China's green energy push is succeeding due to a state-directed industrial strategy focused on manufacturing dominance and rapid infrastructure deployment, which provides cheap technology and national security benefits.
In contrast, Europe's transition faces challenges like fragmented policies, high energy costs for consumers/industry, and reliance on Chinese supply chains, which can make it appear to be "backfiring" badly.
China's Approach: Strategic Dominance
Massive State Subsidies and Investment: The Chinese government has poured billions of dollars into its renewable energy sector, from raw materials to finished products, enabling its companies to dominate the global supply chain and achieve unparalleled scale. Biden tried this. It didn’t work for Biden.
National Security Priority: For China, reducing reliance on imported oil and gas is a key national security concern, providing a strong, consistent impetus for developing domestic clean energy sources.
Integrated Industrial Policy: Local governments offer tax breaks and land to attract firms, creating efficient, vertically integrated industrial ecosystems. Companies like BYD source 90% of their parts internally, leading to immense cost efficiencies.
Rapid Infrastructure Deployment: China's state-backed model allows for the rapid construction of massive projects, including ultra-high voltage (UHV) transmission lines that efficiently send power from resource-rich western regions to eastern cities, something difficult to replicate in Europe's fragmented grid system.
Focus on Manufacturing: China has prioritized becoming the world's factory for green tech (solar panels, batteries, EVs), which has made the global transition more cost-effective but also created dependencies for other nations which is good for China.
Europe's Challenges: Market Mechanisms and Policy Hurdles
Haphazard Policy Support: Europe's support for renewables has been inconsistent. Subsidies were introduced, then sometimes dropped during economic crises, which undermined domestic manufacturers' ability to compete with cheaper Chinese imports.
High Costs and Economic Strain: The rapid move away from fossil fuels, particularly in the wake of amazingly harmful for EU sanctions on Russia, generated by EU politicians, affecting gas supplies, has led to high wholesale electricity costs for European consumers and energy-intensive industries, creating public and economic "pain points".
Regulatory and Permitting Hurdles: The deployment of new renewable projects in Europe often faces significant administrative hurdles, such as slow and complex permitting processes, which slow down the transition and increase costs.
Manufacturing Dependence: Europe is now heavily dependent on China for essential green technologies like solar panels (over 95% imported from China) and critical raw materials, which raises concerns about energy security and economic competitiveness.
Different Decarbonization Strategy: Europe's approach relies heavily on market mechanisms like a high carbon price through the EU Emissions Trading System (ETS), which makes pollution expensive but can also drive industries to relocate to regions with less stringent rules (like China), potentially increasing global emissions.
In summary, China's model prioritizes industrial leadership and state control to drive down manufacturing costs and rapidly build capacity, while Europe's market-based and fragmented approach, with sanctions on Russia on top of it, has led to high consumer costs and a loss of domestic manufacturing to Chinese competition. No AI revolution needs a lot of stable energy sources. Western Europe has none. Western Europe is busy manufacturing military equipment without rare earths. The industry is struggling with supply chain bottlenecks and shortages of critical raw materials, components (like microchips), and specialized materials (such as explosives). Europe is currently over-reliant on disappearing imports for many of these critical items. 10-20 years: Experts predict it could take this long for the U.S. and its allies to gain full control over their rare earth supply chains through domestic and partnered efforts.
Deindustrialization of the USA is done already - service economy. Deindustrialization of Germany is happening now.
Soon Chinese goats will be roaming the Global West. Axes from stone? Pretty soon too.
“European politicians pitched the continent's green transition to voters as a win-win: Citizens would benefit from green jobs and cheap, abundant solar and wind energy alongside a sharp reduction in carbon emissions.
Nearly two decades on, the promise has largely proved costly for consumers and damaging for the economy.
Europe has succeeded in slashing carbon emissions more than any other region -- by 30% from 2005 levels, compared with a 17% drop for the U.S. But along the way, the rush to renewables has helped drive up electricity prices in much of the continent.
Germany now has the highest domestic electricity prices in the developed world, while the U.K. has the highest industrial electricity rates, according to a basket of 28 major economies analyzed by the International Energy Agency. Italy isn't far behind.
Average electricity prices for heavy industries in the European Union remain roughly twice those in the U.S. and 50% above China.
