In the fight to address climate change, renewable energy companies are often assumed to be Jedi Knights. Valiantly struggling to save the planet, wind and solar interests are thought to be locked in mortal combat with large fossil fuel corporations that continue to mine, drill, and blast through the earth’s fragile ecosystems, dragging us all into a grim and sweaty dystopia.
In the United States and elsewhere, solar panels glitter on rooftops and in fields; turbines tower majestically over rural landscapes. The fact that, globally, the renewables sector continues to break records in terms of annual deployment levels is, for many, a source of considerable comfort. Acting like informational Xanax to ease widespread climate anxiety, news headlines reassure us that the costs of wind and solar power continue to fall, and therefore wind and solar is (or soon will be) “competitive” with energy from coal and gas. The transition to clean energy is, therefore, unstoppable.
By Any Means Necessary
Of course, wind and solar companies are not charities. They are, in a phrase, profit driven. They want to attract investment capital; they seek to build market share, and they all want to pay out dividends to shareholders. In this respect, renewable energy (and “clean tech”) companies are not fundamentally different from fossil fuel companies.
But so what? North-based environmental groups frequently point out that we have just a handful of years to start to make major reductions in emissions. Therefore, this is not a time, they insist, to split hairs or to make the perfect the enemy of the good. If electricity generation is the leading single source of CO2 pollution, then surely the more electrons generated by renewable sources of energy will mean fewer electrons being generated by fossil fuels. What more needs to be said?
But there are several reasons why, in their current role, renewable energy companies could be more part of the problem than they are part of the solution—which, if true, means a lot more has to be said. As we will see, they are beginning to squander their “social license” by being party to a “race to the bottom” dynamic that risks turning workers and many ordinary people against action on climate change. Equally serious, large wind and solar interests’ “me first” behavior is propping up a policy architecture that is sucking in large amounts of public money to make their private operations profitable.
They are sustaining a model of energy transition that has already shown itself to be incapable of meeting climate targets. In so doing, these companies have not just gone over to the political dark side, they helped design it.
The Phony War
Before we go further, we need to dispel the myth that there is today a gladiatorial contest between dirty and clean energy. From 2009 to 2019, global energy demand grew over 20 percent. Roughly 75 percent of this demand was met by energy sources other than wind or solar. In 2019, wind contributed just over 6 percent of the world’s electricity, and solar just 2.8 percent. What we are witnessing is not an energy transition, but an energy expansion. More fossil fuels are being burned today than ever before, and emissions in 2019 were at record levels.
With demand for electricity rising at between 2 and 3 percent per year, it is going to take a very long time to dislodge coal and gas as the main sources of electricity generation. And like capitalist enterprises everywhere, energy companies—“green” or not—have a deep affection for steadily rising consumption. This perhaps explains why wind and solar companies have not used their political influence to fight for an aggressive approach to energy efficiency or conservation. It also partially explains why major oil companies are investing in renewable energy. Royal Dutch Shell plans to invest up to $2 billion in solar and wind energy. The company acquired a 49 percent stake in Cleantech Solar, a Singaporean solar developer. BP has entered the solar photovoltaics (“solar PV”) business through its subsidiary Lightsource BP. But this does not mean that the oil companies are abandoning oil and gas. Rising demand presents opportunities to make money in both renewables and fossil fuels.
Who (and Where) Are They?
Wind and solar companies can be divided into two broad categories, namely, the producer companies that supply the hardware (wind turbines and solar panels and, increasingly, storage batteries and other auxiliary technologies), and project developers, installation companies, and technical consultancy firms that work to bring renewable power to electricity grids.
On the producer side, the first thing that stands out is just how oligopolistic the wind and solar sectors are. A small handful of countries have a big presence in the manufacturing of wind turbines, and China has a massive presence in the production of solar panels. Just six turbine suppliers control nearly three-quarters of the global market. China’s rise as a turbine producer has been meteoric. In 2005, no Chinese wind companies were in the global top ten. A decade later, in 2015, five of the top ten wind turbine manufacturers were China-based, and four were in the European Union (E.U.). The largest wind companies in China are Sinovel, Dongfang, and Envision.
