China, EU and US zero-carbon race

China, the European Union (EU) and the United States are competing for world leadership in zero-carbon technologies in what has been called the new industrial age.

The report compares for the first time the performance of economies’ generation, distribution and investment in key decarbonisation technologies such as renewable energy, battery electric vehicles and heat pumps, the European Green Consensus, the 14th Plan China’s Five-Year, India’s Energy Conservation Act, Japan’s Green Plan Growth Shows how national plans like his strategy, and ultimately the US Inflation Reduction Act, have become engines of industrial growth.

According to the report, all countries are trying to position themselves in the global competition in the new era of net zero industry.

Although the global competition in zero carbon technologies is between China, the EU and the US, China is far ahead in most of the areas analyzed in the report.

Along with lithium cells for solar panels, wind turbines and batteries, China is making the biggest gains in employment and investment. The country aims to capture a large part of the growing net-zero market, as well as control the technology and supply chains for the rest of the world.

STRENGTHS OF THE EU AND THE US

Last year, the EU provided 22 percent of its total electricity production from wind and solar power. By having the highest share of wind and solar energy in electricity generation, the EU is a leader in investment and use of heat pumps.

China’s strongest competitor is the EU in green jobs, electric vehicle sales, wind power and investments, while the United States shows the strongest performance in innovation through research and development investments.

The United States competes for the lead with China in total spending on zero-carbon technologies and with Japan in spending per capita.

As the United States challenges China’s leadership with the Reducing Inflation Law, this law is expected to rank first in the EU in the share of renewable energy sources in investment, employment and electricity generation.

TOTAL INVESTMENT IN 2022 $856 BILLION

In renewable energy technologies, China ranked first in this field with an investment of 538 billion US dollars last year. The EU followed China with $180 billion and the United States with $138 billion.

Taking into account the share of renewable energy sources in electricity production, this rate was 22 percent in the EU, 15 percent in the US, and 14 percent in China in 2022.

In the renewable energy industry, employment in China in 2021 was estimated at 5.3 million, while the number of employees in this sector in the EU and the US was estimated at 1.3 million and 900 thousand, respectively.

Electric vehicles accounted for 25 percent of all vehicle sales in China last year. This rate was 23 percent in the EU and 8 percent in the US. The share of electric vehicles in total sales is expected to reach 29 percent in China this year, 26 percent in the EU and about 10 percent in the US

JAPAN, A COMPETITOR IN INNOVATION WITH THE US

Japan stands out as America’s strongest rival in innovation. Japan is the country with the largest fleet of electric vehicles and hybrid cars.

It is estimated that Japan could increase its competitiveness by fully committing to the coal-exit energy transition and implementing stronger incentives for the use of heat pumps for heating and cooling. However, Japan is still unable to use its full potential due to weak policies.

Seeking a strong position in the supply chain of global net-zero emissions technologies, India is expected to overcome these difficulties by receiving more financial support, although it faces different challenges.

India, which has nearly doubled the share of solar and wind power in electricity generation compared to 2017, has the potential to demonstrate a successful example of net-zero development in other sectors with additional investment.

INDUSTRIAL DEVELOPMENT MISSING TRAIN WARNING

Strategic Perspectives CEO Linda Kalcher said in her assessment of the report that a new era of industry based on zero-carbon technologies has emerged.

Stating that China, the EU and the US are all competing to capture the largest share of the growing world markets and secure supplies for their domestic demands, Kalcher used the following statements:

“In a world where you either lead or risk being left behind, producing zero-carbon technologies is becoming a prerequisite for industrial growth, innovation and competitiveness. Carbon-free technologies have the potential to replace fossil fuels faster than some think.”

Neil Makaroff, Director of Strategic Outlook, said China’s industrial leadership proved successful in generating growth and job creation, prompting the United States to introduce the Inflation Reduction Act.

Makaroff explained that countries that miss the boat in the transition to a net zero emissions economy will likely lag behind in industrial development and continue to rely on high-cost gas, oil and coal:

“Targeted financial support or new economic partnerships are very important to ensure that all countries can participate in the technology race and ensure a just energy transition. As Europe rapidly scales up renewable energy sources, heat pumps and electric vehicles, it cannot be complacent.

It is time to transform the European Green Deal into a grand reindustrialization plan to maintain its position in the global race to net zero. Building factories for solar panels, batteries and heat pumps will not only ensure Europe’s net zero transition, but will also create quality jobs.” (AA)