As an industrial powerhouse, it has more recently turned into an example of Chinese green transformation, boasting the world’s first smart and zero-carbon port that is 100% electricity driven and green-energy backed. Onsite industrial-scale wind turbines and solar panels ensure renewable-energy self-sufficiency in the 10th-busiest port in the world, handling more than 20 million shipping containers annually.

It’s perhaps no wonder, then, that China chose to host last year’s summit of the Shanghai Cooperation Organization in Tianjin, on the banks of the Bohai Sea, in yet one more show of growing influence from Beijing. With twice the number of world leaders in attendance since the summit launch in 2001, from Russian President Vladimir Putin to Indian head of state Narendra Modi, Xi Jinping called for an end to the “Cold War mentality” that was triggering “turbulence and transformation” and called for “equal and orderly multipolarization” of the world that could pave the way to a “more just and equitable global governance system.”

The group pledged increased cooperation in energy, infrastructure, green industry, AI and innovation. These are the economic pillars of the present and the future that is being built. And they are the architecture for a new kind of cold war, one over our ecological future, propelled by a growing geopolitical rivalry between the giants of the 21st century.

Great power rivalry

In an article last year in Foreign Policy magazine, the influential historian and futurist Nils Gilman argued that the advent of the “ecological cold war” is upon us, driven by a struggle “over the metabolic basis of modern industrial society.”

“Call it a Green Entente vs an Axis of Petrostates,” he wrote on LinkedIn.

In the wider transition to a low-carbon economy, China needs no introduction. Its influence in the green transition – through supply chain routes and cheap hardware – is plain to see. It has installed more solar and wind than the rest of the world combined, the United Nations has said. Its capacity to drive down the cost of clean technologies has been a boon for reining in the growth of carbon emissions, giving vast swaths of the planet the tools to shift to renewables.

It has also played at least some role in the U.S. decision to retreat from climate policies, with a Trump administration that has made a U-turn to a fossil fuel agenda and adopted protectionist measures in an “America first” attempt to decouple from Chinese economic might. At the same time, the United States has signalled a sharp interest in ridding itself of dependency on China for critical minerals, which are not just key to green tech but intrinsic to military hardware. This year, Trump launched “Project Vault,” which includes loans for domestic mining and a bid to stockpile reserves.

Europe has responded to growing national backlash to climate policies by cooling them down and doubling down on its own protectionist measures. In the midst of all this, emerging economies that could help accelerate the energy transition are running up against roadblocks.

A piece of the green pie

While some observers take issue with Cold War framing, others are mapping out the ripple effects of these geopolitical tensions when it comes to the race to slow down planetary warming. “We are in the midst of a green cold war,” agrees economist Jorge Arbache, a professor at the University of Brasília. “The implications are that China, which is already leading, will probably lead even more because China will keep investing in green production.”

For Arbache, the heart of the struggle has to do with the amount of money that is at stake. Suffice to say, it’s a lot. One 2025 estimate from the Boston Consulting Group pegs the opportunities embedded in four key sectors – critical minerals, green tech manufacturing, green industrial material and green services – as US$11 trillion by 2040. “We are talking about an extremely big business agenda, and of course there is a competition in terms of who will eat what size of the cake,” Arbache says.

Although many developed countries are well positioned to participate in that agenda, it is also true that they do not necessarily have the key elements, such as critical minerals, available clean energy, carbon markets, abundant water and biodiversity. “Geography is back,” Arbache says. That means that developing economies that do have those assets could find themselves better positioned than before. “It gives those economies a bargaining power that they did not have very recently,” he says.

Chaos vs. foresight

But the name of the game, lately at least, has been chaos, driven by its number-one agent, U.S. President Donald Trump. “If I could sum it up, it’s better to govern chaos, because order is too costly,” observes Sabino Vaca Narvaja, a political scientist and former Argentine ambassador to China. “A fragmented society is easier to manipulate.”

China, of course, is steeped in contradiction, pouring money into coal projects, and facing accusations of human rights violations. It also has a different logic to its movements, Vaca Narvaja notes, one that bets on the long term. And so far, it has paid off.

The Chinese incursion into the green market was not about business at the outset, Arbache notes; it was about domestic security. Beijing registered, decades ago, the vulnerability it could face when it came to power supply. A desire to become energy self-sufficient shifted it into green-tech development, which has positioned it as a leader in renewables development. It now has a stranglehold on a huge chunk of the critical-minerals market, controlling 50% of global production and 87% of processing and refining.

China’s formula also relies on the rest of the world, Vaca Narvaja notes. It needs the world to buy its products. And it is. “China’s cleantech products are going basically everywhere in the world,” said Lauri Myllyvirta, non-resident senior fellow at the Asia Society Policy Institute’s China Climate Hub, in a conversation held last year on China’s climate path amid trade tensions.

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For all major cleantech products except batteries, “the Global South, broadly understood, has overtaken the old developed world as the larger destination,” Myllyvirta said. There are countries with impressive uptake in solar, such as Pakistan, South Africa and Middle Eastern countries, but it’s the broad-based nature of the boom that’s sending the biggest signal. “From one side, there is the cost competitiveness of Chinese supply, and from the other side, there is a massive diversity of drivers,” he said.

Electrification is everywhere. Cities are turning to electric buses. Drivers are turning to electric vehicles. Governments and individuals alike are turning to solar power in the Middle East and Africa. Clean-energy sectors continued to drive growth in China in 2025, doubling in value from 2022 to US$2.1 trillion – which is equal to the economies of Brazil or Canada, according to an analysis from the think tank Carbon Brief.

At the same time, a glut in solar panel production is leading to uncertainty. Beijing set its 2026 growth target between 4.5% and 5%, the lowest level in 35 years, noting a “grave and complex” landscape.

“I don’t think we will be talking about renewable energy the way we are if it wasn’t for what China has been able to accomplish in the last decade,” says Jai Asundi, executive director of the Center for Study of Science, Technology and Policy, in Bangalore, India. “Taking a technology that has been developed somewhere else, and driving the price down. A classic capitalistic efficiency market. That is, if you are more efficient in the way you use a resource, then the capital flows to you.”

Emerging economies demand protagonism

The flip side of that efficient flow of capital, of course, is that it can make it difficult for other economies to compete. Take a place like India, where attempts to jump-start domestic green-energy device production have stalled. “Energy prices are very high in India. So to produce something is already very costly. And some of these technologies are very energy intensive,” Asundi says.

India, which represents 17% of the world’s population, is a prescient case study for wide swaths of the world that are trying to shrink a yawning inequality gap by raising gross domestic product, without contributing to global warming. The developed world built its industrialized wealth at the expense of the environment. That is no longer an option.

“What we are struggling with is this notion of how we work as an ecosystem,” Asundi says. “How do we work as a global society as opposed to a country-driven society? Because after all, climate change is not a country phenomenon; it is a global phenomenon.”

Chen Yu, senior policy officer at the non-profit Global Witness, agrees. “U.S.–China competition may continue, and the global energy landscape seems to be becoming more regionalized and multipolar, but this does not necessarily mean inevitable confrontation,” she says. “The key question is whether competition preserves space for cooperation and allows for fairer rules and resource distribution, rather than creating exclusive blocs.”

Whatever the mix, what matters, she stresses, is that the process of reducing emissions is not delayed.

The rise of ‘powershoring’

Unfortunately, the current moves and countermoves of nations trying to bolster national economies, and respond to electorate demands, is proving detrimental. Arbache says there are alliances available now using today’s technology that could speed up decarbonization, but they are being squandered. The Brazilian economist, who is also the former vice president of the Development Bank of Latin America and the Caribbean, coined the term “powershoring” to describe the strategic relocation of energy-intensive industries to countries that have clean, abundant and secure energy. To produce one tonne of aluminum using coal-fired electricity results in 20 to 22 tonnes of carbon dioxide, Arbache says. But if you produce that same aluminum in Iceland, which runs on nearly 100% renewable power, the carbon output drops to 2 to 3.5 tonnes.

Countries like Brazil, Uruguay and Paraguay also offer abundant green grids for manufacturing. But they are not attracting as many powershoring projects as anticipated from places like Europe, Arbache says. “Although they need new allies and friends to solve their problems, they are still very skeptical because of this very notion of protectionism,” he says. “In the end, they are harming their own economies and they are also harming our economies.”

