The renewable energy industry, the beacon of a sustainable future, has got entangled in one of the fiercest geopolitical rivalries of our time — the US-China trade war. The US-China trade tensions have escalated in recent months, with both countries imposing tariffs on a wide range of goods. The new tariffs on Chinese imports of solar panels, electric vehicles, lithiumion batteries, syringes, and steel have come into effect on September 27. As the nations struggle to decarbonise their economies and meet ambitious climate goals, the tension between the two superpowers is reshaping this key industry, especially its solar energy sector.
At the heart of this struggle is the US ambition to lead the renewable energy revolution. China has emerged as the dominant player in the sector, a position fortified by a blend of strategic state interventions and vast industrial capacity. This dominance, particularly in solar manufacturing, has left the US caught between promoting affordable clean energy and protecting its nascent domestic industry. The outcome of this tension has far-reaching implications, not only for the renewable energy sector but for global climate goals and economic leadership.
READ I Toxic work culture will extract heavy human cost
China’s rise in renewable energy
China’s rise in the renewable energy industry is nothing short of meteoric. In 2023 alone, China added more utility-scale solar capacity than the rest of the world combined. By 2024, its installed solar and wind capacity had reached a staggering 1,120 GW, with renewable energy now accounting for nearly 37% of its total power capacity. This expansion is fuelled by government-backed subsidies, massive investment in industrial-scale solar and wind farms, and a strategy of dominating global supply chains for renewable technologies.
Reports indicate that China’s control of more than 80% of the world’s solar panel production is not a mere accident of economic efficiency but the result of calculated state policy. This includes government subsidies, relaxed environmental regulations, and aggressive overproduction. Chinese manufacturers have been accused of dumping solar panels in the US market at artificially low prices, making it almost impossible for US-based solar firms to compete. While this has led to rock-bottom solar prices, which benefit consumers and investors, it comes at a cost to American jobs and the long-term health of the US solar industry.
Cheap solar energy vs domestic industry
For the Biden administration, solar energy is one of its climate success stories, offering a path toward carbon-neutral electricity by 2035. Yet, the US finds itself in a precarious position. On one hand, the availability of cheap Chinese solar panels has helped accelerate the transition to renewable energy. On the other hand, the influx of these panels has strangled domestic solar manufacturers, many of whom have been forced out of business due to China’s dominance.
The Biden administration has faced considerable pressure to act. In 2022, in response to growing concerns over Chinese solar panel dumping, the US government initiated a two-year tariff moratorium on solar imports from Southeast Asia, where Chinese companies had shifted production to evade US tariffs. Critics argue that this concession has effectively handed China greater control over the US solar market, further undermining domestic manufacturers and making the US more reliant on Chinese imports.
The tension between short-term climate goals and long-term industrial strategy is clear. If US solar manufacturers continue to collapse under the weight of Chinese competition, the US risks losing any chance of building a resilient, homegrown solar industry. China’s approach to the solar industry mimics the OPEC cartel’s control of the oil market—either you join them or you get crushed. Without competition, China could eventually raise prices, placing future renewable energy projects at risk.
The environmental irony
One of the paradoxes of this situation lies in the environmental implications of relying on Chinese-made solar panels. While solar power is critical to combating climate change, many of the panels imported from China are produced in coal-powered factories. This process undercuts the environmental benefits of solar energy, creating a system where ostensibly green products carry a significant carbon footprint . Moreover, the transportation of these panels across oceans on diesel-powered ships adds another layer of emissions.
This raises critical questions about the long-term sustainability of the current global solar supply chain. Can countries afford to overlook the carbon-intensive production processes behind their clean energy infrastructure? And if not, what alternatives are there?
Competition and collaboration
The US-China trade war, while disruptive, is not just a battle over tariffs and market access — it is a fight over the future of renewable energy leadership. Both countries have expressed a desire to triple global renewable energy capacity by 2030, and cooperation between them is crucial for meeting global climate targets. However, the path to achieving this goal is fraught with challenges.
In the short term, the US must decide how to balance the need for cheap, abundant solar power with the desire to protect its domestic industry from unfair competition. One approach would be to ramp up investment in advanced solar technologies, such as perovskite solar cells, which offer higher efficiency and are less reliant on the materials dominated by Chinese supply chains. Another option would be to impose stricter environmental standards on imported solar panels, ensuring that the green energy transition is truly sustainable.
Meanwhile, China must address its reliance on coal and other fossil fuels, which still power 70% of its electricity generation. Despite its dominance in renewable energy, China’s emissions continue to rise as it builds new coal plants to offset the intermittency of renewables. Without a stronger commitment to reducing its carbon emissions, China’s leadership in renewables will remain incomplete.
The global renewable energy industry is at a crossroads, caught between the opportunities of decarbonisation and the realities of geopolitical competition. The US-China trade war has exposed the vulnerabilities of relying on a single nation for critical renewable technologies, but it has also highlighted the need for collaboration in tackling the climate crisis. As the world looks toward a future powered by clean energy, finding a balance between competition and cooperation will be key to ensuring a sustainable and equitable energy transition for all.