.

As we move into the new brave world of solar and wind politics, described in the insightful book Prologue: The Alternative Energy Megatrend in the Age of Great Power Competition by Prof. Alexander Mirtchev, this imbalance becomes greater when further considering Chinese territorial disputes. Solar provinces and wind corridors can become just as desirable as oil and gas fields. The recognition of Chinese territorial ambitions in the South China Sea would mean an exclusive economic zone, not only strategically valuable and rich in resources, but also perfect for offshore wind farms. Unchallenged control of the Fujian Strait between China and Taiwan or victory in one of its many territorial disputes with India or Japan could have a similar impact.

Direct territorial increase is complemented by Chinese soft power and investment. The China-Pakistan Economic Corridor (CPEC) includes several energytotal hydropower, nuclear power, coal and solar energy projects 21,690 MW – new projects include 50MW Cacho Wind Power Project. Wind infrastructure in the corridor will provide ample energy and leverage for Beijing. In addition to Pakistan, many worldwide examples could be enumerated, showing the large volume of Chinese investment in global wind power. In just three years, Chinese turbine manufacturers Xinjiang Goldwind Science & Technology Co. Ltd. and Ming Yang Smart Energy Group Ltd. more than doubled their exported wind capacity; included in this export is Italy’s first offshore wind farm in the Mediterranean.

Falling U.S. turbine production combined with a reliance on Chinese producers for many of the world’s rare earth metals needed to make solar panels poses a long-term challenge to U.S. interests. To this end, the Biden administration must prioritize easing the burdens of U.S. companies in expanding and exporting by making impact statements less burdensome for new energy technologies while streamlining existing energy regulations. A comprehensive and globally conscious energy security strategy and regulatory reform is required.

Relieving the regulatory burden on U.S. businesses will also enable innovation. There are several technological challenges for wind power that companies need to address. Offshore wind is e.g. limited to shallow water because solid bottom turbines can only reach a depth of about 65 meters. Companies will need to invest in and develop floating wind technology to overcome this limitation and harvest the benefits of having platforms on deeper water.

The Biden administration should also use “friendshoring”—Transferment of sustainable technology production to trusted allies to ensure the security of supply chains. Faithful allies around the world are leading the way. Denmark, one of the international leaders in wind power and home to Vestasthe world’s largest producer of wind turbines, is an obvious example.

US allies around the world are investing in wind energy to diversify away from hydrocarbons, avoid dependence on authoritarian petrostats and build a more sustainable future. Unfortunately, expect the Chinese storm to continue unless there is a major change. The United States must lead to avoid it.

With the assistance of Ines Lepeu

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