Canada’s balancing act

Canada, with three-quarters of its exports going to the United States, is also navigating tricky terrain. The shifting sands of Trump tariffs has led the government to overhaul how it approaches trade and put it in hot pursuit of new partners – or increasing the strength of existing ones.

Prime Minister Mark Carney said as much in his headline-grabbing speech at Davos this year, where he warned middle powers that if “we’re not at the table, we’re on the menu.” The phrase carried added weight because it came on the heels of an announcement to expand trade with China, and, crucially, allow at first up to 24,500 Chinese EVs annually into the Canadian market. Carney has since signed agreements with India to export uranium for its fleet of nuclear reactors, critical minerals, and oil and gas. The government also announced a split from the United States over auto policy, revitalizing incentives for EV production and purchase, and the intention of customizing new tailpipe emissions rules, rather than defaulting to the U.S. ones.

The divergence from U.S. policy is significant, says Rick Smith, president of the Canadian Climate Institute. “All we get from the Trump administration is this drumbeat that fossil fuels are the future. It’s very easy to let that overwhelm us as Canadians – to assume that that’s correct, and it’s not,” he says. “The actual economic opportunity is in decarbonization.”

While there are inherent challenges to decarbonization for an oil- and gas-producing country that other nations do not have, Smith says Canada is in a privileged position to move in on the booming battery market. “We’ve got all the elements of a very significant battery supply chain in Canada. And very few countries can say that,” he says. “In a grand contest between China and the United States, should we just be happy that China’s winning on the decarbonization front? No. We should also be getting our elbows up and trying to compete.”

Natalie Alcoba is a Buenos Aires-based journalist and senior editor of Corporate Knights.

The post The race for low-carbon energy is turning into a green cold war  appeared first on Corporate Knights.

Historically considered a theoretical shortcut across the top of the world, the geopolitically charged Northern Sea Route is gaining prominence, in particular as part of China’s “Polar Silk Road” initiative, which seeks to develop Arctic shipping routes and energy projects as an extension of the Belt and Road infrastructure diplomacy drive.  

In December, China achieved a key milestone with the maiden voyage of the China-Europe Arctic Express, a commercial liner service that travels the Northern Sea Route along Russia’s Arctic coast. The vessel Istanbul Bridge was the largest container ship to ever complete the journey, which took two months on the water and three years of preparation.  

China has long sought to establish a stronger economic and political presence in the Arctic, describing itself as a “near-Arctic state” in an official 2018 policy paper that identified warming in the region as a key incentive for deeper involvement. That paper launched China’s ambitions for a northern corridor and encouraged Chinese firms to invest in Arctic shipping infrastructure.  

But the momentum has caused concern among some big shipping players, who say the new route is still too dangerous. “Safe navigation cannot be assured,” Søren Toft, chief executive of the Geneva-based Mediterranean Shipping Company, warned in a LinkedIn post earlier this year. “Sending container ships across the Arctic raises a lot of red flags,” Sian Prior, lead adviser for the Clean Arctic Alliance, said in response to the inaugural China-Europe Arctic Express journey. Andrew Dumbrille, the organization’s North American adviser, said the industry is ill-equipped to deal with accidents such as oil spills in the region because it doesn’t have emergency-response equipment nearby. “That means any spills will stay in the water for longer, wreaking more damage,” he said. 

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Some observers suggest that China’s systematic push into the Northern Sea Route does much more than undermine Arctic safety and threaten fragile natural systems. An important yet little-noticed 2025 report, Vessels on the Northern Sea Route, was published by the Bellona Environmental Transparency Center, which is part of the Bellona Foundation, an Oslo-based non-profit that fights oil and gas pollution. Established by staff who fled Russia in 2022, the group monitors Russia’s environmental impact, nuclear safety and Arctic pollution. They found that China’s growing maritime role in the region is deeply entangled with Russian geopolitical ambitions, Western sanctions evasion and environmental risk.  

The Northern Sea Route stretches 5,600 kilometres along the Russian Arctic coast, from the Kara Gate in the west to the Bering Strait in the east. Russia asserts extensive control along the route, regulating passage through a permit-based system that requires ships to use Russian pilotage services and icebreaker escorts in ice-covered conditions. Vessels transiting the Northern Sea Route are subject to Russian tariffs for these services, and those fees are collected by a subsidiary of Russia’s state nuclear company, Rosatom, which is closely integrated with the country’s military-industrial complex and linked to its invasion of Ukraine.  

Russia’s shadow fleet in the north 

The scale of traffic along the Northern Sea Route is steadily growing, and oil represents a large share of what’s making the trip. The 2025 summer–autumn season saw 103 transit voyages along the corridor, up from 97 in 2024. Thirty-four of the vessels last year were tankers, transporting about 1.9 million tons of crude oil. Fifteen container ships made the journey, including the Istanbul Bridge, up from 11 the previous year, and altogether they carried around 400,000 tons of containers. 

 China is positioning to take a bigger piece of the pie. In September, China’s NewNew Shipping Line signed agreements to invest up to five billion rubles to build a logistics complex in Provideniya Bay, to service vessels travelling along the Northern Sea Route. The company also has plans signed to develop container shipping through Murmansk’s ice-free port. 

Bellona found that most non-Russian-flagged vessels permitted onto the Northern Sea Route in 2024 transported Russian oil to China and India, violating sanctions. This “shadow fleet,” deployed in some of the world’s most hazardous waters, comprises poorly insured aging tankers, often without appropriate ice-class certification. 

The risks are severe. In 2024, Rosatom issued 1,312 permits to 975 vessels to enter the Northern Sea Route, of which 100 sailed under non-Russian flags, including 33 tankers carrying liquefied natural gas and 22 oil tankers. About one-third of them were not ice-class vessels, and more than half of these oil tankers were more than 15 years old.  

While China’s Polar Silk Road is building an important trade link with Europe, it’s also a sign of how commercial ambition could outrun governance in one of the world’s most fragile seas. 

Gordon Feller is a Global Fellow at the Smithsonian Institution. 

The post China’s Arctic shipping ambitions are enabling a dangerous oil corridor  appeared first on Corporate Knights.

Corporate Knights’ annual Global 100 ranking adds more grist to that mill. Of the nine automakers on this year’s list, six are based in China: XPeng (20), Li Auto (29), Nio (30), Zhejiang Leapmotor Technology (43), Seres (63) and Yadea (60), which mainly makes electric two-wheelers. Tesla is a U.S. company, but about half of its production is in China, and BorgWarner, headquartered in Michigan, also has plants in China. A significant number of Western automakers use Chinese batteries in their EVs, too.

But China’s EV market can be hard to parse. In November, The Atlantic published an explosive article contradicting the main narrative around the growth of its industry and purporting that “China’s EV Market Is Imploding.” In the article, Beijing-based writer Michael Schuman points to the pervasive practice of selling zero-mileage “used” cars and claims that the Chinese Communist Party artificially keeps struggling manufacturers afloat.

China, with its cheap electric cars, is teaching Western automakers a lesson, as they build unaffordable, large, luxurious electric models.

– Colin Pratte, transportation researcher, IRIS

In the West, popular perception varies widely, suggesting the distorting effects of online misinformation and a lack of independent data. Chinese cars are thought to be more technologically advanced than their Western counterparts, but their production is considered dirtier than in Europe or North America because of coal-heavy electricity and pollution from upstream processes like mining and mineral processing. But Colin Pratte, a transportation researcher at the Institut de recherche et d’informations socioéconomiques in Quebec, suspects that the latter perception is influenced more by racism than reliable data and that steep tariffs on China’s EVs in Canada and the United States reflect pure protectionism, not high ecological standards.

A big lead

China isn’t the only country propping up its automotive sector, argues Thomas Hundal, a Toronto-based automotive journalist: “To some extent, subsidies are offered everywhere, and people exploit them.” That’s a problem that’s not unique to China, or to EVs, he says, adding that pre-registration, or listing new cars as used, has been a practice in Europe for ages.

According to Reuters, the top 10 countries buying China’s EVs are Mexico, Brazil, the United Arab Emirates, Israel, Belgium, Germany, Australia, Indonesia, South Korea and the United Kingdom.

