Pacific Money | Environment | East Asia

Clean Energy Must Avoid the Mistake of Overdependence

The world must diversify its energy dependence, not simply relocate it from the Middle East to China.

For decades, energy security has meant oil. Countries worried about their dependence on the Middle East and Russia, the security of shipping lanes, and the geopolitical consequences of relying on a small number of producers for the oil that powered global economies. The transition to renewable energy was supposed to rebalance that equation. Yet in doing so, we may be creating a potentially greater vulnerability, since the clean energy supply chain is dominated by China.

Take Europe as an example. The year before Russia’s invasion of Ukraine, Russia supplied 45 percent of the EU’s natural gas imports. The war has forced European countries to scramble for new energy sources. 

The war in the Middle East showed again how quickly concentrated energy supplies can become an economic liability. Roughly one-fifth of global oil consumption passes through the Strait of Hormuz – or did, before the strait was effectively closed by the conflict.

Clean energy can reduce exposure to these specific chokepoints, but the world must diversify its energy dependence without simply relocating it.

China leads in the industries powering the next phase of the global economy. It is the world’s largest supplier and exporter of green technology. In July 2026, China’s green energy exports rose 51 percent year-on-year, with new energy vehicles rising an astonishing 90 percent.

China dominates the clean energy value chain. Today, the country provides roughly 85 percent of global solar production capacity and 80 percent of lithium-ion batteries. This is essentially a monopoly. In electric vehicles, China accounted for almost three-quarters of global production in 2025.

Its control also extends upstream. China holds critical positions in processing and refining the minerals essential to new energy technologies, from batteries to electric motors and wind turbines. It also possesses much of the manufacturing expertise – and increasingly the equipment – needed to turn those materials into finished products.

Therefore, clean energy dependence extends across an entire industrial ecosystem – from processing through technology, components and manufacturing equipment to the finished product. A disruption at any point in the supply chain could reverberate through the entire system. 

The International Energy Agency (IEA) estimated that each month of a halt in Chinese battery supply chain exports could reduce output from EV factories elsewhere by some $17 billion, with more than half of those losses occurring in Europe.

The risk is not hypothetical. China’s use of export controls on rare earths and other critical materials has demonstrated how concentrated supply chains translate into strategic leverage. China mines roughly 60 percent of the world’s rare earths but........

© The Diplomat