China’s Influence in Shaping Global Energy: What This Means for Investors and Businesses Moving Away from Fossil Fuels
Since the dawn of the industrial age, global economic growth has been heavily dependent on fossil fuels such as coal, oil, and gas. However, a new report by Ember, a clean-energy research organization, reveals that China’s vigorous expansion in manufacturing batteries, solar panels, and wind turbines is set to end this fossil fuel era.
The report presents extensive data demonstrating how China’s large-scale production since 2010 has driven down the costs of clean-energy technologies by 60% to 90%. Last year, over 90% of newly commissioned wind and solar projects worldwide generated electricity cheaper than the cheapest fossil-fuel options. This dramatic cost advantage is largely attributed to China’s billions of dollars in subsidies to the sector.
Richard Black, editor of the report, emphasizes that “China is the engine” transforming the global energy landscape, not only domestically but across many countries. China’s push for dominance challenges the United States, the world’s largest oil and gas producer and exporter, which under the previous administration rolled back nearly all federal support for renewables and promoted American fossil fuels in trade deals.
The falling cost of renewables offers strong incentives for many countries, especially developing ones, to reduce their fossil fuel dependence. According to Ember, countries like Mexico, Bangladesh, and Malaysia have recently surpassed the U.S. in renewable energy usage for everyday applications such as heating, cooling, and transportation.
In Africa, solar panel imports from China surged by 60% in the past year, with 20 countries reaching record import levels. China now leads globally, supplying 80% of solar panels and 60% of wind turbines. U.S. companies, lacking comparable production scale, face significant disadvantages.
China’s renewable energy dominance stems from both economic motives and national security concerns, aiming to reduce oil import dependency. The environmental implications are profound, as reducing fossil fuel consumption is widely recognized as critical to mitigating climate change.
Thailand’s former deputy prime minister, Suwit Khunkitti, notes the report dispels the long-held belief that emerging economies must choose between growth and sustainability.
Despite geopolitical concerns about heavy reliance on Chinese technology and the financial challenges for developing nations to build comprehensive energy infrastructure, the timing of global fossil fuel peak usage hinges on China’s own energy transition.
China still consumes more coal than the rest of the world combined and has higher greenhouse emissions than the U.S. and Europe together. While coal use has not declined overall, China’s total emissions appear to have plateaued. Last year, China met 84% of its electricity demand growth with solar and wind, cutting fossil fuel use by 2% despite rising power demands.
Black attributes this reduction mainly to decreased coal combustion for electricity. Policy shifts have redirected subsidies from coal to renewable energy, although China continues constructing coal power plants. These new plants are expected to operate mainly during peak demand periods, serving as backup while wind and solar capacity grows rapidly.
Yuan Jiahai, a professor at North China Electric Power University, likens coal’s role to “training wheels,” providing stability as the clean energy system strengthens.
Economically, clean energy is an increasingly critical sector in China, contributing nearly $2 trillion last year—about one-tenth of the entire economy and comparable to Australia’s national GDP. The sector’s growth rate is triple that of China’s overall economic growth.
This article was originally published by The New York Times.
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China’s dominance in clean energy technology is driving down costs and enabling a global shift away from fossil fuels, presenting Oman’s businesses with a critical opportunity to diversify into renewables to stay competitive. For investors and entrepreneurs, now is the time to strategically align with clean-energy initiatives and technologies, as reliance on fossil fuels faces significant long-term decline risks. Oman must also consider strengthening local capacity to leverage this transition amid geopolitical concerns regarding dependence on foreign technology.