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China’s EV industry is more technologically advanced than the West in two main areas, Hundal says. The first is its battery supply chain: “They can produce huge numbers at low cost compared to North America. China is also years ahead of the Western manufacturers in terms of chemistry, with more impressive discharge rates and higher energy density.” China also has a big lead in charging; their stations are substantially more powerful than North America’s, according to Hundal. Broadly, China has been working on its EV market “in a larger and more serious capacity than the West has,” and for longer.

“China, with its cheap electric cars, is teaching Western automakers a lesson, as they build unaffordable, large, luxurious electric models,” Pratte says. China’s small, inexpensive cars compete directly with the big electric SUVs that Western automakers are pushing with the backing of their own governments. If governments really wanted to reduce greenhouse gases by electrifying transportation, they would welcome cheap Chinese EVs with open arms, Pratte says.

Following a pattern

As few as 15 of the 129 Chinese EV brands are predicted to achieve financial viability by 2030, according to the financial advisory firm AlixPartners. Looking at the stiff competition and excess manufacturing capacity in China’s EV sector, Hundal expects to see major upheaval. “If we go back 100 to 120 years, there were thousands of manufacturers in Canada and hundreds in [the United States]; some survived but most didn’t. I expect that to be the sort of trajectory we will see in China,” he says.

The 2026 Global 100 list puts speed in the spotlight

The threat posed by companies like Nio, Li Auto and XPeng is reminiscent of Toyota’s introduction to the West, when it rapidly gained market share by focusing on affordability and fuel efficiency. Western carmakers at the time emphasized size, power and styling, but Toyota’s big challenge pushed them to overhaul their manufacturing processes and improve their quality and durability. Chinese automakers could force a similar overhaul today by exposing weaknesses in the Western firms. However, its disruptive potential must first overcome the nationalist and protectionist tendencies that have long been the hallmarks of the auto industry.

Ophélie Dénommée-Marchand is a Quebec-based independent journalist with a focus on fact-checking and investigation. She’s also an encyclopedist for the Canadian Encyclopedia.

The post Western carmakers face growing pressure from Chinese EVs appeared first on Corporate Knights.

The country feeds nearly 20% of the global population, but must do so with less than 9% of its arable land and only 6% of its water resources, according to Reuters. Rising temperatures, erratic rainfall and more frequent droughts and floods are battering Chinese agriculture, jeopardizing decades of food self-sufficiency policy. Wheat, rice and maize – the cornerstones of the country’s food system – are increasingly exposed to climate shocks.

“Climate change poses a severe threat to China’s food security,” former agriculture minister Tang Renjian said in early 2024, noting that extreme weather events have already reduced yields in several major grain-producing provinces. In the same year, the Ministry of Agriculture warned that “unusual changes in temperature and rainfall can slow down the growth of food crops, resulting in a drop in the average yield of grains.”

China’s agricultural sector is uniquely sensitive to climate change. The northern plains, home to a majority of China’s wheat production, are becoming hotter and drier. The southern provinces, which grow much of the country’s rice, are increasingly prone to flooding. According to the China Meteorological Administration, average national temperatures have risen faster than the global average, climbing more than 1.6°C since the 1950s.

The country has managed to preserve about 95% self-sufficiency in wheat for nearly two decades. But climate stress is forcing new strategies to the fore, both in agricultural practices and in international trade.

To address growing risks, the Chinese government has embedded climate adaptation directly into its agricultural-reform agenda. The country’s 14th Five-Year Plan (2021 to 2025) prioritizes investments in water-saving irrigation, climate-resilient seeds, precision farming technologies and early-warning systems for extreme weather.

In addition to bolstering domestic yields, China is hedging its food security by deepening trade relations along its Belt and Road Initiative (BRI) network, especially with countries in the Global South, to secure grain from a broader base of suppliers.

China seeks to limit agricultural imports

Wheat has historical and cultural roots that run deep in China, and the stakes for maintaining supply stability are high. The country consumes more than 130 million tonnes of wheat annually, largely to produce staples like noodles, dumplings and steamed buns. While the bulk of demand is met by domestic harvests, higher-end processed foods increasingly rely on imported wheat with specific quality characteristics – particularly from countries like Canada, France, Australia and the United States.

But as Trump’s universal tariffs strategy demonstrates, trade relations are anything but predictable.

In 2019, Canada was China’s leading supplier of imported wheat. By mid-2020, that changed dramatically. The diplomatic row over the arrest of Huawei CFO Meng Wanzhou led to a sharp drop in Canadian wheat purchases, down from more than 50% of imports in 2019 to just 15% by mid-2020. The influential online Chinese media portal Sohu blamed “wrong decisions” made by Canada for the souring of trade ties.

Australia, once a beneficiary of Canada’s fall from favour, has seen its own wheat exports face heightened inspections in China. While this hasn’t triggered a formal ban, it’s a sign that bilateral tensions can quickly spill into food trade.

These shifting trade patterns highlight a deeper strategic calculus. China wants to limit its dependence on Western suppliers for food staples, just as it has for semiconductors and energy. Expanding partnerships with emerging economies such as Kazakhstan, Pakistan and Brazil are a cornerstone of this plan.

Challenges for China’s agricultural productivity

Meanwhile, internal agricultural productivity is under stress. In a 2022 report, the Chinese Academy of Agricultural Sciences estimated that climate-related yield reductions could amount to 5% to 10% by 2030 under current warming trends. One study estimated that China’s key cereal crops could lose around 2.6% yield per degree Celsius of warming, with more vulnerable regions facing up to 12.7% loss per degree across wheat, rice and maize. Another study with different crop modelling – in this case without carbon dioxide fertilization – projected up to 37% yield decline within decades if warming continues unchecked.

For a country where 1.4 billion people depend on food-system stability, even small disruptions can cascade.

China isn’t short on ambition to use technology to solve big problems. It leads the world in the development of hybrid rice varieties and is rapidly digitizing its farm sector with satellite monitoring, AI-driven pest prediction and big-data analytics for yield forecasting. Other innovations come from its “Smart Agriculture” program, which integrates advanced tools such as sensors, drones and blockchain technology into the food supply chain.

Historical memory still shapes China’s focus on food security, especially the famine of 1958 to 1962 that led to the deaths of an estimated 15 to 55 million people – one of the deadliest disasters of the 20th century. While today’s threats are different, the possibility of disruption carries echoes of the past. The Chinese government’s commitment to self-reliance now finds new motivation in the science of climate change.

Gordon Feller is a writer based in San Francisco.

The post Climate change is battering China’s agriculture sector. Here’s how it is responding. appeared first on Corporate Knights.

This marks a shift: the world is going “post-America” just as it once went “post-Soviet.” Global attention is turning to the markets that matter – and they’re in Asia. This vast region, home to half the world’s population, is seeing the future unfold: the rooftop solar revolution is just beginning to accelerate.

With U.S. tariff barriers changing by the day, manufacturers in Cambodia, Vietnam, Malaysia and Thailand are competing with one another and China to sell clean energy tech to regional peers. China is investing in production capacity, such as battery factories in Indonesia and EV production in Pakistan. The result: nations once dependent on fossil fuel imports are starting to trade in technologies that make them energy independent. This is akin to the investment India made in coal production in the 1970s following the “oil shock” of the era.

Even before U.S. tariffs, the tide was turning. In 2024, the Asian Development Bank (ADB) mobilized a record US$8.7 billion in non-sovereign co-financing, much of it for private-sector clean energy in Asia and the Pacific. A key example is Thailand’s Gulf solar and battery energy storage project, backed by $260 million from ADB and $529 million from other partners.

China is crushing it . . .

China is turning a critical corner. With massive manufacturing and clean energy deployment, it may finally be reducing coal dependence. In 2024 alone, China installed 120 gigawatts (GW) of rooftop solar, denting coal demand by 1%. Paired with growing use of electric arc furnaces for steel and structural changes in the economy, the first quarter of 2025 might mark China’s peak in coal emissions.

Even more important: China’s green exports are booming. Since 2023, more than US$150 billion in foreign direct investment has flowed into its “new energy economy” – EVs, batteries, photovoltaic, wind and more. In 2024, most solar exports went to Global South countries for the first time. And the Belt and Road Initiative now prioritizes “new energy” financing.