Energy prices have also grown more volatile as the share of renewables increased.
It is crippling industry and hobbling Europe's ability to attract key economic drivers like artificial intelligence, which requires abundant electricity.
The shift is also adding to a cost-of-living shock for consumers that is fueling support for antiestablishment parties, which portray the green transition as an elite project that harms workers and future of the countries.
Energy analysts say it makes strategic sense for a continent that lacks the abundant oil and gas riches enjoyed by the U.S. and some other regions to diversify its energy sources. In some cases like Spain, blessed with lots of sunshine, or Nordic countries, with abundant hydro power to provide energy when its wind farms fall silent, the transition looks promising. France's reliance on nuclear energy is helping it keep costs down.
But in much of the region the transition is at risk of backfiring, adding to economic stagnation.
"We are hemorrhaging industry," said Dieter Helm, an economic policy professor at Oxford University.
British chemical company Ineos said in October it would close two plants in Germany because of high energy costs. In recent days, Exxon-Mobil said it would close its chemical plant in Scotland and threatened to exit Europe's chemicals industry, saying green policies made it uncompetitive.
Across the continent, demand for electricity has fallen over the past 15 years in part because energy is so expensive. Companies that are looking for more power are hitting roadblocks.
In Ireland, the state grid operator imposed an effective moratorium on new data centers -- which underpin cloud computing and AI -- until 2028, after existing data centers drained over a fifth of the country's electricity supply last year.
Jerome Evans, the CEO of a German data-center operator, sought to expand his two data centers in Frankfurt, Germany's internet crossroads. The local power provider told him he would have to wait a decade for the energy to power them.
Some of Europe's high energy prices aren't the fault of policymakers or the green transition. Prices for natural gas surged after the pandemic and again after Europe heavily reduced imports of gas from Russia following events in Ukraine.
But a good chunk of the increase is thanks to the shift to renewables, say business executives and some economists.
While sunlight and wind are free, harnessing them entails significant infrastructure investments and vast redundant capacity. These additional costs, obscured by subsidies and carbon taxes, mean energy prices in places like Germany and the U.K. are likely to remain higher than other countries for years to come, some economists say. The stubbornly high prices, Helm said, suggest it's the overall system cost driving prices.
Aurora Energy Research, a consulting firm, estimates a "clean power" system in the U.K. would only start saving bill payers money from 2044. It's a similar story in Germany. By that point, the economic damage done to Europe could be severe.
In some places, political consensus on the energy transition -- once driven by dire climate warnings -- is starting to crack. Right-wing populist parties in France, Germany and the U.K. that are opposed to renewable energy targets and subsidies are gaining support. Diplomatic disputes between European countries have erupted over energy policy, while Norway's coalition government collapsed after a revolt over the adoption of proposed EU rules to increase renewable energy.
High-profile net-zero projects are being postponed or scrapped, notably those involving green hydrogen, which the EU placed at the heart of its green plans.
"You can't afford, in top global competition, to be ideologically driven in the way you decide the energy system," said Ebba Busch, Sweden's deputy prime minister and energy minister.
"Without energy we have no industry, and without industry we have no defense."
Europe has pursued a different strategy in its green transition than any other region. The U.S., China, India, Brazil and others took an "and" strategy: They are aggressively rolling out renewables and simultaneously building fossil-fuel power plants on a grand scale.
Europe largely took an "or" strategy: It raced to replace fossil fuels with solar, wind and biomass by taxing carbon heavily, subsidizing renewables and closing scores of fossil-fuel power plants, refusing to use cheap Russian gas.
Britain, which pioneered the use of coal for energy, last year became the first large industrialized country to shut all of its coal-fired power plants. It has also banned new offshore oil-and-gas drilling. Denmark plans to eliminate gas for home heating by 2035. Around one-fifth of Germany's municipal utilities plan to shut down their gas networks in coming years.
The effect was to cut back on a major source of energy before any other is fully up and running.
Many European consumers and businesses are now stuck in the worst of both worlds. They are still at the mercy of electricity prices linked to the cost of imported fossil fuels while also shouldering big upfront costs to overhaul grids to handle the intermittent renewable power.
