China and the Threat to the World’s Energy Independence
Four weeks ago, The Fusion Report ran an article called “This Friday is the 4th of July, How Far Are We From Energy Independence”, in which we looked at US progress towards energy (and particularly electricity) independence. Interestingly, the country that most competes for the world’s energy resources, China, is also the one with control of many of the components and systems critical for next-generation energy. We will examine these trends and what they mean for world energy independence.
Electricity As The Common Energy Medium Worldwide
If you look at many of the various forecasts for electricity supply and demand, most of them focus on the fuels used to generate this electricity. The general “shortcoming” of these forecasts is that they don’t consider what other uses there are for this energy; i.e., there are a number of competing uses for energy besides electricity, as shown in the image below. The interesting thing in the image is the growth in electricity (the dark blue bars) in the delivered energy source between 2020 and 2050, particularly in the industrial, commercial, and residential sector. Currently, roughly 21% of global energy use is used to generate electricity, while by 2050 electricity will account for nearly 50% of global energy use. It is becoming the “common medium” of energy transmission.
One of the interesting points in these energy trends is the growing shift in energy production from the burning of fuels to the use of complex systems that have low-cost fuels or which don’t use fuels. The three most common examples of these are nuclear fission, photovoltaic (PV) solar, and wind power. While these are not the only “system-focused” or “technology-focused” sources of energy (hydroelectric and geothermal could both be considered “system-focused” as well), nuclear fission, PV solar, and wind power are the only ones that are not dependent on specific locales or geologies, and which can be scaled arbitrarily. Unfortunately, China is the country that today “owns” these “system” technologies, being the leading producer of PV solar and wind power technologies in the world.
The Electricity Grid: Getting Electricity to Where It’s Needed
And reaching energy independence doesn’t end with the production of electricity – it actually just starts there. Securing the U.S. power grid is just as critical to gaining energy independence as energy (especially electricity) production is. A good example is transformers, which are almost exclusively built offshore today. While these devices can take months or even years to build, a well-planned and executed cyber-attack can destroy components such as transformers. And transformers are not the only components that are largely offshore-based. The only solution to this problem is reshoring production.
Unfortunately, ‘re-shoring’ is far more difficult to achieve successfully than offshoring. While 364,000 jobs were reshored in the U.S. in 2022, it is a small part of the total number of jobs that are offshore. Worse yet, the U.S. had 608,000 unfilled manufacturing jobs in 2022, showing that building the onshore labor force is at least as important as bringing the jobs back. While many western countries now understand the importance of reshoring, it is not a fast process - avoiding offshoring in the first place is always easier. For critical grid components, carrying out these critical
Summary – Take China Seriously
It is very clear that China means to dominate the energy and electricity production and distribution sectors worldwide. They currently own manufacturing in the renewables energy sector, as well as having a controlling footprint in the power grid systems and components market. In fusion (perhaps the last energy market opportunity), the Chinese are clearly aiming to dominate the market. Pursuing an industrial policy focused on winning in energy is critical to gaining energy independence and resiliency.
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