What about the rest of the region?

South Asia is rising too. Pakistan leads, but Bangladesh and India are scaling fast. India’s solar mission includes 10 million solar roofs. In the fourth quarter of 2024 alone, India added 1.3 GW of rooftop solar – up 64% from the third quarter and more than 219% year-on-year.

Pakistan will double solar installations in 2025

Pakistan’s solar boom, which surged in 2024, shows no signs of slowing in 2025. Based on first-quarter import data, the country may double its solar installations this year. At around 10 cents per watt, solar capacity is being deployed rapidly as citizens abandon an unaffordable grid. In Karachi, where nights can stay over 40°C, cooling is essential. Like California and Australia, Pakistan is learning to pair solar with storage to balance the grid. And any reduction in coal use will bring relief to some of the world’s worst urban air pollution.

AC demand will dwarf AI data centre needs

Air conditioning demand – especially in megacities like Singapore, Lahore, Bangkok and Jakarta – will drive rooftop solar adoption in Asia. Historically low electricity consumption is set to rise, with AC demand dwarfing debates in the West over whether data centres will require more power. In Asia, it’s about AC, not DC.

ASEAN takes off

Southeast Asia is just getting started. Generation in the ASEAN region (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam) was 26% renewable in 2024, well below the global average of 40%, according to the global energy think tank Ember. With 690 million people and expected sixfold growth in energy demand, the region is ripe for a solar surge. There’s more than 30,000 GW of potential known in the region, with only 26.6 GW of installed capacity.

Watch as these dynamic economies move to the average world capacity with the lowest cost source and then to achieve abundance. Vietnam has unlocked direct solar contracts for businesses; Malaysia has launched a new solar program; and Indonesia is surely going to catch up when its friends from Saudi Arabia to Australia are charging ahead.

Australia’s drive to be a renewable-energy superpower

Australia, with its world-leading rooftop solar penetration, is a postcard from the future. South Australia now runs a grid with the highest solar, wind and battery penetration, and no baseload. Last month, South Australia recorded its biggest drop in power prices. And as of December last year it had the most stable electricity supply in the national electricity market.

Combine that kind of know-how with the political will of the newly re-elected Labor government to become a renewable power and you have a huge role for the land down under. Australia’s job now is to share its grid-integration know-how and low-cost clean energy products with the world.

This article was produced by and is copyright of Climate and Capital Media. It has been edited to conform with Corporate Knights style. Read the original article here. It has been republished with permission. 

The post The rooftop solar revolution is accelerating — and all eyes are on Asia appeared first on Corporate Knights.

The mountainous region in the northern province of Jujuy is known for its enchanting, multicoloured rockscape and the chain of settlements that hug the rugged valley. In 1993, a diesel locomotive ceased to operate. But last year, after track upgrades and a concerted effort from local politicians, a gleaming solar-powered battery train made its maiden run. Authorities have gushed about the electric train, describing it as a beacon of green innovation that could bolster one of the most popular tourist destinations in the country. 

But zoom out and another picture snaps into view. Engineered by a state-owned Chinese manufacturer, with Chinese-made lithium phosphate batteries charged by a Chinese-built solar farm, the 70-seat train is an example of the kind of power wielded by one of the key drivers of the global energy transition. Soft power to go hand in hand with big, bold power, as China takes a commanding role in the world’s race to get to net-zero before the devastating impacts of climate change hit another level. 

China is, for all intents and purposes, fuelling the global green transition right now. The latest flagship renewables report from the International Energy Agency forecasts that China will account for nearly 60% of all renewable capacity installed around the globe from now until 2030. If those projections play out as predicted, China will be home to nearly half the world’s total renewable-power capacity by the end of the decade. In fact, clean energy investment by China nearly equalled the money poured into fossil fuels globally in 2024. The progress is being driven by the “new three” of electric vehicles, batteries and solar, which grew twice as fast as the Chinese economy as a whole and accounted for one-quarter of its GDP growth last year, according to analysis from Carbon Brief. In 2023, China installed most of the world’s new solar capacity, a whopping 58%. 

China’s trajectory represents a remarkable pivot in international perception. Saddled with the title of the world’s biggest polluter as its economy boomed at the turn of the century, China is having a green awakening. It has secured strategic resources critical to the green economy, opened new trade routes and inked debt-funded alliances. Although its environmental record at home remains mixed – it has seen its use of coal-fired power drop but is still building more plants within its borders – the momentum is positive. China appears on track to see its emissions peak by 2030. All the while, it has vowed not to build any new coal-fired plants abroad. As Xi Jinping announced in 2021 before the United Nations General Assembly, the country is pledging to “increase support for other developing countries in developing green and low-carbon energy.” With the United States retreating from environmental leadership, the China factor will matter even more to developing economies. Half of China’s solar, wind and EV exports already go to the Global South. 

“With the U.S. pulling out of the Paris Agreement, there is a fracturing of trust that is happening,” says Fikayo Akeredolu, a Nigerian climate and energy-transition scholar completing a doctorate at the University of Oxford. China “now looks like the good guy.” The question is, she says, “Are you good because you’re good, or are you good because the other guy is bad?” 

From brownouts to ‘small but beautiful’ 

It’s helpful to consider how China got here. China’s renewable-energy story began almost 25 years ago, in 2001. It had just entered the World Trade Organization and its economy was growing much more quickly as a result. But unlocking trade propelled it at a figurative wall: demand for energy was outpacing supply. Brownouts were a recurring issue. It was already relying on heavy imports of oil and coal, so energy security was a growing problem. “Obviously, energy is key to economic growth,” says Alex Wang, law professor at the University of California, Los Angeles, and co-director of the Emmett Institute on Climate Change and the Environment. Wang’s research focuses on the law and politics of Chinese environmental governance, and he’s written a book, coming out this year, called Chinese Global Environmentalism. China, he notes, was already seeing various environmental limits to its growth.

The year 2007 was momentous because the Intergovernmental Panel on Climate Change further crystalized the impact humans were having on modern climate change – and researchers identified China, producer of ever more goods in a globalized world, as the biggest emitter of greenhouse gases, ahead of the United States. At the same time, renewable-energy technologies, especially solar and wind, were maturing. But the United States was divided on whether to invest in that direction, Wang says. The EV industry in the United States was struggling, and China saw that. One year earlier, in 2006, it had enacted the landmark Renewable Energy Law, which set a framework for it to promote the development of clean energy. “So I think Chinese leaders saw an opportunity to achieve a lot of different goals all at once by really investing heavily on renewable energy,” Wang says. And then a few years later they saw the same opportunity with EVs. “As they are doing all the things that they need to do for very practical reasons, they can also say they are contributing to global climate goals.” 

This shift is visible in the controversial Belt and Road Initiative (BRI), China’s massive plan to build a global network of land and maritime infrastructure projects, including ports, highways, railways and fibre optic networks. Since it was launched in 2013 with the goal of greasing access to international markets and boosting connectivity, nearly $1.2 trillion has already been earmarked or spent. Roughly 150 countries have signed on or said they intend to. For some, especially in the Global South, it’s been a welcome injection of cash. But China’s mission has been marred by white elephant projects, such as railway and highway ventures in Kenya and Uganda that are choking governments with debt payments, along with growing environmental and social pushback. 

At the same time, of course, the initiative has advanced China’s political interests. In 2022, for example, Nicaragua joined the BRI one month after severing diplomatic ties with Taiwan. More recently, BRI has gone through a rebranding, with an emphasis on green. Authorities now emphasize “small yet smart” and “small but beautiful” investments, such as the solar-powered train in Quebrada de Humahuaca. And while the envelope has shrunk, in 2023 the China Development Bank and the Export–Import Bank of China announced they would each be dispersing US$48 billion for energy-related projects. 

Part of the success of these ambitious development goals, no doubt, derives from China’s ability to drive down costs through its manufacturing prowess and lax approach to labour conditions. Solar panels in the United States and Europe cost three times as much as in China, but China’s treatment of workers is notoriously poorer than Western democracies’. 

For China, Wang says, it’s not about altruism; it’s about business. He describes the mentality like this: “We are making a lot of stuff that we want to sell; we need places to sell it. And it so happens that lots of countries have these decarbonization targets, so how perfect is that?” 

