If the world is going to move away from fossil fuels
and avoid catastrophic global warming, many things will have to change.
Petrostates like Saudi Arabia will see their budgets
fall short, and as oil demand shrinks, they will face a fight for market share
which will be won by the countries with the cheapest and cleanest crude. The world
will have to reorganize itself around a new imperative for clean, electric
energy. As a result, supply chains for things like wind-turbine and solar-panel
components will gain primacy.
China, which currently makes a large share of them, will have a huge advantage.
Chinese investments in mines from the Democratic Republic of Congo to
Chile and Australia, will secure their access to the minerals needed for solar
panels, electric vehicles and the like. Unable to be a petrostate, China is
becoming an electrostate, investing strategically all along the chain.
Europe, home to big turbine manufacturer Siemens Gamesa, will also be in the
game, and EU Commission President Ursula von der Leyen has set an ambitious
goal of cutting emissions by at least 50% compared to 1990 levels in 10 years.
But China is seen as the potential big winner, via sales of electricity-related
infrastructure around the world.
Chinese
companies are starting to invest more in wind and solar power abroad. China
Three Gorges, a big power company, said in August that it will buy half a
gigawatt of Spanish solar capacity from X-Elio, a developer based in Madrid.
Last year state-owned China General Nuclear Power Group bought more
than 1gw of wind and solar farms in Brazil.
China
now produces more than 70% of the world’s solar modules. It dominates the
supply chain for lithium-ion batteries, according to Bloombergnef, controlling
77% of cell capacity and 60% of component manufacturing.
Politicians
in America, Europe and Australia have expressed concern at Chinese control of
minerals critical to not just energy but defense. A company backed by Bill
Gates and other billionaires plans to search for cobalt in Quebec. America’s
Development Finance Corporation is, for the first time, taking equity stakes in
mining companies. One beneficiary is TechMet, which is betting that some
investors will prefer mines independent of Chinese control.
“It’s
a very significant strategic issue for the United States and the West,” says
Admiral Mike Mullen, a former chairman of America’s Joint Chiefs of Staff and
now the head of TechMet’s advisory board. “I almost liken it to Huawei. We wake
up and they’re in control of the world.”
From The Economist (edited)
