At the end of May, the European Commission placed its main commercial concern on the table: how to protect the continent's industry from the increase in Chinese imports. For Brussels, maintaining this dependence on Beijing's suppliers is already an "unsustainable" market situation. Days later, there was another strong signal: the announcement that European funds will be restricted to renewable projects that use Chinese equipment. Although the measure also affects other non-EU countries, the concern is particularly focused on the Asian giant due to the risk it poses to the EU by revealing the seams of its critical infrastructures to an increasingly powerful trading partner that it does not fully trust.
The problem is that Europe is now caught between the sword of fossil fuels - whose rise due to the war in Iran has resurrected the ghosts of the Ukraine crisis - and the wall of a renewable transition that leads to Beijing. Faced with this equation, European companies are calling for protection to rearm the domestic renewable industry and give a boost to the green molecules market.
Brussels has tried to convey with all means at its disposal the seriousness of the situation and the urgency of the measures it has proposed. The President of the European Commission, Ursula Von der Leyen, explained that same week that the goal is to reverse a structural vulnerability. "We depend too much on imported fossil fuels, which leaves us at the mercy of the volatility of global markets," she told the press in Yerevan (Armenia). "We have to increase our own resources in Europe. This concerns renewable energies and nuclear energy, as they are locally sourced, cheaper, and more reliable," she specified.
Is it really that serious? The truth is that Europe still imports 57% of the energy it consumes. Although in recent years the Twenty-Seven have made efforts to detach themselves from Russian fuel, in many cases, this has not been replaced by domestic energy but by other foreign suppliers, mainly liquefied gas from the United States. This means that the continent's competitiveness is still very much conditioned by the fluctuation of fossil fuel prices, which still represent approximately 68% of Europe's energy mix. In the last quarter, due to the closure of the Strait of Hormuz, through which nearly 20 million barrels per day passed, oil prices have risen above $80. These figures provide enough arguments for Brussels to make a move before another energy shock.
To understand how we got to this point, it is necessary to go back a few years. China, the world's largest emitter of polluting gases, articulated its decarbonization strategy not only as a response to its environmental urgency but also with the aim of boosting its own commercial and industrial dominance.
Supported by massive subsidies and its dual carbon policy, China has cemented its green hegemony through aggressive technological acquisition. In other words, the State opened its market to foreign firms but conditioned their entry to the creation of joint ventures and the transfer of their advancements to local partners. With this barter strategy - a large market in exchange for technology - the Asian industry has managed to absorb knowledge and skip years of research and development, to now monopolize 36% of all installed renewable generation capacity in the world, adding more megawatts of solar energy than the United States, the European Union, and the rest of the Asia-Pacific region combined.
The Asian giant has consolidated a position of technological production superiority in the market and already accounts for the manufacturing of 85% of solar panels and 68% of wind turbines worldwide, according to estimates from the report China green tech and its industrial policy by Spanish economist Alicia García-Herrero.
And it will continue to grow. China is building new solar capacity at a rate of 277 gigawatts (GW) annually, more than 2.5 times the 138 GW that the country would need to comply with the Paris Agreement and its own national climate goals. In practice, domestic overinvestment driven by Chinese policies and the lagging deployment in the rest of the world have turned the Chinese manufacturing apparatus into "an overwhelming force on the world stage," details the aforementioned report published by the United Nations University. "This makes global dependence on Chinese production for the energy transition no longer a choice but an economic reality," it specifies.
This scenario, according to the General Director of the Spanish Photovoltaic Union (UNEF), José Donoso, reflects a different canon, where the historical model of energy safeguarding gives way to other concerns. Donoso refers to historical events that occurred over a century ago when the British navy under Winston Churchill decided to replace coal on its ships with oil. That decision turned the control of geographically very limited resources into a priority. Now, market control no longer resides solely in dominating distant fossil fuel deposits but in the capacity to manufacture cutting-edge renewable technology. "Since the sun and wind are everywhere, that factor disappears and becomes the need to control technology," he explains.
