Key facts
- Trade barriers are increasing for clean energy technologies, including solar panels, batteries, EVs, and wind turbines.
- Analysts warn that these barriers threaten to slow the global energy transition and make it more expensive.
- The U.S. has implemented restrictions on foreign-made power grid equipment, citing national security concerns.
- Brazil has increased tariffs on EVs and solar panels, impacting Chinese exports.
- The EU is considering 'made-in-Europe' requirements for clean technologies.
- Grid operators warn that trade barriers could slow electrification and renewables deployment due to increased costs and procurement constraints.
Rising trade barriers across the clean energy sector are creating a 'bumpy road ahead' for the global energy transition, according to industry experts and analysts. Governments are implementing tariffs, duties, anti-dumping measures, local-content provisions, and subsidy regimes, citing national security, sovereignty, and the need to foster domestic industries.
These measures are increasing the cost of essential clean energy technologies, including solar panels, batteries, electric vehicles, electrolyzers, heat pumps, and wind turbines. The International Energy Agency reported that the average duty rate across the solar supply chain increased ninefold between 2023 and 2024. This proliferation of trade restrictions threatens to slow down the deployment of renewable energy and the upgrades of aging electricity grids, which are already facing supply chain pressures.
In the U.S., an executive order issued in August restricts the use of foreign-made power grid equipment deemed a national security risk. Karen Wayland, CEO of the GridWise Alliance, warned that these actions will exacerbate existing supply chain issues for grid components like transformers, which are already experiencing long delivery times and price hikes. While the intention may be to attract domestic manufacturing, Wayland noted that production would not materialize quickly enough to meet surging power demand.
Similarly, the European Union is considering 'made-in-Europe' requirements for clean technologies purchased by public authorities. However, the European Distribution System Operators have cautioned that such rigid origin requirements could constrain procurement and increase costs in the short term, as Europe lacks sufficient domestic production capacity for certain critical components.
Developing countries are also implementing trade barriers, with Brazil imposing rising tariffs on EVs and solar panels. Chris Aylett, a researcher at Chatham House, noted that while Western nations are motivated by geopolitical security concerns related to China, emerging economies are primarily focused on securing a share of the green industrial market. The impact, however, is similar: a slowdown in the adoption of green technologies and potentially higher greenhouse gas emissions globally.
Analysts warn that trade barriers could make green products more expensive than conventional technologies, undermining climate change mitigation efforts. However, some argue that allowing China to dominate the clean tech supply chain could lead to a political backlash that also hampers the energy transition. This argument underpins the EU's proposed 'made-in-Europe' restrictions, with EU industry chief Stéphane Séjourné questioning the political sustainability of relying heavily on Chinese-made batteries for decarbonization.