EU Struggles to Reduce Dependence on China in Energy Transition
Key Takeaways
- •The EU’s renewable energy expansion has increased its reliance on China for solar panels, wind turbines, battery materials, and other clean energy components.
- •EU officials say this dependence creates risks for climate goals, economic security, and critical infrastructure security.
- •Wopke Hoekstra said Europe should reduce its dependence on China now, even though building domestic capacity will carry short-term costs.
- •The European Court of Auditors said EU efforts to diversify imports have not produced tangible results and that domestic production faces bottlenecks.
- •A Loom report said China supplied 98% of Europe’s solar panels, 88% of lithium-ion battery imports, and 61% of inverter imports in 2024.
In recent years, the European Union has replaced one critical energy and security vulnerability with another: a heavy dependence on China for its green energy ambitions.
As the EU has moved to phase out Russian energy imports and reduce its overall reliance on oil and gas, it has rolled out large amounts of renewable energy capacity. But the clean energy transition has become dependent on another global power, potentially undermining Europe’s energy security — China.
China Dependence
For its renewable energy buildout, the EU has relied on imports of solar panels, wind turbines, critical minerals, battery materials, and other essential equipment from China.
Cheaper Chinese products have flooded the EU market, raising concerns about domestic manufacturing, energy security, and national security.
Since the launch of the EU green deal, Russia’s invasion of Ukraine, and the Middle East crisis, the EU has moved to reduce its oil and gas dependence. But in the process of rapidly expanding solar, wind, and battery capacity, Europe has shifted from fossil fuel dependence to dependence on China for critical minerals and components used in clean energy installations.
That shift matters because the same supply chains that helped accelerate deployment can also leave Europe exposed if trade flows tighten or if suppliers remain concentrated in a small number of markets.
The EU has recognized that this dependence on China is untenable and has launched measures to reduce reliance on Chinese clean energy components. So far, none has had a meaningful impact.
Europe has struggled to strike a balance between rapidly scaling green energy to meet ambitious climate goals and reduce fossil fuel dependence, while avoiding excessive reliance on Chinese products for the energy transition.
The Cost of Reducing Reliance on China
Moving away from Chinese dependence will cost the EU a great deal.
Building domestic capacity would reduce reliance on China, but it would also bring high short-term costs, according to EU Climate Action Commissioner Wopke Hoekstra.
Hoekstra told Euronews in an interview this week that the EU must act now to reduce its outsized dependence on China. He said Europe should have taken action five or ten years ago, and that the longer it delays decisive action, the higher the costs will be in the long term.
“But it will be much cheaper and much more to our advantage to do it now than be wishy washy and wait another five to 10 years,” Hoekstra told Euronews. Related: Asia Spot LNG Prices Hit 5-Month High as Hormuz Blockage Drags On
The high level of dependence on China is a “dangerous and uncomfortable” vulnerability for both Europe’s climate ambitions and economic security, Hoekstra added.
He also said Chinese parts and equipment are a vulnerability for Europe’s critical infrastructure security.
Europe’s immediate challenge, according to the commissioner, is to build domestic capacity to reduce dependence on China, even if that means higher short-term costs.
Europe’s Challenges and Struggles
That is easier said than done.
The EU is struggling to diversify imports, according to a report by the European Court of Auditors (ECA) earlier this year.
“EU action on import diversification is not producing tangible results, bottlenecks hinder domestic production, and recycling is still in its infancy,” the auditors said. “Against this backdrop, many EU-supported projects are unlikely to succeed in time.”
“Unfortunately, we are now dangerously dependent on a handful of countries outside the EU for the supply of these materials,” said Keit Pentus-Rosimannus, the ECA member responsible for the audit. “It is therefore vital for the EU to up its game and reduce its vulnerability in this area.”
This year, the EU launched a platform to aggregate demand for raw materials and boost diversification under its Raw Materials Mechanism, which is intended to diversify supplies of critical raw materials.
The EU is also looking to partner with non-EU countries such as Brazil in an effort to diversify supply chains away from China.
Analysts warn that while dependence on China has helped make clean energy installations cheaper and faster, it is undermining the EU’s economic and national security. For policymakers, the issue is not just the pace of the energy transition, but the resilience of the industrial base behind it.
In 2024, China accounted for 98% of European solar panels, 88% of lithium-ion battery imports, and 61% of inverter imports, according to a report earlier this year by the non-profit strategy center Loom.
Despite the EU’s efforts in recent years, policies have not resulted in any significant de-risking of clean technology manufacturing, said the report, which was co-authored by Michal Meidan of the Oxford Institute for Energy Studies (OIES) and Michael Collins, a former deputy head of national security strategy at the UK Cabinet Office.
The authors said that if Europe does not rein in its dependence on China’s clean tech, its economies will suffer, and its AI ambitions could be undermined, with the risk of becoming dependent on Chinese batteries.
“The fastest, cheapest route to deploying clean energy at scale — solar panels, battery storage, grid technologies, heat pumps — currently runs overwhelmingly through China,” Loom’s Executive Director Joss Garman said.
“Europe’s response to its oil and gas dependency risks quietly consolidating another dependency: this time on Chinese clean energy technology,” Garman said in the foreword to the report.
“One chokepoint replaced by another, no less real for being less visible on an energy bill.”
By Tsvetana Paraskova for Oilprice.com
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