Sunrise in the east

23.03.23 | This year, the European Union is expected to adopt legislation to decrease reliance on China for its energy transition from fossil fuels to renewables. The US has already adopted such legislation, included in the Inflation Reduction Act (IRA). There is a lot of work to be done though, for instance on the supply chain and production of solar panels to produce solar energy. Since 2011, China has invested about USD 50 billion in new solar panel manufacturing capacity, ten times more than Europe. As a result, the Chinese share of production at all stages in the solar panel supply chain has increased substantially. As of 2022, China has 79% share of solar panel manufacturing capacity compared to about 2% each for Europe and North America. The upcoming government support in the form of tax credits or input cost subsidies, on energy for instance, could be beneficial for European and US companies making solar panels or producing inputs.

Source: International Energy Agency, 2023.