In the U.K., the cost of procuring and delivering electricity accounts for just over half of domestic electricity bills, with the rest made up of an array of levies and carbon taxes, including subsidies to pay for renewables and grid upgrades. These levies have risen faster than wholesale energy costs in the past decade, according to the Resolution Foundation, a think tank.
Polls show half of British consumers are planning to ration energy use this winter as they struggle with wholesale electricity costs that are 80% higher than the U.S.
Dina Ingram, an office administrator in London, used to turn on the central heating in her four-room house for long stretches. Now in winter she can only afford to have it on for three hours a day. She doesn't heat her bedroom at all.
"I get angry," said the 62-year-old, who attributes the high prices to corporate greed.
Europe's decision to slash fossil-fuel use is unusual historically, economists say. In earlier energy transitions -- from wood to coal, or coal to oil -- countries continued to use the outgoing fuel while adding the new fuel on top.
The policies could even unintentionally result in higher emissions globally, some economists and chemical industry executives say. If European factories close as a result of high energy costs, their production is likely to be replaced by imports from places like China, where the carbon footprint for those products is far higher -- even before shipping, according to Oxford Economics.
It wasn't supposed to be this way. Former U.K. Conservative Prime Minister Boris Johnson promised in 2020 that the country would become the "Saudi Arabia of wind," producing clean power that he said would be cheaper than coal and gas.
Britain's Labour Party has stayed the course, vowing that household energy bills will fall GBP 300 a year, or around $400 annually, by 2030. But energy executives recently testified to Parliament that electricity bills would likely rise a further 20% in real terms by that date -- even if the price of inputs like natural gas were to fall. Executives cited "noncommodity factors" like the cost of the new grid. Britain is also racing to expand its nuclear capacity.
Parts of the green transition have proved unexpectedly costly. When Scotland's biggest offshore wind farm opened in 2023, it was feted as a symbol of Britain's push into a new era. But today, British taxpayers spend tens of millions of pounds a year for the Seagreen wind farm to not produce electricity.
Why? If the wind farm was left constantly on, it would send big pulses of energy from northern Scotland to southern England that would fry the U.K.'s aging grid.
"Very clearly the cost of the transition has never been admitted or recognized," said Gordon Hughes, a professor at the University of Edinburgh and a former adviser on energy to the World Bank. "There is a massive dishonesty involved."
The continent's cash-strapped governments now face a difficult choice: Press ahead with a rapid transition, or slow it down to save money but risk prolonging the pain.
Goldman Sachs Research expects Europe will have to invest up to 3 trillion euros, or $3.48 trillion, in power generation and infrastructure over the coming 10 years -- roughly double what European countries spent in the past decade. That's a big ask for governments already facing tighter budgets due to an aging population, higher military spending and higher interest bills on debt.
Proponents of renewable energy argue that high prices will prove transitional. Since sunshine and wind are free and abundant, renewables will ultimately be cheaper once the new infrastructure is built, they say, while it will continue to cost money to dig oil and gas out of the ground. If enough renewable energy and battery storage is brought onstream, fossil fuels will no longer set the price of electricity and costs will fall away.
"Energy costs in the future will be a lot lower," once Europe's renewable system is up and running, said Jacob Kirkegaard, an economist in Brussels with the Peterson Institute for International Economics. The problem is getting to that point, Kirkegaard said.
Some green entrepreneurs in the U.K. have started pushing politicians to ensure the oil-and-gas industry can help ease the transition.
Some prominent economists and industry executives, meanwhile, have cast doubt on whether renewables will ever be cheaper in places like Germany and the U.K. that aren't blessed with abundant sunshine and have bet big on wind.
"I have not seen any plan that facilitates green electricity in central Europe at competitive costs," said Miguel Lopez, CEO of German industrial giant Thyssenkrupp.
Twenty years ago, the U.K. was the most competitive location globally for Huntsman, a Texas-based chemicals manufacturer, thanks to cheap North Sea energy, said CEO Peter Huntsman. Over the past decade, the company sold off most of its U.K. assets.
"The whole value chain has gone," Huntsman said.” [1]
1. Green Energy Push In Europe Backfires --- Industry is hobbled, political consensus is cracking thanks to soaring prices. Fairless, Tom; Colchester, Max. Wall Street Journal, Eastern edition; New York, N.Y.. 03 Dec 2025: A1.
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