To avert the worst of the climate crisis, renewable energy and electrification around the globe are essential. In order to do so, Europe and China must join efforts and foster the clean technology expansion in developing countries. A more cooperative approach between them is needed.
The climate crisis is accelerating and its effects are felt around the globe. The decarbonization and electrification of the European Union is long overdue. European industry must shift from fossil fuel consumption to renewable powered-electrification and achieve climate neutrality in Europe - just as the EU intends.
Unfortunately, Europe itself is currently dependent on two super powers in the energy sector:
- The USA for fossil energy, predominantly Liquified Natural Gas (LNG), which has replaced the former dependency on Russian Natural Gas for the most part.
- China for Green Technology to produce renewable energy: such as solar panels, lithium-ion batteries, magnets and raw materials.
It is clear that Europe needs to quickly reduce its dependency on US-LNG and phase it out eventually. At the same time, Europe should avoid becoming fully dependent on China for Green Technologies, as this would introduce economic and eventually geopolitical dependencies, along with cybersecurity threats.
Race to Net-Zero Emissions Development in the Global South - A benefit for Europe
Every ton of CO₂ matters. To avoid the worst of the unfolding climate catastrophe, Europe should not only shift its own industries to carbon neutrality but also use its influence to accelerate decarbonization in the Global South. This would not be charity, but self-interest. Accelerating decarbonization could lead to the Global South leapfrogging the fossil phase altogether and using cheap, efficient renewables as soon as possible. This has already been the case for telecommunication - instead of using landlines, the developing world has gone fully mobile. Apart from the obvious benefits of lowering CO2-emissions and improving air quality, the benefits of switching to renewables are manyfold: Electrification creates stable jobs, sustainable growth in the community, more equality and social mobility.
The Global South has ideal conditions for large-scale renewable energy infrastructure: abundant access to sun, wind and critical minerals, great potential for economic growth, as well as a growing work force. Still, it has yet to adopt it at scale. The problems with installing large-scale renewable energy facilities differ among countries and are complex, but can be summarized roughly to lacking the capacity for large infrastructure development and overwhelming debt burdens limiting space for investments. Still today, large-scale solar farms in the developing world often are not financially viable because the cost still is too high, despite decreasing massively over the past years. Therefore, the Global South would benefit from support in their Net-Zero Emissions transition.
For the EU, supporting Net-Zero Emissions Development worldwide, would not only be beneficial in terms of its climate policy, but also for maintaining its economic competitiveness and securing its geoeconomic independence. However, the EU by itself lacks the means to do so. This begs the question: Who else has interest in decarbonization? The USA has bid farewell to the fight against the climate crisis, as well as on development cooperation. Even worse, they are pushing aggressive fossil fuel overreach.
Europe and China Interaction in the Global South
China, while remaining in the German view a systematic rival, a competitor or at the very least a difficult partner, remains a reliable resource in the fight against climate change. It single-handedly drove down the costs of numerous green technologies, making renewable energy affordable for many developing countries. Through its Belt and Road Initiative - which in 2021 shifted to Small but Beautiful - it also actively cooperates with them.
Europe should define its China policy as part of its broader effort to advance electrification across the Global South. In order to keep some of its influence, Europe needs to engage meaningfully in the energy transition in the Developing World.
The EU and China are the major actors in the field of net-zero development. For both EU and China clean tech leadership signifies energy security and an economic advantage, leading to strategic sovereignty and diplomatic influence. This has been amplified by the recent US attack on Iran. Our recent study examined how the EU and China interact in Global South countries in support of net-zero development.
Three patterns were observed:
- Complementarity: Parallel, synergetic involvement by EU and China, without deliberate coordination between the two governments. Complementarity is orchestrated by the host country, which requires a critical amount of institutional capacity and bargaining power on its side.
- Cooperation: Intentional, coordinated joint efforts by European and Chinese actors in third countries in form of bilateral or trilateral partnership agreements. This has become quite rare, since there is a lack of political will in Brussels and in some EU capitals to sign official agreements with Chinese partners for three-way cooperation at the state level. Cooperation mostly is confined to narrow technical exchanges or multilateral institutions.
- Competition: This represents the most common mode of EU-China engagement in the global South. It revolves around market share, political influence, and standard-setting. While Chinese firms primarily compete among themselves, European firms focus on defending technological quality in niche markets. Beyond commercial interests, both sides vie for strategic influence. In theory, this rivalry could benefit third countries, but with declining concessional finance, such benefits may not materialize.
EU and China mostly interact in competition or complementarity with each other. Competition proves unavoidable in sectors of strategic dependency and probably will continue to do so in the foreseeable future. Complementarity is possible whenever the host country has got a critical amount of institutional capacity and bargaining power. Yet, the lack of cooperation in these areas signals a major opportunity, particularly in underdeveloped markets.
How should the EU move forward in Global Net-Zero Development?
So far, the EU is not fully capitalizing on its assets, including development finance expertise, regulatory influence, technical knowledge, and diplomatic capital, thereby putting itself at a disadvantage. Meanwhile, China has a more flexible approach and seizes opportunities where they present themselves and serve China’s strategic interest.
The EU cannot compete with Chinas enormous industrial capacity. But the study shows that Europe has a role to play if it utilizes its expertise and capital in development finance. Therefore, to foster net-zero development in developing countries, Europe should employ its development finance and enable renewable energy projects by de-risking them with concessional lending. In order to do so, it must stop cutting Official Development Assistance (ODA) and extend it to industrial cooperation.
Furthermore, while the EU most likely cannot outperform China’s enormous production capacity anymore, it should identify those net-zero technologies it wants to be competitive in and pursue production, involving third countries. For this, it has to keep in mind at what cost it is willing to avoid technological dependence on China. Also, it should focus European industrial policy on defensible niches: for example, offshore wind, complex systems integration, climate adaptation, project development and the combination of adaptation technologies with emerging technologies. These are technologies in which China has not yet established dominance.
Regarding raw materials, the EU should pursue supply chain security and governance and foster the establishment of a predictable and transparent framework for critical mineral mining, including ecological and social criteria as well as processing and trade. The strategy for raw materials should also include supply diversification, partnering with upcoming clean tech powers.
Lastly, as a major market for net-zero technology from China, Europe can use its leverage and set standards regarding quality, access, sustainability, circularity, workers’ rights and cybersecurity risks. Setting social and environmental standards will amplify the positive effects of green technology even further.
The global expansion of Chinese Green Technology presents a historic opportunity for humankind to combat climate change. However, if it is not sustained by increasing manufacturing capacity, growth and employment all around the globe, it may come to a halt. Europe, in particular, has a critical role to play in driving global decarbonization. If it continues to reduce Official Development Assistance (ODA) and concessional finance, it risks undermining its own influence and the collective progress toward a sustainable future.
