The market for green technologies will soon supplant the oil market

The International Energy Agency (IEA) is probably right. Green technologies, in particular six of them (photovoltaic energy, wind, electric cars, batteries, electrolyzers and heat pumps) will be the driving force of the 21st century industrial revolution.

In a recent study, the IEA shows that these six sectors, which were worth $700 billion in 2023, will reach more than $2 trillion by 2035, "a value close to the global market for crude oil." Sales and purchases of clean technologies already represent the equivalent of half of global gas trade.

The IEA forecasts are shown below in a table.

China's green oil 

China dominates the industrial scene, with market shares reaching between 70 and 90% of these future technologies. While European policy and Joe Biden’s investment plans should shake Chinese supremacy, China will nevertheless manage to maintain a market share of around 50%, according to IEA experts; Europe and the United States will each take a quarter of the pie.

China started from very far behind. It is more than ten years ahead in its energy transition and has a formidable industrial base. According to the IEA as well, China’s exports of clean technologies are expected to exceed $340 billion in 2035, which is roughly equivalent to the projected oil export revenues of Saudi Arabia and the Emirates combined in 2024!

And, just this year, China has inaugurated a new solar cell manufacturing plant whose production capacity equals the needs of all of Europe…

Tariffs won't change anything

Of course, Washington and Brussels are trying to protect themselves by raising border taxes, notably on batteries and cars coming from China. While these protectionist measures are making headlines today, their effectiveness is questioned by many experts.

"China's technological rise will not be hindered, and may not even be slowed, by American restrictions," according to Adam Posen, president of the Peterson Institute for International Economics, a Washington-based institute that conducts research for governments and central banks around the world.

China is not only competitive in terms of labor costs but controls every stage of manufacturing, from raw material to finished products. No other state in the world has invested as much in R&D as Beijing.

A considerable lead

It is easy to forget, but China entered the electric car race as early as 2001. For the first generation of lithium car batteries, the Middle Kingdom holds all the patents and unmatched know-how. Tariffs do not seem to faze it.

Thus, the world's largest producer of electric vehicles, BYD, expects that its deliveries abroad will soon represent nearly half of its total sales. "Which suggests that it does not consider U.S. tariffs (currently 102.5%) a major obstacle. The carmaker already has a factory in Thailand and is building similar factories in Hungary, Brazil and Turkey," explains Bloomberg, which has just devoted a dossier to Chinese technological supremacy.

Just a few days ago, Volvo, owned by the Chinese group Geely, acquired the entirety of the capital of the joint venture Novo Energy that it held with one of the few European battery manufacturers, Northvolt, which is in serious financial difficulty and had been planning to build a second factory. As for the European states that supported the idea of raising tariffs on cars made in China, Beijing has just threatened them: they will be on the blacklist of countries that trade with China. 

If China's supremacy can no longer be fought with tariff barriers, except at the risk of triggering a global recession, the best response lies in research and development.

The decisive battle for batteries

Undoubtedly, after the solar decade, the next will be the decade of investments in batteries. A new generation is emerging, one offering a so-called "solid" architecture that aims to free itself from lithium-ion. This new generation, which uses lithium-metal anodes without graphite — a material over which China has an almost total grip — should be commercialized in the very near future. The expected performance is spectacular, enabling fast charging and a range exceeding 1000 kilometers, while greatly reducing the risk of fire.

According to researchers at the Carnegie Endowment, a think tank that encourages diplomatic exchanges and international cooperation, Europe or the United States still have every chance to develop and industrialize this new generation of batteries. In the United States, QuantumScape has allied with the VW group; BYD and CATL have been brought together in a consortium by the Chinese government to accelerate the pace. Toyota and Nissan aim for production by 2028 while Samsung promises mass production as early as 2027 for premium cars. And that may be the good news: competition in the race for a technology deemed disruptive will certainly be fierce but very open.

According to Benchmark Mineral Intelligence, a consultancy specializing in strategic materials, China should occupy only a minority share in the production of these next-generation batteries. The reason? The country is advancing in small steps, fearing the loss of control over its industrial base founded on the first generation of batteries. Is the wheel of fortune turning? Probably, but only if the United States and Europe finance next-generation projects and refrain from subsidizing the technologies where they have definitively lost ground.

This column appeared in the editions of 24 Heures and Tribune de Genève.

This article has been automatically translated using AI. If you notice any errors, please don't hesitate to contact us.