China has been the Middle East's biggest energy client

For years, China has been the Middle East's biggest energy client. Soon, the opposite may also be true.

Several of the nation's solar giants have announced plans to build factories across various stages of the supply chain in countries such as Saudi Arabia and the United Arab Emirates.

Both Jinko Solar Co. and TCL Zhonghuan Renewable Energy Technology Co. inked deals with the Saudi sovereign wealth fund this month.

The benefits for both sides are plain. For Gulf nations, it's a head start in a type of energy generation that will last long after fossil fuels begin to wane.

For Chinese companies, it's a foothold in outposts with plentiful land, agreeable governments and — importantly — few trade restrictions with Western nations.

US tariffs targeting China's solar industry have hit producers hard. They've also hurt America's clean-energy efforts. Solar panels in the US cost nearly triple what they do in China, which reduces demand and slows the energy transition in the world's No. 2 emitting market.

Could a Middle Eastern expansion help ease pressure on both?

In theory, US restrictions are supposed to support local manufacturing jobs while eliminating reliance on a geopolitical rival.
An employee walks beneath solar panels at the Al Dhafra Solar project. Photographer: Natalie Naccache/Bloomberg

But as Chinese solar firms diversify outside the mainland, concerns about excessive dependence look less credible. If you can buy solar panels from a half-dozen countries, including historic partners like Saudi Arabia, does it really matter if you can't build your own?

Protecting factory jobs is still valuable, of course. If the Middle East is able to undercut US panel producers, a new round of tariff investigations may follow.

To get around it, Chinese solar giants could pour more investment into the US. But the market is expensive and political tensions make it unpredictable.

For now, the reality is that the solar battle between the world's two largest economies may have created an unexpected set of winners — the Gulf states.

That should give Washington pause. Solar power has proven to be the best weapon humankind has developed so far in the fight against climate change.

As factories spring up around the world, the US will have to answer the question: isn't it time to take advantage?

--Dan Murtaugh, Bloomberg News
https://bit.ly/4fgMtPw ❤️👈

No comments

Powered by Blogger.