Settore energetico

Thus China will burst the green bubble

China's rush towards the energy transition risks triggering a global crisis, with a real green bubble ready to explode.
The dragon is making giant strides in the conversion to green energy and its companies dominate the world in today's crucial sectors such as the production of electric vehicles and components for solar panels.
Chinese supply in these areas is so large that it is changing the global supply/demand balance, producing solar panels and parts thereof at very low prices and therefore attractive to European buyers.
In this way, however, the market of the old continent is undermined, where companies from the various EU countries cannot cope with the competitiveness of Chinese costs and are unable to start their production.
Essentially, some companies fear a green bubble is about to burst.
China's state-led economy spent nearly $80 billion on clean energy production last year, about 90% of all such investments globally, BloombergNEF estimates.
The country's annual spending on green energy has overall increased by more than $180 billion a year since 2019, the International Energy Agency says.
In these data there are the premises for predicting a boomerang of the Chinese boom against the development of the sector in Europe and the USA.
What can happen, according to an analysis by WSJ.
Clean energy is booming in China.
But it's an exploding bubble.
Among the most recent Chinese producers of solar energy are a farmer and a toy manufacturer: the news is important to understand how much the sector is expanding and how profitable it has become to entice companies of all kinds to enter the sector.
Spending on green energy in China is rapidly expanding, so much so that there is a rapid accumulation of renewable energy in the country and an excess of solar components.
This means that dragon products in these sustainability-related sectors are shipped everywhere at low prices, hampering attempts to build such production elsewhere, particularly in Europe.
According to the Dow Jones data tracker OPIS, for example, since the beginning of the year the prices of Chinese polysilicon, the building block of solar panels, have fallen by 50% and those of panels by 40%.
The result is the effect of the wide availability of supply.
read also China, there is a boom in this sector.
And Europe is shaking To cite some examples of how China is creating a green bubble, there is the case of the Chinese dairy giant Royal Group.
Among his latest projects are a farm with 10,000 dairy cows, a milk processing plant and a $1.5 billion factory to make solar cells and panels.
The dairy farmer hasn't been the only one to focus on Chinese solar energy over the past two years.
Others include a jewelry chain, a manufacturer of pollution control equipment and a pharmaceutical company.
The newcomers are contributing to an ambitious push into wind and solar energy in China: This year alone the country is set to install roughly the same amount of solar power as the United States in total, he estimates Rystad Energy.
Meanwhile, Chinese exports of everything from batteries and electric vehicles to solar panels and wind turbines have surged.
Europe and the United States, committed to supporting the national production of clean energy in every way, are already paying the consequences in terms of price competitiveness.
Not only that, the excess supply can cause a disastrous drop in the prices of these components, with significant repercussions on the profits of producers all over the world.
Indeed, many established Chinese solar companies warn that the consequences could be severe, with losses or failures even in the short term.
It is no coincidence that some companies, including leading Chinese industry names such as Jinko Solar, Trina Solar, Canadian Solar, have suspended expansion plans, according to TrendForce, a Taiwan-based market intelligence firm.
The oversupply has been exacerbated by import barriers imposed in India and the United States, which have upended Chinese manufacturers' forecasts and left their panels sitting in ports and warehouses.
The United States proved to be particularly unpredictable with its threat of anti-dumping duties and implementation of the Uyghur Forced Labor Prevention Act, which ended up preventing panels made from Chinese polysilicon from entering the country.
Why China is a threat to Europe in clean energy Many Chinese manufacturers are now seeking to offload supplies at deeply discounted prices in Europe, one of the few large solar markets without tariffs or other barriers to panel imports.
While European solar developers are enthusiastic, the region's already struggling manufacturers feel threatened.
Some European manufacturers were already grappling with internal challenges such as slow approvals, lack of skilled labor and high energy costs, which made it difficult to compete with their Chinese counterparts.
The recent drop in solar energy prices has meant that Chinese panels are selling for about half the cost of production for members of the European Solar Energy Manufacturing Industry Association, said Johan Lindahl, secretary general of the group.
About 40% of the panels produced this year by members who responded to the association's survey were languishing in warehouses.
A Norwegian manufacturer of solar wafers, a key component of panels, went bankrupt in August.
The only remaining European rival, NorSun, has halted production in recent weeks because its customers, mostly European solar cell and panel makers, were unable to sell their products, said Carsten Rohr, commercial director of NorSun.
read also Europe-China, from trade war to recession? What can happen to the EU At this rate, Europe's dependence on Chinese solar risks increasing rather than decreasing, said Gunter Erfurt, CEO of Swiss solar cell and panel manufacturer Meyer Burger.
The company decided to postpone its planned European expansion and instead ship manufacturing equipment to a new plant in the United States, which has offered large government subsidies to solar producers.

Author: Hermes A.I.

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