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Experts have highlighted China’s dominance of solar manufacturing and the dangers of being “under the thumb” of one country as the world grapples with the “first global energy crisis”.
International Energy Agency executive director Dr Fatih Birol said the current energy crisis was “interwoven by many factors, including geopolitics”.
Countries around the world are currently grappling with skyrocketing gas prices after sanctions were placed on Russia following the invasion of Ukraine. The Covid-19 pandemic has also caused supply chain shocks.
“We are in the middle of the first global energy crisis,” Dr Birol told the Sydney Energy Forum on Tuesday.
“The world has never witnessed a major energy crisis in terms of its depth and its complexity … I believe we may not have seen the worst of it yet.”
Dr Birol also wanted to give a “heads-up” about the energy security implications of China’s global dominance of solar manufacturing.
He said about 80 per cent of the global supply chain manufacturing for solar comes from China, and this was expected to grow to 95 per cent by 2025.
While Dr Birol acknowledged that China had done excellent work in the last 10 to 15 years to bring down the cost of solar, “80 per cent for any country in the world is a big number”.
“To rely on the entire world, on one single country, is something we all need to think about from an energy security perspective,” he said.
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He said one province in China was responsible for about 40 per cent of global manufacturing, with two major factories responsible for about 25 per cent.
“What happens if there is a fire in one of those factories? The entire global supply chain will be affected,” Dr Birol said.
“From that point of view, we think the diversification of the solar supply chains will be important.”
Dr Birol said three producers around the world were also responsible for more than 75 per cent of the global output of the critical minerals lithium and cobalt, which was important for electric car batteries.
“Again here, diversification will be very important,” he said.
US Secretary of Energy Jennifer Granholm also addressed the forum and echoed Dr Birol’s concerns.
“We want to make sure that we are not, as nations, under the thumb of petro-dictators,” Ms Granholm said.
“Under the thumb of those who don’t share our values, and under the thumb of those who strategically would like to control aspects of the supply chain.
“We all want to have a large footprint on the supply chain but we also want to make sure we are doing this in partnership with one another.”
Ms Granholm said the global market for products to reduce greenhouse gas emissions was worth around $23 trillion and was an opportunity for making money but could also foster more peaceful relations.
“No country has ever been held hostage to access to the sun, no country has ever been held hostage to access to the wind — they have not ever been weaponised, nor will they be,” she said.
“Therefore our move to clean energy globally could be the greatest peace plan of all.”
Prime Minister Anthony Albanese said the Covid-19 pandemic had exposed vulnerabilities and laid bare challenges that simply could not be ignored.
He said the Ukraine war had also impacted the supply and price of energy and was reshaping energy markets.
In Australia, severe weather was also impacting the demand for energy and supply of renewables.
“We need to act and my government will act, we will lay a new foundation for sustainable growth and prosperity,” Mr Albanese said.
At the forum, Australia’s CSIRO and the United State’s National Renewable Laboratory signed an agreement as the first step in the two countries working together on key technologies such as long duration storage, electric vehicles and grid integration.
Asked whether China was seen as a rival in the race to green energy, Ms Granholm said: “I worry that China has bigfooted a lot of the technology and supply chains that could end up making us vulnerable if we don‘t develop our own supply chains”.
“Therefore, from an energy security point of view, it is imperative that nations that share the same values, develop our own supply chains, not just for the climate, which of course is very important, but for our own energy security.
“We’ve seen what happens when we rely too much on one entity for a source of fuel and we don’t want that to happen. So for to diversify those energy sources and to link up with partners is all part of our energy security.”
Climate change and energy minister Chris Bowen said there had been good discussions about the two countries’ interests in improving manufacturing and supply chains.
“That’s good for our own economies. It’s good for national security as well to have supply chains amongst ourselves and amongst friends and allies.”
Meanwhile, Dr Birol said some countries blamed the current energy crisis on cl