Powering up energy deserts

In some cases, China’s role in decarbonization may even be incidental. Power is the product; renewables are just a better way to get it. 

“To talk to someone about the energy transition implies that they have some kind of energy already,” notes Akeredolu, the Nigerian energy expert. Some 600 million Africans did not have access to electricity in 2022, according to the International Energy Agency, most of them in sub-Saharan Africa. In Nigeria, the most populous country in Africa and a major producer of petroleum, roughly 60% of its residents are energy-poor. 

“I’m looking at what countries like China are doing to plug that energy gap,” Akeredolu says. And at the moment, it’s a lot. At its 2024 Summit of the Forum on China–Africa Cooperation, the Chinese government earmarked US$51 billion in financial support to Africa over the next three years, including for 30 clean energy projects. Large-scale infrastructure projects, such as hydro dams, require the kind of massive flows of money managed by the Chinese state. But smaller-scale ventures, in particular solar, have been cornered by private Chinese companies, Akeredolu says. 

A wave of customization is taking root, spurred by the Nigerian government’s decision to cut petrol subsidies, which were eating up more of the state budget than health, education and infrastructure combined. Now that the government has rolled back subsidies, solar – which had a higher upfront cost – has become more attractive, at least to middle-income earners. “There are a lot of Nigerian companies now that are literally going to China and saying, ‘Hey, listen, you have all these solar PVs, you have all this tech, but it’s too expensive for our consumers – so what can you do?’” Akeredolu says. “‘Can we have some sort of pay-as-you-go model? Instead of a whole solar panel that powers a whole house, can we have something that just powers a television?’” And they are having success, with Nigerian entrepreneurs embarking on fact-finding missions in China to understand their manufacturing processes and how to emulate them at home. 

“I would argue that the perception of China right now in the African context around energy or renewables, I think, is very positive,” Akeredolu says. 

When it comes to solar, it’s not about aid or even loans, she adds. Chinese firms are simply interested in making money, and they’re employing domestic labour to do so. In fact, Nigerian companies are crucial to the equation, to ensure buy-in from locals. “Actual Nigerians are taking ownership of the conversation and saying, ‘This is what we need, this is how we need it, and this is how we build it.’” 

Global South dominance

China’s influence across the Global South has grown rapidly in recent years. In South America, it has overtaken the United States as the largest trading partner, and it holds the second spot for Latin America as a whole. Countries rich in oil and metals rode the wave of booming markets in China and India, providing the commodities they needed to grow. Brazil, Bolivia and Peru, for example, saw major declines in poverty, according to analysis by the International Monetary Fund, while debt-stricken Argentina dug itself out of a financial hole. 

These last two decades have also seen China stake out a significant presence in the region’s energy grid. Since 2000, the China Development Bank and the Export–Import Bank of China have financed nearly US$10 billion in energy-generation and -distribution projects in Latin America and the Caribbean, according to analysis from Boston University. 

Often, the investments are welcomed by countries otherwise strapped for cash. China’s Belt and Road Initiative, for example, funded the high-altitude Cauchari solar farm in Argentina’s Jujuy province that is powering the batteries for the Humahuaca train, and generates electricity for 70% of the province’s inhabitants. The project relied heavily on Chinese involvement, from engineering to solar panels, Huawei technology, cables and other imported equipment. 

But there was also pushback. Indigenous communities, environmentalists and local residents across the country have opposed large-scale clean energy projects that displace settlements or come with environmental costs, such as a major dam in the southern province of Santa Cruz. Cauchari also faced resistance for similar reasons. And for all its environmental attributes, the solar-powered battery train has faced considerable opposition from local communities, who criticized insufficient transparency, the displacement of families along the rail line, and the cost of tickets. The emergence of monopolies is another source of concern, as seen in Chile, where state-owned Chinese companies control 57% of the country’s energy distribution. 

“China is looking to exert its influence through the economy, either through indirect or direct investment – rather than the sort of military interventions that used to be carried out by the United States in the region,” says Santiago Rosselot, co-author of a 2022 study on Chinese investments in the Southern Cone of South America by the Chilean think tank Fundación Sol. Rosselot questions China’s role in pushing the energy transition forward in the region and argues that its presence is strategic. South America is rich in the critical minerals required for the energy transition: lithium, copper, nickel and rare earth elements. The so-called lithium triangle, an area about the size of California that stretches over parts of Argentina, Chile and Bolivia, accounts for 60% of the world’s lithium reserves. 

“The main threat we see is a sort of neo-extractivism,” Rosselot says. “The energy transition is happening, but the same logic is still applying, which is that Latin America is providing the raw materials for the industry to happen in another place.” 

Although the price of lithium has dropped because of concerns over a glut in the market and fears of a slower uptake of EVs, mining giants continue to flood the region looking to invest. China has poured billions into Argentina, which offers the most business-friendly terms of the three lithium-triangle countries. But it’s got big investments in Chile, too, which also sends nearly three-quarters of its copper exports to China.

Lithium mining comes with an inherent cost to the environment, because the water-intensive process used to extract it from underground brine requires pumping large volumes of liquids. The world’s voracious demand for this critical ingredient of the energy transition – lithium demand surpassed one million tons per year in 2024 – has the United States and Europe seeing China’s inroads in the critical minerals market as a security threat. But South American countries continue to push for greater participation in the supply chain. Peru, home to a major new port that Jinping declared would bring “considerable income and enormous job opportunities” to locals – albeit questioned by some of them – has been trying to lure major Chinese battery manufacturer BYD to set up a plant within its borders. 

“Our focus has really been about a just energy transition,” says Alicia Zegarra Garcia, with the Centre for China and Asia-Pacific Studies at Peru’s Universidad del Pacífico. Some five million Peruvians still rely on wood or manure for heat and to cook, she says. “We are talking about a process that is not just about the extraction of minerals, but as a transition that changes the systems of production. The industries that develop. The transformations that happen inside of them,” she says. “And how government policies ensure that the distribution of those benefits actually reach a population that right now can’t afford an electric car.” 

So then, how to balance the scale of clean energy production, local impact and global imperative as the hard realities of global warming loom large? There is always a price to pay for development. History is littered with the sacrifice zones of progress. As the ripple effects of the demise of the U.S. Agency for International Development (USAID) sink in and the geopolitical chess board is rearranged, China’s green-energy engine will take an ever-prominent role. 

“The U.S. is making a choice to move in a very different direction, where renewables are considered almost a dirty word,” says UCLA professor Wang. That is leading to a wider conversation, Akeredolu notes – in Africa, but certainly beyond – “around who is left standing that we can trust to meet our climate commitments.”

Natalie Alcoba is a Buenos Aires–based journalist and senior editor at Corporate Knights.

Natalia Favre is an Argentinian photographer and visual storyteller based in Cuba and Argentina and working in Latin America.

The post How China’s energy transition engine is driving change in the Global South appeared first on Corporate Knights.

In China, you can purchase the compact BYD Seagull for ¥90,000, or about $17,000 Canadian. In Switzerland, the similarly sized Dongfeng Nammi Box runs about $27,000. But in the U.S. and Canada, the cheapest EV is the three-door hatchback Fiat 500e, which comes in at $40,000. That’s a 48% surcharge for living in the wrong country. Or, more precisely, for keeping cheap, Chinese-built EVs out.

There was some hope that cheaper EVs were on their way, but that was extinguished this summer when Washington and Ottawa announced 100% tariffs on Chinese EVs, essentially guaranteeing they will not be available anytime soon.

Support for this decision has been nearly universal – from industry, unions and partisans across the political spectrum, who say it will protect a nascent domestic EV supply chain, which has been promised more than $50 billion in public subsidies in Canada (and nearly 10 times that in the United States) and all the jobs and economic ripple effects the auto industry provides. North America’s auto industry, it appears, is simply too big to fail.

Just as the integrated auto industry benefited from massive Canadian and American bailouts during the financial crisis 15 years ago, these tariffs can be thought of as a preemptive bailout, a tacit admission that local producers cannot compete with Chinese automakers, which both governments say have the unfair advantage of cheap labour and government subsidies.

