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The US and China are taking over the EU’s green energy transformation

The EU’s climate agenda is in trouble.

The Green Deal, which aims to reduce the EU’s greenhouse gas emissions by 55% by 2030, has made a promising start following the adoption of several important pieces of legislation, including a ban on the sale of new combustion-powered vehicles from 2035 and a new carbon border tax coal .

Increasingly, however, Europeans are rebelling against ecological restrictions in which they find it difficult to see the advantages. Another less reported but equally important threat to the bloc’s ecological and energy transition comes from the alarming number of Chinese and American companies entering the EU’s energy sector.

In our book “Energy: How to reclaim our European ambition” (published in French), we shed light on this overlooked issue ahead of the European elections, which will be crucial for the EU’s energy strategy, and call on the bloc to carefully consider cooperation and competition with sovereignty.

China’s green share

While there is currently no quantitative data on China’s share of the European energy market, we know that the country controls 80% of the world’s clean technology production capacity in 11 segments, from solar wafers to many lithium-ion battery components.

Taking advantage of Europe’s sovereign debt crisis, Chinese investors moved in for the first time in early 2010 to acquire significant stakes in sectors long considered “sovereign,” such as energy transmission and distribution networks.

The most important of these was the world’s largest utility company, State Grid Corporation of China (SGCC), commonly known as State Grid – the world’s fourth-largest company by total revenue, behind Walmart, Saudi Aramco and Amazon (as of March ). Three Gorges Corp, responsible for the world’s largest hydroelectric complex, is also increasingly present.

For example, in Portugal, Three Gorges Corp. won the tender to purchase 21% of the Portuguese government’s shares in EDP-Energias de Portugal SA in 2010. Meanwhile, in Italy, SGCC expanded its presence by collaborating with the Italian government in 2014, acquiring a 35% stake in the CDP Reti fund, thus obtaining a blocking minority in the local gas network operator SNAM and the electricity transmission network operator Terna.

Similarly, in Greece, the state-owned transmission network has made significant progress, acquiring a 24% stake in the national electricity transmission network operator from the Greek government in 2016.

Although the main targets were Portugal, Italy and Greece, Chinese investors also acquired networks in Luxembourg. Finally, let’s not forget that China’s green tech industry has flooded Europe with cheap solar panels and electric vehicles (EVs).

The US is moving in

The stakes are even greater because China is not the only country with ambitions in the EU: the United States also wants to benefit from the bloc’s poorly thought-out energy strategy.

Russia’s war with Ukraine has not weakened the United States’ energy dominance in the world, and more specifically in the EU. Indeed, although Russian gas was expected to act as a bridge fuel in the energy transition, especially in the case of Germany, the EU quickly adopted sanctions against its long-term trading partner, minimizing its dependence.

Partially filling the empty space left by Moscow, the United States has become a leading producer and exporter of LNG to Europe. This situation favors US trade while keeping domestic energy costs low, further widening the price gap, while Europe experiences energy price inflation and undermines its relative competitiveness and attractiveness to energy-intensive industries.

Beyond energy supply issues, EU member states are working hard to develop a common vision, highlighting the challenges of sovereignty and strategic autonomy.

European companies, particularly in France, have been making efforts to develop fourth-generation small modular nuclear reactors (SMRs), with an attempt to form a European nuclear alliance launched in November 2023.

However, at the same moment, countries such as Italy, Belgium and Romania partnered with the American company Westinghouse Electric Company to develop lead-cooled fast reactors.

Here, too, the coordination gap plays to the advantage of American influence in Europe, as confirmed by John Kerry in September 2023. As part of the international “Clean Fuel from SMR” consortium led by American companies, the Czech Republic, Slovakia and Poland have been selected to participate and will receive support for their studies feasibility of replacing coal with SMR.

These EU countries turn to the Americans to build new nuclear power plants, mainly due to their financing and technical expertise, while the EU continues to block all support for nuclear projects on its territory.

Cracks in zero condition

The scale of this foreign investment in renewables, new nuclear facilities and grid development could have a major impact on the bloc’s strategic independence as it seeks to decarbonize.

These investments raise concerns for the continent’s energy security, given the still fragmented nature of Europe’s energy landscape:

  • In the short term, the supply problems caused by the energy crisis urgently force the EU to turn to other foreign partners (other than Russia) and only change our energy dependence problem.
  • In the longer term, in the face of Chinese dumping and US protectionism, Europe will have to protect domestic energy producers or network operators after having long neglected them.

The main challenge for Europe is to end one dependency without falling into another. To replace the import of climate-damaging fossil fuels (coal, gas and oil), EU Member States must accelerate and coordinate the development of their “green” technologies.

Towards green sovereignty

These threats require the bloc not only to pay more attention to non-EU operators, but also to take greater responsibility for its own energy system. How can it do this while still delivering on the Green Deal’s vision of a “green, secure and affordable energy supply”?

As a start, we recommend that EU Member States work harder to build truly European energy networks. As we move towards decarbonization, we can expect our electricity system to be powered by more and more renewable energy sources. These arrangements will require extensive and interconnected networks on a European scale, which need to be consolidated and developed by the EU Member States themselves.

The second emergency is the financing of green energy. In November, the European Climate Neutrality Observatory warned that a lack of EU-level public investment in green energy and other advances could result in the bloc failing to meet net-zero emissions targets.

Instead of heeding the warning, member states reduced the fund for renewable energy and clean technologies – the Strategic Technologies Platform for Europe (STEP) – to €1.5 billion in February.

Our book calls for a radical change in strategy by creating, on the one hand, a “European Transition Savings Account” to attract private savings and, on the other hand, a “European Sovereign Fund” that receives revenues from carbon pricing revenues.

Whether they will actually be created will depend on the upcoming European elections. Results leaning towards higher European ambitions can help us look for clean, affordable and safe solutions.

On the other hand, a further shift towards the nationalist right could have detrimental consequences for the bloc’s economic strength and, paradoxically, its sovereignty.

This article was co-authored by Michel Derdevet, president of Confrontations Europe. Carine Sebi is Associate Professor and Chair of Energy for Society at Grenoble École de Management (GEM) and Patrick Criqui is Director and Energy Economist at Université Grenoble Alpes (UGA)

This article is republished from The Conversation under a Creative Commons license. Read the original article.