Why China will Rule Renewable Energy – Paul Krugman | Substack

Report on the Global Transition to Renewable Energy and its Implications for Sustainable Development Goals

An analysis of the global energy sector indicates an inexorable shift towards renewable sources, primarily solar and wind power. This transition is critical for achieving multiple Sustainable Development Goals (SDGs) but is concurrently shaping a new geopolitical landscape defined by great-power rivalry. The concentration of manufacturing capabilities for renewable technologies presents significant challenges and opportunities for the international community in its pursuit of the 2030 Agenda for Sustainable Development.

1. The Ascendancy of Renewables: A Driver for SDG 7 and SDG 13

The global energy future is set to be dominated by renewable sources, a trend underpinned by economic and environmental imperatives that directly support key SDGs.

• SDG 7 (Affordable and Clean Energy): The rapid decline in the cost of solar and wind technologies makes them increasingly accessible and affordable. This trend, coupled with rising global demand for electricity, positions renewables as the primary solution for future energy growth, thereby advancing the goal of ensuring universal access to clean energy.
• SDG 13 (Climate Action): The transition away from fossil fuels is the cornerstone of global climate action. The inevitable dominance of solar and wind power is fundamental to mitigating climate change and reducing greenhouse gas emissions, directly addressing the urgent call for action outlined in SDG 13.

2. Production Dominance and its Impact on SDG 8 and SDG 9

The supply side of the renewable energy transition reveals a significant concentration of industrial power, with China establishing a commanding lead in the manufacturing of essential equipment. This industrial alignment has profound implications for sustainable economic growth and innovation globally.

1. China’s Manufacturing Leadership: China has achieved near-total dominance in the solar power industry and controls a substantial portion of the wind power supply chain. This concentration of production capacity influences global progress towards SDG 9.
2. Implications for SDG 9 (Industry, Innovation, and Infrastructure): China’s industrial strategy has positioned it as the world’s primary producer of the infrastructure required for the green energy transition. Other global powers, including the United States and European nations, face significant challenges in catching up, impacting the diversification and resilience of the global industrial base for clean technology.
3. Impact on SDG 8 (Decent Work and Economic Growth): While the renewable sector creates economic opportunities, the geographical concentration of manufacturing means that the associated economic growth and job creation are not evenly distributed. Effective use of technology is as crucial as its production for achieving broad-based economic benefits.

3. Geopolitical Competition and the Challenge to SDG 17

The strategic importance of renewable energy technology has transformed the sector into an arena for geopolitical competition, which complicates the international cooperation necessary for achieving the SDGs.

• Strategic Monopoly Concerns: A single nation’s effective monopoly on the production of goods crucial for the global energy transition raises strategic concerns. This dominance can be leveraged in trade and geopolitical conflicts, potentially hindering collaborative efforts.
• Challenges to SDG 17 (Partnerships for the Goals): The current dynamic of competition, rather than partnership, among great powers in the renewable energy sector poses a direct challenge to the spirit of SDG 17. The failure of nations like the United States to maintain a competitive role in production weakens the potential for balanced global partnerships and risks creating dependencies that could undermine the collective pursuit of sustainable development. The future of achieving the SDGs will depend heavily on navigating this competitive environment to foster the necessary global cooperation.

Analysis of the Article in Relation to Sustainable Development Goals

1. Which SDGs are addressed or connected to the issues highlighted in the article?

1. SDG 7: Affordable and Clean Energy
   • The article’s primary focus is the global energy future, which it states “will be dominated by solar and wind power.” This directly addresses the goal of ensuring access to affordable, reliable, sustainable, and modern energy for all by highlighting the shift towards renewable energy sources.
2. SDG 9: Industry, Innovation and Infrastructure
   • The article discusses the “supply side: production of the equipment that harvests energy from sun and wind.” It emphasizes China’s dominance in the solar power industry and production of wind-related equipment, linking directly to industrial capacity, technological development, and the infrastructure required for a clean energy transition.
3. SDG 17: Partnerships for the Goals
   • The article frames the energy transition within an “era of great-power rivalry” and “geopolitical competition.” It discusses how one power’s “effective monopoly on producing crucial goods” can be used in trade conflicts, which relates to the global partnership for sustainable development, particularly in the context of trade and technology transfer.

2. What specific targets under those SDGs can be identified based on the article’s content?

1. Target 7.2: By 2030, increase substantially the share of renewable energy in the global energy mix.
   • The article directly supports this target by stating that “the world’s energy future will be dominated by solar and wind power” and that “renewable dominance [is] inevitable.” It discusses the “rapidly rising demand for electricity” being met by these sources.
2. Target 9.4: By 2030, upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies and industrial processes.
   • This target is addressed through the discussion of the “production of the equipment that harvests energy from sun and wind.” The article highlights China’s role in dominating the “solar power industry” and producing wind turbines, which are the core “clean and environmentally sound technologies” for this industrial shift.
3. Target 17.10: Promote a universal, rules-based, open, non-discriminatory and equitable multilateral trading system.
   • The article implicitly addresses this target by highlighting the risks of its failure. It warns that China’s “dominance of renewable energy” could be used in trade conflicts, similar to how it has deployed its “dominance of rare earths.” This points to the geopolitical challenges facing an open and equitable trading system for crucial sustainable technologies.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

1. Indicator for Target 7.2: Renewable energy share in total final energy consumption.
   • The article implies this indicator when it discusses the “demand side: consumption of renewable energy” and compares different regions: “On that front Europe still leads by some measures, China by others, while America is a distant third by any metric.” This suggests measuring the proportion of energy consumed from renewable sources.
2. Indicator for Target 9.4: Proportion of global manufacturing of renewable energy technology by country.
   • The article provides a qualitative measure for this indicator by stating, “At this point China completely dominates the solar power industry. Europe still produces a lot of wind turbines, but China produces almost everything else wind-related.” This points to tracking which countries are producing the necessary technology for the energy transition.
3. Indicator for Target 17.10: Market concentration of exports for crucial sustainable goods.
   • The article implies this indicator by discussing the geopolitical risk of one power having an “effective monopoly on producing crucial goods.” It cites China’s “dominance of rare earths” as a precedent and warns of its “likely dominance of renewable energy,” suggesting that the concentration of production and export of these goods is a key metric for assessing the stability of the global trading system.

4. Summary Table of SDGs, Targets, and Indicators

Source: paulkrugman.substack.com