The competition between the United States and China has escalated significantly, particularly focusing on trade and economics, which is causing ripples across various sectors, especially clean energy. The US-China trade war is reshaping the global energy transition as the two largest economies exchange restrictions and tariffs, making the impact on clean energy technologies increasingly clear.
On December 2024, China took a significant step by banning exports of key minerals to the United States. These minerals, which include gallium, germanium, antimony, and graphite, are not just ordinary materials but are indispensable for technologies pivotal to semiconductors, defense, and renewable energy. This dramatic pivot marks the beginning of a new chapter in the trade conflict, with insights from Andrew Polk, co-founder of Trivium China, highlighting how these restrictions indicate China’s readiness to respond to US moves much more aggressively.
Despite immediate effects being muted due to prior restrictions on these minerals, the broader economic consequences loom ominously. For example, graphite is widely recognized as a fundamental component for lithium-ion battery manufacturing, especially for electric vehicles (EVs), where it is used as anodes. With China controlling around 80% of global graphite output and processing 70% of it, this dominance creates significant bottlenecks within the clean energy supply chain.
The rising costs of key technologies, particularly EV batteries and solar panels, could worsen as supply chain disruptions push prices up. This situation raises concerns about consumer adoption of EVs—already hampered by high price tags—suggesting these disruptions could slow the renewable energy transition. Charging home at $15,000 to $20,000 on average for EVs, affordability is one of the main barriers prospective buyers face.
Efforts are underway to diversify supply chains. The US and its allies are searching for alternatives to reduce dependence on Chinese minerals. Investments include recent loans, such as the $150 million aimed at accelerating graphite mining operations in Mozambique, alongside proposals to reopen mines within the US to secure antimony for military applications. Although these efforts are promising, they are projected to be years away from full-scale operations, like the Yellow Pine mine reopening slated for 2027.
Economic analysts, such as those from the U.S. Geological Survey, have issued warnings about the potential outcomes of these trade restrictions. A total ban on gallium and germanium exports, for example, could result in up to $3.4 billion deducted from the U.S. GDP. Even if these niche metals are used primarily for specialized applications, their strategic significance supports fundamental technology sectors, including semiconductors and military components.
From the U.S. side, the administration under former President Donald Trump has taken steps to impose tariffs on Chinese imports, with figures projected between 10% and 100%. While these tariffs are framed as measures to diminish reliance on Chinese goods, they could also lead to inflated costs for clean energy technologies, complicishing the dynamics of the renewable energy market.
The trade war transcends the direct rivalry between the U.S. and China, creating ramifications worldwide. Nations like Europe and Japan, reliant on Chinese-made clean energy components, face similar vulnerabilities, jeopardizing their ambitions to adopt renewable technologies effectively. For example, Europe has aggressive offshore wind goals but remains tethered to Chinese production for cost-effective solutions, particularly solar panels and wind turbine components. Such interdependencies bring forth the paradox of Chinese dominance—while contributing to global renewable energy initiatives, the trade tension risks destabilizing those very foundations.
The dual role of China becomes particularly noteworthy; it is not just the key supplier of these materials, but it is also the world’s predominant force pushing for renewable energy advancements. By 2023, it had achieved over half of the world’s offshore wind installations and over 80% of global solar panel production, making any disruption to these trade channels of immense consequence to global energy targets.
The trade conflict, though disruptive, brings opportunities for technological innovation. Researchers are actively pursuing alternatives to lessen reliance on materials like graphite. Promising developments include innovations within battery materials, recycling technologies, and advancements like solid-state batteries, which have the potential to break current supply chain constraints.
Simultaneously, the emphasis on strengthening domestic supply chains within the U.S. and among allies could be back on the rise. Investments are increasing for securing materials through mining initiatives, not only to boost energy independence but also to capitalize on the necessity of sustainability pathways.
The balance between trade wars and climate aims grows increasingly urgent as global clean energy objectives hinge on the rapid integration of renewables. The International Renewable Energy Agency (IRENA) suggests the urgency of tripling renewable energy capacity by 2030, yet disruptions from trade wars and supply chain limitations stand as potential derailments of these commitments.
Even with ever-advancing solar and wind sectors contributing to over 80% of the pledge for renewable energy by 2030, these geopolitical tensions urge countries to prioritize not just their energy independence but also sustainability. Finding equilibrium through thoughtful planning, investment, and collaborative efforts will be pivotal, where secure global cooperation emerges as imperative for securing paths toward sustainable futures.
The US-China trade war epitomizes the delicate interplay between competitive rivalry and cooperative aspirations within the clean energy transition, highlighting the need to pay heed to the interconnected nature of global supply chains—the stakes are perilously high, impacting not just the two superpowers but the entire planet as we navigate this multifaceted tension.