Also in this race, the European industry is struggling to compete with the Chinese offer. This is detailed by the General Director of the Spanish Wind Business Association (AEE), Juan Virgilio Márquez, who denounces that Asian companies manage to market "a product equivalent to the European one with a 30% discount." For the wind spokesperson, the key lies in starting from different market rules. "The [Chinese] State provides the land and the capex for the infrastructure. It finances it at zero interest or even with grace periods of years, basically you have a percentage of capex that the company does not have to cover," he explains.
This weakness in capitalizing on the energy sector has a recent precedent in the European Union. The natural gas crisis following Russia's invasion of Ukraine in 2022, which not only had an impact on prices but also revealed the fragility of the Old Continent. As acknowledged at that time by the European Commissioner for Climate, Wopke Hoekstra, depending on Russia was a "very costly strategic mistake," as was the lack of an industrial base that would grant autonomy to the continent. Europe managed to navigate that situation by massively importing other fossil alternatives, but did not manage to position itself as an autonomous energy actor at that time.
Today, the risk is to replicate that failure and turn the green transition into a new episode of dependence on other non-EU countries. This is warned by Márquez: "Europe is slow to react, and the measures it takes are not as clear and forceful as in other markets." On the other hand, Donoso argues that "the solution lies in working with the concept of strategic technological reserves."
The 27 face another handicap compared to powers like the United States or China. While these can impose tariffs overnight, the Brussels architecture requires negotiation and seeking cohesion among all its members. This consensus requirement highlights the clash between two blocs. On one side, countries seeking to shield their industry to protect their economy. On the other, member states prioritizing access to cheap, competitive, and fast energy. In this second position, as pointed out by the wind industry association, Spain is also included. This constant need for agreement among the Twenty-Seven ends up reducing autonomy and slowing down any commercial shield.
From the business front, another key issue is pointed out to avoid stumbling again on the stones of the past. The Director of Strategy and International Growth at Moeve, Rik Sneep, emphasizes that, although significant steps have been taken in recent years, "we need to accelerate through more regulatory certainty, more administrative agility, and incentives," because "the energy transition is a central issue of sovereignty for Europe." The goal, he assures, is to promote large-scale investment to "not miss out on opportunities compared to other regions, contributing to building a more diversified and resilient European energy system."
Green Molecules. Part of this capital is focused on overcoming the limits of direct electrification. That is, decarbonizing sectors where not everything can be plugged in. In this regard, Europe's bet is on green molecules, such as hydrogen and other fuels that can have a renewable origin and are capable of replacing their fossil alternatives. Sustainable sources such as biomass or ecological fuels also come into play. These gained prominence in Brussels' roadmap after the war in Ukraine, when Europe acknowledged the vulnerability of its dependence on foreign gas.
"Electrification today is a country's protection and not just a business opportunity," emphasizes the general director of the wind industry association. However, there is a sector of the economy where electricity is not feasible for decarbonization, such as heavy industry and long-distance transportation, directly responsible for 31% of European emissions. In this gap, green molecules are expected to play a leading role in Europe, where external energy dependence is still at 57%, according to Eurostat.
"Green molecules can reduce dependence to 28% by 2040," Sneep emphasizes. Not everyone shares this opinion, as some consider that investing in green hydrogen, for example, may not reduce the price gap with fossil sources. But Spain "has a unique opportunity to position itself as an energy hub, due to its availability of renewable resources, strategic location, and the possibility to connect with other markets," states the Moeve executive.
Today, the energy mix reflects a much more aggressive commitment to solar energy, which already accounts for nearly 30% of its generation structure, compared to the European average of 17%. These renewable sources are supported by nuclear generation (around 20% of the mix) and hydropower (12%), still necessary to ensure supply. In order to capitalize on this advantage, the private sector is already taking risks.
An example is the Andalusian Green Hydrogen Valley, with an approved investment exceeding 1 billion euros for its first phase. Located in Huelva, it will have an initial capacity of 300 MW, unprecedented in the EU. The idea is for the infrastructure to complement the largest renewable fuel complex in the southern part of the continent, to be produced from organic waste and used oils. The goal is to produce 500,000 tons per year of sustainable aviation fuel (SAF) and renewable diesel. The sector has taken up the challenge. Europe, as stated by UNEF, "cannot afford to delay it by three or five years."