Cleantech is mostly China

From petrostates to electrostates – energy security and costs are driving this transition

The technological response to climate change is mostly a story of China’s response to climate change. Four out of five solar panels, one in every two heat pumps, two-thirds of electric cars, and almost all the world’s batteries are all made in China.

This is a structural change in the world’s economy – China’s fossil fuel consumption has plateaued despite ever-increasing energy consumption. Their new installs of solar in the first six months of this year are of a similar size to the entire existing installed base for solar in the US. Some of this rush is accelerated by incoming electricity pricing policy changes but the fundamentals are clear – solar is the lowest cost generation. These huge investments in clean energy, storage, and transmission grids are leading to an expected fall in their emissions this year.

Why? It’s a matter of both energy security and industrial policy. Importing 70% of its oil and 40% of its gas represents an unbearable risk for a nation with a history of foreign interference; exporting clean technology is an opportunity to stimulate economic growth and domestic job creation.

China’s build of electrotechnologies is now staggeringly rapid and goes beyond just solar. Together with wind, batteries, EVs and heat pumps, these clean technologies can replace three-quarters of overall energy needs. For example, the 90,000 electric trucks sold in the first half of 2025 exceeds the number sold in all of 2024. 80,000 of those were sold in China, against around 200 sold in the US.

Clean technologies become the default

The effects of this go far beyond China, with China’s overseas investment ramping up green manufacturing outside China and cheap exports of electrotechnologies fundamentally changing the economics of energy.

A full analysis of China’s clean-tech manufacturing investments from the Baltimore-based Net Zero Industrial Policy Lab estimates these investments at $388 billion. Adjusted for inflation, this investment is larger than the US’s Marshall Plan to help European industry recover after World War II.

The target technologies are the whole electrotech stack of “batteries, battery materials, charging infrastructure, electric buses, electric motorcycles, green hydrogen, new energy vehicles (NEVs), NEV parts, solar, storage, and wind”. These investments are still focused in Southeast Asia but are increasingly into Latin America and Central Asia.

Those cheap electrotechnologies are unlocking change across the world with half of China’s exports going to non-OECD countries. A host of countries already have more solar and wind, as a share of generation, than the US, and their renewable generation capacity continues to expand rapidly.

Brazil just cracked a third of generation from wind and solar causing their natural gas consumption to drop. Solar exports to Cambodia, Afghanistan and Pakistan have more than doubled their generation capacity without increasing their dependence upon fossil fuels. Both Pakistan and Saudi Arabia are seeing declines in fossil fuel usage as renewables grow.

Africa is leapfrogging to affordable and reliable power. Solar and wind are growing very rapidly in Namibia, Senegal, Morocco, Kenya, Zambia, Tanzania and Nigeria. Mozambique is rapidly electrifying – in 2018 only a third of their twenty million people had access to electricity. Now that’s two thirds. South American countries continue to ramp up their renewables, with particularly rapid expansion in Chile and Uruguay. In all these nations, renewables are delivering jobs & energy independence, clean air, freedom from fossil fuels and the geopolitical entanglements that they create.

How does New Zealand engage?

What does this mean for Aotearoa and local climate investment? Ever-cheaper solar and wind and storage means the potential for very cheap electricity, lowering household costs and our industrial competitiveness. Whether that happens depends upon how we fund that investment and upon electricity market rules.

It means strong support for joint research through the New Zealand–China Strategic Research Alliance (SRA).

It means new markets for green technologies developed here. We have some stand-out examples of that going well – EnPot’s technology to help aluminium smelters switch to renewables is now being trialled with Chinese partners and Lanzatech’s first commercial plant is in Hebei. But beyond those examples, there’s not a lot happening yet. This seems like a ready opportunity for New Zealand cleantech start-ups.