In the case of both Europe and China, turbine production was initially directed toward meeting domestic demand. By 2010, China’s wind companies collectively achieved higher sales than was the case in any other country. In terms of deployed capacity, the United States comes a close second to China. In the United States, just three companies control 79 percent of the wind market; these are General Electric (41 percent), Vestas (23 percent), and Siemens/ Gamesa (15 percent).
As for solar PV, China accounts for 73 percent of global production. In 2019, Europe, the United States, and Canada together contributed a little under 7 percent. Solar PV energy relies on raw materials, manufactured polysilicon, and components (ingots, wafers, cells, and modules), and China is the main player in all of these supply markets. Among the largest companies are Jinko Solar, LONGi Green Energy, and JA Solar, while Daqo New Energy easily dominates polysilicon production. As with wind, a lot of China’s PV production meets domestic demand. In 2018, China was the world leader in annual PV installations, with India, the United States, the E.U., and Japan being the next largest markets.
Not Enough for the Climate, Too Much for the Market
Although mostly absent from the public discourse on renewables, the fact is that the scale of production required to meet climate targets is physically beyond the capacity of the handful of countries and companies that currently dominate the renewables sector.
The recent advances of wind and solar need to be viewed against the decarbonization challenge. Noting that eighty-two gigawatts (GW) of new wind capacity came online in 2020, the Global Wind Energy Council (GWEC) recently stated, “We need to be installing around 180 GW per year to get to where we need to be [to reach the Paris Agreement climate targets]. Every year we fall short, the mountain to climb gets higher.” According to the International Renewable Energy Agency (IRENA), for wind to meet 35 percent of the world’s demand for electricity, more than 6,000 GW of wind power would need to be operational by 2050.18 The GWEC recently reported that 743 GW is currently installed, but this capacity will either be decommissioned or it will need to be “repowered” (meaning the original blades, hubs, generators, and gearboxes will need to be replaced) long before 2050. According to GWEC, Europe is home to nearly 12,000 wind turbines expected to be decommissioned by 2024. IRENA estimates that, to meet 25 percent of electricity demand by 2050, more than 8,500 GW of solar PV would need to be installed, which is more than seventeen times today’s capacity (512 GW).
If these numbers are not intimidating enough, IRENA’s most recent data on the levels of wind and solar deployment needed to stay within 1.5° Celsius of warming are jaw-dropping. Installed solar PV would need to reach 14,000 GW and wind (onshore and offshore) would need to exceed 8,100 GW by 2050.
If these estimates are even remotely accurate, then annual levels of net deployment of wind and solar energy will need to be four times higher than they are currently, starting immediately, for thirty consecutive years until 2050. In a 2017 paper, energy experts Thomas Poulsen and Rasmus Lema concluded, “There is a massive shortfall in current industrial capacity to meet an output of this scale.”
From a capitalist perspective, however, there is no “massive shortfall” in capacity; rather, there is a surplus. This situation draws attention to how climate targets are completely incompatible with the profit-focused framework. China illustrates the contradiction with stunning clarity. The International Energy Agency (IEA) notes, in the case of solar, “dozens of GW of new production capacities [were] added in 2017 and 2018 in all segments of the value chain while the global PV market was stagnating.”
Overcapacity depressed global prices to the point where producers “are not selling a large part of their production at these low levels” because prices have fallen “below the average production costs of many companies.” A 2019 European Commission report draws attention to “huge oversupply” that has led to ‘”the insolvency of many companies.” Overcapacity also plagues the wind sector, which has led to a wave of bankruptcies and mergers. The number of China based wind turbine suppliers declined from sixty-three in 2013 to thirty-three in 2019, and many gear box and turbine blade companies have disappeared. Today, just ten producers account for 80 percent of the total global blade supply.
