Germany mulls strategy to reduce reliance on China in green technologies – report

Germany must reduce its reliance on China in green technologies and should be more demanding on climate issues when dealing with the Asian country, states a foreign ministry draft paper seen by energy policy newsletter Tagesspiegel Background. A section of the ministry’s draft China strategy entitled “China as competitor in the green transformation” notes that the country already has a “strong to dominant” position in a number of technologies, adding that Germany should reduce one-sided dependencies by diversifying its sources of supply and boosting domestic production. At present, Europe is highly dependent on China’s solar industry, for example.

In a section on “reducing import dependencies,” the draft from Green foreign minister Annalena Baerbock’s ministry refers to lithium batteries and rare earth elements - some of which are needed for wind turbines and hydrogen electrolysers. In order to break free from such dependencies, raw material partnerships are to be strategically aligned worldwide, and incentives are to be set for corresponding German foreign investments. Companies are to be encouraged to strategically stockpile critical raw materials - in some cases even through government requirements for minimum storage quantities, according to the paper. In the EU, the federal office wants to initiate regular stress tests to identify relevant critical raw materials, preliminary, intermediate and final products.

At the same time, the draft calls for making China a partner in efforts to protect the climate, for example by intensifying cooperation in emissions trading. It suggests negotiations to make China a member of the international “climate club” envisaged by the German government. The EU should take a more proactive stance on climate protection by using its strong foreign trade position and set conditions for access to its internal market, including "compliance with ambitious environmental and social standards," the draft says, according to Tagesspiegel Background.

Relations between the EU and China remain key in global efforts to cut emissions. China's heavy involvement in many European countries' energy sectors has become an important driver of national energy transitions, but has also stirred fears of dependency. For example, the great reliance on hardware supply from China is causing concern among Germany’s solar power industry.