With a large share of countries looking into transforming their economies to reach net-zero emissions or sustainable development in line with the Paris Agreement, the global demand for zero-carbon technologies is rapidly growing. A new report by Strategic Perspectives compares the performance and provides a snapshot of the global race to the top in five major economies – China, European Union, United States. Strategic Perspectives is a European think tank that works in a collaborative way to ensure effective climate action is the solution to a multitude of crises the world is facing.
The report compares the 5 major economies and shows that: A global race to the top on zero-carbon technologies is well underway China and India shows significant potential to grow its importance in the global supply chain. The EU and the US competing for leadership. All countries are seeking to position themselves in this new industrial era, with its associated socio-economic benefits.
Manufacturing and investing in renewable energy, battery electric vehicles and heatpumps provide a competitive advantage for the countries at the forefront of the technology race. Japan is not yet fully, maximising its potential due to weak policies.
The report shows how national transition plans such as the European Green Deal, China’s 14th Five-Year Plan, India’s Energy Conservation Act, Japan’s Green Growth Strategy and, more recently, the US Inflation Reduction Act (IRA) are being transformed into industrial growth engines.
The analysis is based on existing data presented with the support of the international research group Zero Carbon Analytics.
Key findings on the five economies:
● China clearly leads in most areas we analysed. It shows the biggest advances in manufacturing of solar photovoltaics, wind turbines (narcelle) and lithium-cells for batteries, as well as jobs and investments. The country aims to capture a large part of the growing net-zero market as well as control of technology and component supply chains for the rest of the world.
● The EU is decarbonising its economy fast, with the largest share of wind and solar electricity generation accounting for 22% of the electricity mix in 2022. The EU is also leading on heat pump investment and deployment. It is the strongest competitor to China on green jobs, sales of battery electric vehicles, wind manufacturing and on investments (NB. The data precedes the Inflation Reduction Act).
● The United States performs strongest on innovation through investment in research, development and demonstration (RD&D). It is in a neck and neck race with China on absolute spending and with Japan if measured per capita. The Inflation Reduction Act is expected to challenge Chinese leadership and could allow the US to surpass the EU on investments, jobs and renewable energy share in electricity; it currently ranks second ahead of China.
● Japan is a strong competitor on innovation if RD&D is assessed on a per capita basis. Taking battery electric vehicles, plug-in hybrids and hybrid cars together, Japan had the biggest fleet of these vehicles in 2021. Japan could be much more competitive if it was to fully commit to the energy transition with a coal phase-out and put stronger incentives in place on heat pump deployment for heating and cooling.
● India is an emerging economy with ambitions to position itself in the global net-zero supply chain. It still faces a different set of challenges but these could be overcome faster if it received more financial support. India is making progress in incorporating solar and wind into its electricity generation, almost doubling its share from 2017 figures (5% to 9%). With additional investment, India could become a showcase of successful net-zero development in other sectors. The electric vehicle industry is expected to grow at a compound annual growth rate of 49% between 2022 and 2030.
“A new industrial era based on zero-carbon technologies has emerged. China, the EU and the US are competing to seize the biggest shares in the growing global markets and secure supplies for their domestic demand. In a world where you lead or risk being left behind, manufacturing zero-carbon technologies turns into a precondition for industrial growth, innovation and competitiveness”, emphasised Linda Kalcher, Executive Director of Strategic Perspectives.
“The net-zero industrial race between major economies is on. China’s industrial leadership has proven successful in driving growth and job creation, prompting the US to launch the IRA. Countries that miss the train on the net-zero transition will likely lag behind in industrial development, remaining heavily dependent on costly gas, oil and coal”, said Neil Makaroff, Director of Strategic Perspectives.
“While Europe is rapidly deploying renewables, heat pumps and electric vehicles, it cannot rest on its laurels. To maintain its position in the global race to net-zero, it is time to turn the European Green Deal into a major reindustrialisation plan. Building factories for solar panels, batteries and heat pumps will not only secure Europe’s net-zero transition, it will also create quality jobs”, highlighted Neil Makaroff, Director of Strategic Perspectives.
The writer of this article is Dr. Seema Javed, an environmentalist & a communications professional in the field of climate and energy