In a move that could significantly hamper the energy transition goals globally, China is contemplating restricting exports of critical technology related to solar photovoltaic components.

The proposal was open to the public for comments, for which the deadline was January 28. If implemented, local manufacturers would be restricted from exporting the technology over which China has a stranglehold.

China’s Commerce and Science and Technology ministries recently invited public feedback on the proposed changes to the Catalogue of Export Restricted Technologies, which could include a ban or restriction on exporting technology related to the production of solar wafers, black silicon, and ingots.

China accounts for over 90% of the world’s output of solar wafers. A report by the International Energy Agency (IEA) said last year that China controls more than 80% of all manufacturing critical to the production of solar panels and could produce over 95% of the world’s polysilicon and wafers in the near future. The report called on policymakers to make the supply chain a priority.

China’s dominance, coupled with protectionist policies on exporting crucial technology, would jeopardize countries’ solar plans, which are a critical component of global energy transition initiatives.

For instance, India, which has set an ambitious goal of setting up 500 GW of capacity from non-fossil sources by 2030, relies heavily on Chinese imports for its solar component requirements even after implementing import restrictions on them. The target for solar alone is 280 GW in India. The country’s cumulative installed solar capacity stood at 60 GW at the end of September 2022.

China’s move comes at a time when protectionist trends in the renewable energy space are coming to the fore globally. Besides Europe, Japan, and South Korea, China has been vocal against the United States’ massive subsidy regime for renewables. India too has implemented a basic customs duty of 40% on imports of modules and 25% on cells from April 2022.

On the flip side, for a country that enjoys hegemony over solar manufacturing, it would go against China’s interests if it were to restrict exports when the world depends on them. Such a move will be counterproductive and could push other countries even more strongly to develop their own supply chains, eventually reducing demand for China’s products.

According to Frank Haugwitz, Senior Advisor, Apricum Cleantech Advisory, Berlin, the proposal is not calling for a ban but only restrictions.

“Even if there are restrictions, that does not mean such technology can’t be transferred any longer. As long as the equipment manufacturer has obtained an export license, all good,” he told Mercom.

He recalled that the last time this policy was amended, it took China two years to release the official catalogue of technologies prohibited and restricted for export. “Export restrictions are nothing new, they existed since the early 2000s in China and they exist in other countries too. One response of other countries could be to intensify their efforts to revitalize local manufacturing,” he said.