China Leads The Way In Cleantech Industry, Overtakes US: RMI Study

A recent report by RMI described the goals of countries regarding cleantech in its study “race to the top” dealing with the transition from fossil energy to clean energy. It compares the progress made by the three regions that dominate the deployment of renewable energy technologies — China, Europe, and the United States. 

The RMI report on “X-Change: The Race to the Top” compares the cleantech competition between China, Europe, and the United States. It compared the three regions as they compete and among them, China dominates in the hardware supply chains of key clean technologies. It identified the growth in Chinese cleantech due to its strategic decision to invest heavily in research and capital expenditure in these sectors.”

In patents, the report compares and found, that China overtook Europe and the United States combined in 2014 in terms of a number of renewable patents. By 2020, China was gaining six times as many renewable energy patents, nearly 80% of the global total. This is a feature across the whole range of renewable technology patents: in 2020, Chinese companies filed 84% of solar patents, 85% of wind, 78% of battery, 75% of electric vehicle (EV), and 75% of other electrification technologies.

 

Whereas, in clean tech technologies, China has reportedly come to dominate the supplier of key clean technologies. Based on data for battery and solar panel trade from the Comtrade Observatory of Economic Complexity (OEC) database. Thus, China has become the key global producer, while Europe, the United States, and the rest of the world are all net importers.

 

In renewable energy deployment, China has deployed the largest amount of solar and wind, with a notable surge in 2023, as new solar deployment more than doubled from 100 GW to 261 GW according to the IEA. 14 However, solar and wind are a much larger share of electricity generation in Europe, so it would be fair to say that Europe is leading this race.

The study showcased that, China has both the largest number of electric vehicle (EV) sales and the highest EV market share. Europe is rapidly following, and the United States is about four years behind in terms of market share. The latest IEA data indicates that the market share of EVs in 2023 was around 10% in the United States, 25% in Europe, and 35% in China.

The research takes data from over the past decade and highlighted, China has been electrifying its residential and commercial buildings while Europe and the United States have not significantly changed the share of electricity in building demand. It examines, China has caught up with Europe; the United States is still far ahead, but the United States building share of electricity within final energy has been flat over the past decade.

It stated, “A large part of electrification in China has been the leapfrog from biomass to electricity as the main source of energy in buildings; this provides inspiration for other regions that will benefit from going through a similar shift. Forty years ago, biomass provided three-quarters of China’s final energy demand in buildings; 16 now it is less than a fifth. Meanwhile, during the same period, electricity has grown at a 13% compound annual growth rate to provide nearly one-third of final demand in 2021.”

It evaluated, moreover, “China will continue to dominate investments in renewable technology supply chains, with BNEF noting plans for $469 billions of surplus investments in factories planned for 2024-27.20 However the United States and Europe are back in the game. Other factors such as, Putin’s invasion of Ukraine, the United States has passed the Inflation Reduction Act (IRA), and Europe has passed a wide swathe of legislation — most notably the RePowerEU plan.

It mentioned, “The IRA has driven a surge in investment in US cleantech, with the American Clean Power Association noting that 280 clean energy projects have been announced in the first year of the IRA, with $282bn of investment.”

Other studies can substantiate, “A part of this has been investment into the clean energy supply chain, and that money is spent over time; BNEF expects total US supply chain capital expenditure to be $40bn in 2025, 24 although Rhodium Group data imply that it will be more than this. 25 In total BNEF expects a 16-fold increase in supply chain capital expenditures in the United States and Europe in the period to 2025, from $4 billion in 2022 to over $60 billion expected in 2025.”