Only this time, the bailout is being paid for by the consumer – who will shell out tens of thousands of dollars more for an EV – and the climate, which will be forced to absorb additional carbon due to the slower uptake of more expensive EVs.

We can’t lose sight of the fact that getting affordable electric cars into people’s hands isn’t something that is optional. It is essential to achieving our climate goals.

— Nate Wallace, clean-transportation program manager at Environmental Defence

The opportunity cost of keeping out Chinese EVs

If inexpensive Chinese EVs were available in Canada, they would supercharge EV adoption, adding an estimated 1.8 million zero-emission EVs to our roads over the next decade and lowering our carbon emissions by almost 28 million tonnes. These ultra-low-cost EVs would also free up more than $5.3 billion in family budgets – money that will now be spent on more expensive EVs, gas cars and gasoline instead.

These numbers, crunched by Corporate Knights’ director of research Ralph Torrie and shared with the Toronto Star, show the opportunity cost of keeping Chinese EVs out of Canada, all in the name of protecting the local auto manufacturing industry. The figures demonstrate how tariffs will imperil our climate targets, drive inflation and dampen economic growth by eating up billions in disposable income, Torrie says.

Former U.S. president Donald Trump has said that the tariffs are a “tax on a foreign country” and will, in effect, make China pay for “ripping us off and stealing our jobs.”

Economists across the political spectrum, however, say that tariffs will actually drive prices up – in other words, stoke inflation. “We didn’t go to Trump University, thinking that China will pay these tariffs,” says Nate Wallace, clean-transportation program manager at Environmental Defence. “They’re a tax on Canadian consumers with the explicit intent of raising prices.”

Meanwhile, trade with China in other goods is booming, reaching more than $100 billion last year. Tariffs on EVs only single out a particularly essential climate-change-fighting technology for punishment.

“There will be fewer EVs and more emissions,” Wallace says.

What’s worse, the tariffs could end up failing to achieve their goal of fostering a local EV industry. Some who have seen Chinese EVs up close – including the CEO of Ford Motor – say they are so advanced and so cheap, legacy automakers might never catch up. In other words, Chinese EVs are on track to dominate globally, and these tariffs could end up doing nothing but forestalling the inevitable.

The number one barrier to EV adoption: sticker price

In the United States, EVs have become the focal point of culture wars around climate change. But in Canada they had the magic power to bring erstwhile opponents together, with environmentalists and business leaders, Liberals and Conservatives, unions and management working to encourage the development of a domestic EV supply chain to reduce carbon emissions and provide a new generation of blue-collar jobs.

The tariffs, however, shattered this alliance, definitively putting economic development ahead of emission reductions.

“We can’t lose sight of the fact that getting affordable electric cars into people’s hands isn’t something that is optional. It is essential to achieving our climate goals,” Wallace wrote in a submission to the Canadian government calling for lower tariffs.

Road transportation is responsible for 17% of carbon emissions in Canada and 22% in the U.S. Globally, thanks to EVs, the transportation sector is one of the few that’s on track to reach net-zero by 2050. But North America lags behind.

If Americans or Canadians are ever given the opportunity to buy these vehicles, I think they would sell a lot stronger than a lot of Western automakers would think – and I think that’s really terrifying for them.

— Kevin Williams, reporter for InsideEVs

The number one barrier to EV adoption is sticker price. Despite many studies showing that the overall cost of owning an EV is cheaper in the long run than a gasoline-powered car, they remain significantly more expensive upfront in the North American market.

In China, however, EVs have achieved price parity with cars powered by internal combustion engines across price points – from the cheapest models to the most luxurious – and the results speak for themselves: China leads the world in EV sales, with more than one-third of all new cars powered by batteries. In fact, more than 60% of all EVs bought globally are purchased in China.

For mass adoption to take off in Canada, EV prices would have to drop by one-third to one-half, according to a Scotiabank analysis released last year. This is also how much cheaper Chinese EVs are today. Yet EVs in North America are only getting more expensive. The two cheapest models on the market – the Chevy Bolt and Nissan Leaf – were recently discontinued.

“The only reason why low-priced electric vehicles from China pose any kind of threat to this industry is because the legacy automakers in North America have so far refused to bring affordable electric vehicle models to market,” Wallace wrote.

Tim Burrows, president of the EV Society, a Canadian non-profit that promotes EVs as a climate solution, says the tariffs on Chinese EVs appear at first glance to be jumping the gun. “There are no vehicles that it’s going on in Canada,” he says. “We don’t have Chinese EVs, and we have no EV industry to protect yet.”

Mark Carney, former governor of the Bank of Canada and now the UN’s special envoy for climate action and finance, has questioned the lavish U.S. and Canadian subsidies to the auto industry to spur EV manufacturing, saying the money would be much better spent subsidizing heat pumps for households that can’t afford them.

But Burrows sees how tariffs are necessary to prevent cheap Chinese EVs from flooding the market. Our auto industry, he says, needs time to catch up: “The Chinese didn’t just show up with cheap, well-made EVs. They started 15 years ago. We’re just starting out.”

Burrows and other EV advocates take issue with the lack of a sunset clause in the tariffs. If they were in place for a limited time – say, two to five years – with a clear end date, the tariffs would allow enough time to develop a North American supply chain and bring more inexpensive models to market. But as things stand now, they say that the tariffs coddle the domestic auto industry, which hasn’t shown any urgency in offering more EVs for sale.

Or, as Wallace puts it: “No accountability mechanisms exist to apply downward pressure on EV prices, whether it be regulatory requirements or market-based competition.”

Chinese vehicles kick their bad reputation

Because Chinese car brands aren’t available in Canada and the United States, few people can say with authority whether they’re any good, or if they’d sell. Kevin Williams is one of those people. An Ohio-based reporter with InsideEVs, he travelled to Beijing to test-drive Chinese EVs and says they’re so good, Western automakers are “cooked.”

“Chinese EVs are competitive in ways that go beyond just price,” he says. “They’re stylish, they’re well-made, and they work really well.” Williams, who has not minced his words after test-drives of lacklustre American EVs, says Chinese vehicles have bucked their reputation for inferior quality. “For a long time, Chinese cars really weren’t great,” he says. “That isn’t true anymore.”

In the early 2000s, a lot of Chinese cars were simply cloned versions of Western cars that had been reverse engineered. Then in the late 2000s, automakers in China pivoted to EVs – or “new energy vehicles,” as they’re called there – and invested far more in their development. Now, 15 years later, Chinese manufacturers sell more EVs than all other car companies combined.

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“They’ve been doing a lot of research and development and refining their product to the point where now they’re one of the biggest automakers in the world,” Williams says. “It didn’t happen in a vacuum. They didn’t just all of a sudden start making solid vehicles. It took a minute.”

Detroit-area company Caresoft, which takes apart cars to analyze how they’re built, tore down a BYD Seagull and was impressed with the quality of its construction, especially for the price point. The company was similarly impressed with other Chinese EVs and wrote that “the automotive landscape is set for a significant shift, driven by the rapid evolution of China’s electric vehicle industry [which] should serve as a wake-up call to legacy automakers.”

Williams says that if they were available in Canada and the U.S., there’s no doubt Chinese EVs would find eager buyers. “Most consumers don’t care where the product comes from,” he says. “If Americans or Canadians are ever given the opportunity to buy these vehicles, I think they would sell a lot stronger than a lot of Western automakers would think – and I think that’s really terrifying for them.”

In the 1980s, Japanese cars were cheaper and better than North American options and were being snapped up at a rapid clip. Then-U.S. president Ronald Reagan imposed Japanese import quotas to allow the domestic auto industry time to catch up, and four years later, after Japanese companies agreed to open factories in North America, the quotas were dropped.

Now, Japanese cars are ubiquitous. And North American cars still exist – and they’re vastly more reliable than they were before competition arrived.

Throughout history, the greatest automotive innovations have been a result, oftentimes, of the government challenging automakers to improve.

— David Tracy, editor-in-chief of The Autopian

All EV supply chains lead back to China

One of the only places on earth where Chinese EVs can compete head-to-head with Western vehicles is Australia, which has a free trade agreement with China. In Australia, Chinese-built EVs now control 80% of the EV market, and Chinese brands are the most popular, behind only Tesla.

