What’s worse than relying on Russian gas and OPEC oil?

We’re all paying the price of relying on Russian gas for our energy. Not to mention the price of laughing at former President Donald Trump when he pointed out Europe’s vulnerabilities. Back in the 70s we learned the hard way what certain members of OPEC could do to us. In fact, ever since coal dominated, history is a long list of energy conflicts.

No doubt the authorities have learned their lesson this time though, right?

Well, I’m glad you asked…

It turns out that China’s dominance of the renewable energy pipeline, if I might call it that, rivals OPEC and Russian gas put together.

From mining to refining to manufacturing to installation and sometimes even to ownership, China has its fingers on the jugular of our future power systems.

What could possibly go wrong?

No doubt they’ll laugh at Trump when he warns about this on his campaign trail.

But let’s add some data to the idea. Something suspiciously absent from political debate.

China dominates refining of crucial metals like nickel (35%), cobalt (77%) and lithium (50-70%, plus 78% of cathode production and 70% of cell manufacturing for electric cars). As well as having plenty of political sway over the nations that dominate mining, including dominant ownership in the miners producing the resources.

The belt and road initiative is delivering numerous governments on a conveyor belt to China.

More famously, China dominates rare earth mining and refining – 98% of rare earths used in the EU comes from China…

When it comes to producing the actual finished goods, it’s much the same. China controls about 80% of solar panel manufacturing and 60% of wind turbines.

Within the supply chain process, there are a few key bottlenecks where China is even more dominant.

And the percentages mentioned above are often increasing. For example, China is expected to have about 95% of solar manufacturing in a few years.

Things are so imbalanced that even the International Energy Agency is worried about it. That’s like having the World Health Organisation declare the pandemic came from Wuhan and we should do something about it.

And we are. But the Chinese are doing more. They spent more than half a trillion US dollars on clean energy last year, accounting for about half of the global total and leaving the US far behind by a factor of four.

What about the future? When it comes to manufacturing, China received 90% of the investments in the sector.

I expect the above to get worse for a simple reason: how much energy it takes to produce renewable energy infrastructure… ironically enough.

It’s not entirely clear that renewable energy plants could provide the energy required to produce themselves, for example. Which could create a bit of a problem down the line when we transition to a grid dominated by those renewables…

Much better to let someone else produce our renewable energy then, isn’t it? It makes our grid look green if our energy demand and emissions happen elsewhere in the world, where they don’t count to the local total which is supposedly causing climate change…

Anyway, the good news is that the energy transition is very real after all. It is a pivot away from Russia and towards China. Great.

So let’s imagine a world where China controls our access to resources we need for energy, military and tech applications.

What would happen to Taiwan in that environment?

What would happen to trade flows for everything else in our economy?

Indeed, what would happen to Europe and the US’ attempts to replace China in the areas of renewable energy which it’s so dominant in?

Somehow, I don’t think the Chinese would happily watch their industrial lead and geopolitical stranglehold evaporate. I suspect confronting their industrial control of the West may actually trigger the very crises we’re worried about.

If the EU and Europe announce an industrial plan to counter China’s control over certain supply chains, that closes what geopolitical analysts call the window of opportunity. And when such windows start to close, it often spurs action rather than inaction.

Just as Europe’s bungled energy reliance on Russia may have created the window of opportunity for Russia to invade Ukraine, so too might the renewables transition create the window for China to take Taiwan.

The Chinese Communist Party may one day present us with a choice: Taiwan or the planet?

Keep in mind that launching a European and US industrial and mining base takes time. A lot of time under the current mining environment in Europe.

The resources must be found, permitted, developed, produced and then sent to China for refining. Or refineries must be built in Europe. Just not in anybody’s back yard, thank you very much. Refining is not a very environmentally friendly process, after all.

The whole process of becoming less dependent on China would do a lot of damage to the European environment. Yes, we need to mine to save the environment after having stopped mining to save the environment…

And so, if we face a stark choice in the future, a choice between saving the planet from carbon dioxide and confronting China, which will we choose?

I’m not sure, to be honest. But there are some hints floating around…

“Germany Studies Tapping Coal-Exit Funds for Defense Projects”, reported Bloomberg.

Heck, consider this from the Financial Times:

European ammunition maker says plant expansion hit by energy-guzzling TikTok site

Norwegian group Nammo blames ‘storage of cat videos’ for threatening its growth as data centre corners spare electricity

Yes, energy shortfalls force us to make choices between what we truly value…

Another motivation that’s more important than saving the planet from carbon dioxide is trade war politics. Consider President Biden’s Green New Deal, better known as the Inflation Reduction Act, despite the strong correlation between high energy prices and green energy. Was it welcomed by politicians around the world for its planet-saving potential?

Nope, it was criticised as a piece of protectionism that demanded a response from the EU…

The priorities are clear, then: green policies are industrial policies. They’re not about saving the planet after all.

Anyway, to answer my own question from the beginning, what’s worse than relying on Russian gas and OPEC oil?

The geopolitical crisis which will come from relying on China for the green energy transition, that’s what.

But it’s not all bad news. Trends like this are tailor-made for investors to profit from. Resource shortages, energy tech booms, geopolitical scuffles and large-scale delusions all imply big and sustained moves in financial markets.

What’s going where? You have until tomorrow to find out here.

Nick Hubble
Editor, Fortune & Freedom