John Cadogan, a veteran Australian automotive journalist and qualified mechanical engineer, is far less enthusiastic about Chinese EVs, calling them “a functional appliance.” He says they’re good for people who can’t afford more expensive models but can’t compete on quality. “When you make anything cheaply, inevitably quality issues such as endurability and performance suffer,” he says. “Consumers are finding that out.”

But the line between Chinese EVs and others isn’t as clear as you might think. Regardless of where they’re assembled, all EVs rely on numerous parts from China. From semiconductors to battery cathodes, even the raw minerals in batteries and the rare earths in electric motors, all cars – and especially EVs – are reliant on a supply chain controlled by China. “It’s becoming very hard to differentiate what’s Chinese-made and what’s not,” Cadogan says.

As a result, as soon as EVs start rolling off the line in the U.S. and Canada, they’ll still be drawing from the Chinese supply chain, and that won’t change until new mines and refineries are up and running, a process that typically takes more than a decade.

A missed opportunity to expand the power grid

With tariffs in place, and few used EV options on the market, budget-conscious Canadians will be pushed back into the internal combustion engine market. This means another eight years on average of paying private-sector oil companies to fuel up rather than (mostly) publicly owned utilities.

According to Corporate Knights analysis, utilities would receive $3.5 billion in additional revenue over the next decade from the charging of Chinese EVs alone – badly needed funds that could be used to expand the grid to support electrification of the economy.

Without Chinese EVs providing inexpensive options, EV sales aren’t growing fast enough to meet the federal government’s legislated 60% target by 2030 and 100% by 2035. Estimates put out by the Parliamentary Budget Office show that EV prices would need to drop by one-third to meet the first target.

Coincidentally, the cheapest Chinese EVs retail in Europe for about one-third less than the cheapest EVs available in Canada. And while the 100% tariff in the U.S. and Canada leaves no room for negotiation or improvement, the EU’s 38% tariff has already been dialled back on several models, following an investigation into state subsidies.

Being more open to addressing specific grievances with Chinese EVs could create an incentive for China to improve its labour and environmental practices while increasing access to cheaper EVs in Canada. In France, for example, EV rebates are dependent on the car’s carbon footprint – only vehicles made with clean energy qualify.

Are the government and industry up to the challenge?

On the other hand, dropping the tariffs entirely and allowing Chinese EVs to flood the market isn’t a great option either. It would not only cede a critical industry to a geopolitical rival; it would mean looking the other way on the objectionable labour practices and underregulated pollution the Chinese EV supply chain relies on.

Instead, government regulations – that is, limiting rebates on expensive EVs – could be necessary to drive down prices, says David Tracy, an automotive engineer and editor-in-chief of The Autopian, a car-focused online publication.

In the past, when the market has failed to protect consumers and the environment, the government has stepped up to make a difference, he says. “I’m all about competition. But as someone who is well versed in automotive history, I’ve seen how really challenging automakers has led to great things. Throughout history, the greatest automotive innovations have been a result, oftentimes, of the government challenging automakers to improve,” he says.

Fuel economy regulations in the U.S, for example, yielded cars that are more powerful, more reliable and more efficient than ever. “And that doesn’t happen naturally,” Tracy says. “I think if we just went by the market, it’s possible we’d still have carbureted automobiles without airbags.”

Marco Chown Oved writes about climate change for the Toronto Star. With files from Ralph Torrie, director of research at Corporate Knights.

This story is jointly published with the Toronto Star.

The post Who’s trying to kill the $17,000 electric car? appeared first on Corporate Knights.

The announcement increases the existing tariff from 6.1 to 106.1% as of October 1, The Canadian Press reports. A separate 25% tariff on Chinese steel and aluminium products takes effect October 15.

“We are transforming Canada’s automotive sector to be a global leader in building the vehicles of tomorrow, but actors like China have chosen to give themselves an unfair advantage in the global marketplace, compromising the security of our critical industries and displacing dedicated Canadian auto and metal workers,” Prime Minister Justin Trudeau told media Monday, during a federal cabinet retreat in Halifax. “So, we’re taking action to address that.”

“We all know that China is not playing by the same rules as other countries,” he added. “Unless we want to get in a race to the bottom, we have to stand up and that’s what we’re doing.”

Trudeau said Canada is also looking at similar trade measures for Chinese-made products like “chips and solar cells,” iPolitics reports.

Monday’s decision mirrored tariffs imposed by the United States in May and the European Union in June, and coincided with a visit Sunday by U.S. National Security Advisor Jake Sullivan. The Canadian tariff applies to electric and some hybrid cars, trucks, buses and delivery vans.

“Chinese brands like BYD are not a major player in Canada’s EV market right now but imports from China have exploded in recent years as Tesla switched from U.S. factories for its Canadian sales to its manufacturing plant in Shanghai,” CBC reports. “The new tariff will apply to those Shanghai-made Teslas that are sold in Canada – a development that is expected to force the U.S. automaker to supply the Canadian market with vehicles made at one of its other plants in the U.S. or Europe instead.”

Deputy Prime Minister and Finance Minister Chrystia Freeland said the tariff was meant to protect the tens of billions of dollars governments have invested in domestic EV-manufacturing facilities.

“Canada is home to the talented workers, raw materials, clean electricity, and specialized production capabilities needed to build electric vehicles” but faces “an intentional, state-directed policy of overcapacity, undermining Canada’s ability to compete in domestic and global markets,” she said in a release. That called for “decisive action to level the playing field, protect Canadian workers, and match measures taken by key trading partners.”

The release said China’s annual EV exports have increased in value from $200 million in 2018 to $47.2 billion in 2023. It cited a BloombergNEF calculation that the country produces enough EV batteries to meet 100% of global demand.

Other recent analysis pointing to an “unprecedented rate” of global renewable-energy deployment has credited China with the lion’s share of that growth but expressed concern about a growing decarbonization divide between Asia and the rest of the world, and between China and the rest of Asia.

Fast action

The tariff decision came less than two months after Freeland announced a 30-day consultation to determine how to handle trade restrictions on Chinese EV imports. Canada is “facing unfair competition from China’s intentional, state-directed policy of overcapacity that is undermining Canada’s EV sector’s ability to compete in domestic and global markets,” she said.

At the time, CBC cited the average price of a Canadian EV at around $73,000, while the Seagull, produced by Chinese automaker BYD, costs around $13,000 on the domestic market. The Seagull is so inexpensive because it is manufactured to reduce costs – its small size alone means it can be produced with fewer materials and travel farther on a smaller battery. BYD has also cut down on extraneous parts; the car has only one front wiper and no rear wiper, so the company “only has to manufacture one wiper arm, one wiper motor, and one wiper blade,” Inside EVs wrote earlier this year.

Critics say other factors are also at play, including heavy subsidies by the Chinese government and low wages for autoworkers, which together help to artificially lower prices and compete unfairly against Western EV companies.

But still, the fast turnaround on the tariff announcement caught the eye of some observers who implied that the outcome of the consultation had been determined before it began. A senior federal official told media the tariff had been under study for months and was not prompted by pressure from the U.S., CBC writes.

Fair market or missed opportunity?

The Automotive Parts Manufacturers’ Association had lobbied for U.S.-style tariffs in Canada, and its president Flavio Volpe said Ottawa had “stepped up again” for the industry. “It’s very important for us to have a level playing field,” he told CBC. “The Chinese are very good at what they do, but what they do also includes breaking the rules.”

But that comment didn’t fully capture some of the praise China is receiving for massively improving its automotive product over the last five years. The Chinese vehicles are “amazing quality. Just amazing,” the equivalent of a Tesla Model S with “90% of Tesla’s capability – for half of the price,” wrote RethinkX co-founder Tony Seba in mid-June. “No company in the West can compete with this. No company in Japan can compete with this.”

It isn’t even that a model like the Seagull would be priced the same in Canada as it is in China –rather than trying to flood the market, Chinese automakers’ practices in Europe suggest they’re aiming for sales margin over volume, charging the equivalent of $35,000 or $45,000 for a car that would sell for US$17,000 at home, Corporate Knights CEO Toby Heaps and research director Ralph Torrie wrote in a Globe and Mail op-ed earlier this month.

But companies like BYD, unlike many of their Western counterparts, are still putting smaller, more affordable cars on the market, rather than emphasizing pricier zero-emission trucks and SUVs. That difference had Marc-André Viau, government relations director at Montreal-based Équiterre, suggesting a more modest tariff – in the range of 17% to 38%, as in Europe, rather than 100%, as in the United States. He urged Ottawa to structure the surtax to reflect differences in environmental standards and working conditions, but also to favour the smaller vehicles that Canadian buyers need and want.

‘Verge of extinction’

“People who are in the market for an affordable new vehicle have almost no options left,” since “small, low-cost models have been on the verge of extinction for about 10 years,” Viau wrote. An excessively high tariff, he warned in mid-August, would miss the opportunity to stimulate healthy competition to build small, affordable cars in North America.

Heaps and Torrie made much the same point. Affordable electric cars from Chinese companies like BYD “could open up the Canadian EV market to millions of middle-class families,” they said. “The electricity needed to charge those cars will generate cash flow for Canadian utilities, helping them prepare for the growing role of electricity in our energy system.” And with the vast majority of the cars currently manufactured in Canada destined for export, concerns about domestic job loss have been exaggerated.

“We buy all sorts of things from China, why should electric vehicles be an exception?” Torrie asked in an email Monday. “Every combustion vehicle bought today will be emitting greenhouse gas emissions well into the 2030s. We cannot get at the root cause of the fires and floods and the heat waves if we keep trumping climate change in our policy decisions.”

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On Monday, Clean Energy Canada said the tariff would make the transition off carbon more costly and difficult.

“Unfortunately, Canada made a decision today that will result in fewer affordable electric vehicles for Canadians, less competition, and more climate pollution,” director of public affairs Joanna Kyriazis told CBC. “Not only could today’s announcement have a chilling effect on future EV sales, it could drive up EV prices and slow adoption in the near term as well.”

CBC cites Volpe pointing to coal-fired generating stations that still power manufacturing in China, while Freeland cited the country’s “abysmal” labour and environmental standards. In their Globe and Mail op-ed, Heaps and Torrie said those realities “must be taken seriously.” But “it is already illegal to import products tainted with forced labour,” even if Canada has never applied that standard against any product.

The solution, they said, is that “this law should be enforced at the individual company level, rather than by a tariff that would shut out any Chinese-made EV, including those made in China by Western carmakers like Tesla, Honda and General Motors.”

This article originally appeared in The Energy Mix. Read the original article here. It has been edited to conform with Corporate Knights style.

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Affordable electric vehicles that are made in China could open up the Canadian EV market to millions of middle-class families.

But the news comes at a fraught time. Following a similar move by the United States, the Canadian government is considering punitive tariffs on Chinese EVs, with the consultation period August 1.

Such tariffs would be a mistake. Chinese EVs should be accepted for sale in Canada without the tariffs, as long as they meet Canadian standards and are made by companies that do not employ forced labour in their supply chains.

Every year, Canadians buy more than 1.5 million new cars, most of them from foreign countries, and some of them made in China.

Canadian households want and need affordable electric vehicles, sooner rather than later. And reasonably affordable Chinese electric sedans and mid-sized crossovers are available for export to Canada now.

The charged debate over whether to deny Canadians access to affordable Chinese EVs is triggering claims that without a high tariff, China would flood the market and put Canadian auto workers out of work.

But those risks are being exaggerated. Nearly 90 per cent of the cars assembled by Canadian auto workers are exported, and that’s still going to be the case for EVs.

While it’s realistic to expect some job losses among Canadian auto workers from more imports of affordable Chinese EVs, they would be minimal, on the order of 2 per cent. And more importantly, there would also be jobs created.

If Chinese EVs grew to 20 per cent of new car sales over the next five years, by 2030 it would save the families that bought the vehicles $9-billion in fuel and maintenance costs. The money would recirculate in local economies, generate more than $1.5-billion in revenue for Canadian utilities and eliminate 12 million tonnes of greenhouse gas emissions. Even under a wide range of assumptions, the net effect would be more wealth circulating in the Canadian economy.

There is not much risk that Chinese EVs will “flood the market,” as tariff proponents claim. Chinese automakers are more interested in margin than market share. In Australia, Europe and other markets, they’re pricing their products competitively.

The arrival of Chinese EVs into Canada would make it an affordable option for families looking for a new car for $35,000 to $45,000. Otherwise, they will have to turn to a combustion vehicle that would lock in poorer performance, higher fuel and maintenance costs, air pollution and greenhouse gas emissions that would persist well into the 2030s.

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The risk of opening a back door to the U.S. market by allowing cars made in China to be sold in Canada is a red herring. It would be easy for the United States to apply its tariffs on any Chinese-made vehicles (using the vehicle identification number) trying to cross the border for sale.

And with regard to any Chinese-made batteries or parts short of a fully assembled vehicle, it would be relatively straightforward for Canada to apply surgical tariffs on these parts to stay onside with the United States-Mexico-Canada Agreement, without preventing Canadian consumers from purchasing affordable EVs.

It’s true that China’s electricity supply used to make EVs is dirtier than North America’s, but the pollution the EVs save during their lifetime far outweighs that disadvantage.

The charge that Chinese cars are made with forced labour must be taken seriously. It is already illegal to import products tainted with forced labour, although Canada has yet to stop any Chinese products from entering the country under this law. In any case, this law should be enforced at the individual company level, rather than by a tariff that would shut out any Chinese-made EV, including those made in China by Western carmakers like Tesla, Honda and General Motors.

The switch to electric cars and trucks is accelerating exponentially around the world, and EV supply chains are routinely subsidized by governments, nowhere with greater vigour than in Canada. Allowing Chinese-made EVs into Canada will broaden the market for EVs, help bring the country to the forefront of an economic megatrend, and spur competition.

The electricity needed to charge those cars will generate cash flow for Canadian utilities, helping them prepare for the growing role of electricity in our energy system. More EVs will also increase the pressure on apartment building owners, condominium corporations and municipalities to build out the charging infrastructure that we need.

From time to time, an issue comes along where Canada’s interests do not align with those of the United States,’ and where asserting an independent Canadian policy is warranted. This is one of those times. Let them in.

This piece was first published in The Globe and Mail. 

Toby A.A. Heaps is CEO of Corporate Knights and Ralph Torrie is the Director of Research at Corporate Knights.

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The analysis for Carbon Brief by Lauri Myllyvirta, senior fellow at the Asia Society Policy Institute and lead analyst at the Centre for Research on Energy and Clean Air, cites “official figures and commercial data” to call an end to the emissions increase that began when China reopened its economy after the COVID-19 pandemic.

January and February still saw “large increases” in year-over-year emissions from “the low base of 2023,” the analysis states, enough to produce a significant, 3.8% increase over the first three months of the year.

“The drivers of the CO2 drop in March 2024 were expanding solar and wind generation, which covered 90% of the growth in electricity demand, as well as declining construction activity,” Myllyvirta writes. “Oil demand growth also ground to a halt, indicating that the post-COVID rebound may have run its course.”

Last November, Myllyvirta projected that China’s CO2 emissions were poised to decline this year thanks to a surge of clean energy investments that exceeded targets. Six months later, “a 2023 peak in China’s CO2 emissions is possible if the buildout of clean energy sources is kept at the record levels seen last year,” he says. “However, there are divergent views across the industry and government on the outlook for clean energy growth. How this gap gets resolved is the key determinant of when China’s emissions will peak—if they have not done so already.”

The key factors in the CO2 decline include: Wind and solar pushing fossil fuels down from 67.4% in March, 2023 to 63.6% in March, 2024 as a share of China’s electricity generation, “despite strong growth in demand”; An 8% drop in steel production and 22% decline in cement due to a slower real estate sector; Electric vehicles now accounting for 10% of the country’s fleet and “knocking around 3.5 percentage points off the growth in petrol demand”; and 45% of last year’s solar growth coming from smaller, distributed energy systems.

“These trends seem set to continue, as real-estate investment continued to contract—for the third year—as a result of a government clampdown on excess leverage and financial risk in the sector, and sizable supply resulting from booming construction in the past,” Myllyvirta says.

Get the rest of Lauri Myllyvirta’s analysis here.

This article first appeared in The Energy Mix. Read the original story here. 

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