Of course, this is typical of the kind of supply–demand disequilibrium that is a recurring feature of capitalist markets. If we were talking about toenail clippers or Beanie Babies, then who would care? But if reaching the Paris Agreement targets requires a dramatic and sustained scale-up of production, then there can be no room for “boom-bust” cycles and the reckless destruction of physical capital unleashed by falling profit margins, bankruptcies, and industry consolidation.
Mine, All Mine
To be fair, wind and solar companies did not invent capitalism, and they did not make the rules in which they are expected to operate. Nevertheless, the current policy architecture suits the larger players to a tee. But that same architecture is not able to deliver on the Paris Agreement climate targets—and they know it.
Meanwhile, rather than fighting the good fight against fossil fuels, large renewable energy interests are instead fighting each other. Some governments have tried to introduce Local Content Requirements (LCRs) for renewable energy projects to create jobs in domestic goods and services, developing skills and knowledge, and to overcome “barriers to entry” into the increasingly oligopolistic renewables sector. But renewable energy companies see LCRs as an additional cost of doing business, and a contributor to “investor risk.” These companies have taken their concerns to the World Trade Organization, which has frequently ruled against the use of LCRs. Renewable companies have also made use of the Energy Charter Treaty to sue countries for “indirect expropriation,” arguing that their stock values had suffered as a result of a phase out of subsidies.
In 2014, the Intergovernmental Panel on Climate Change warned that “Effective mitigation [of climate change impacts] will not be achieved if individual agents advance their own interests independently.” The original Earth Summit of 1992 called for the “transfer and diffusion of environmentally sound technologies.”  But for-profit renewable energy companies have eschewed the kind of practical cooperation necessary to reach climate goals. For them, sharing skills, experience, and technologies would amount to economic suicide. In fact, intellectual property (IP) restrictions have become progressively more stringent, not less. Tellingly, the IEA recently noted, “The private sector has limited incentive to produce knowledge if firms cannot fully exploit the returns on their investment because that knowledge is easily available to others.”
Exploitation for a Good Cause?
The current system is also increasingly unfriendly to workers. In the last year or so, China-based solar companies have been accused of being party to coercive labor practices in China’s Xinjiang Uyghur Autonomous Region. In March 2020, the AFL-CIO referred to the “horrific abuse the Chinese government has inflicted on more than 1.8 million Uyghurs and other Muslims and Turkic people in China’s largest province, the Xinjiang Uyghur Autonomous Region (XUAR).” Much of the world’s polysilicon used in the manufacture of photovoltaic cells for solar panels comes through Xinjiang. In April 2021, the Biden administration’s climate envoy John Kerry referred to “solar panels that we believe in some cases are being produced by forced labor.” According to Bloomberg, the evidence of forced labor is troubling “because the solar power surge that’s one of the great hopes in the race against global warming depends on the crucial supply of Xinjiang-made polysilicon.”
In the United States, roughly 90 percent of solar panels are imported from China or other East Asian countries. Project developers and installation companies in the United States, Europe, and elsewhere are perfectly happy with this arrangement because lower prices for China’s solar panels (and, increasingly, wind turbines) means electricity generated by these technologies will become increasingly competitive with electricity produced from burning coal and gas. This will, in turn, drive the market for wind and solar installations.
Meanwhile, across both the Global North and South, the “green jobs” that were promised have not materialized; either that or they have disappeared. Tens of thousands of solar manufacturing jobs have been lost in the United States, Europe, and Japan as a result of cheaper production costs in China.
In the case of wind energy, the “race to the bottom” dynamic is less evident, but efforts to secure the highest profits certainly are.41 Scotland provides a disturbing example of unfulfilled promises of green jobs. The United Kingdom’s offshore wind capacity has grown dramatically in recent years, but employment in the sector has actually declined. The 1,700 jobs in offshore wind today fall far short of the 28,000 jobs that were promised a decade ago. According to the 600,000 member trade union in the United Kingdom, the GMB,
Renewable companies have outsourced turbine manufacture to an Italian company and most of the 54 steel foundations are expected to be built in low-wage Indonesia and shipped to Scotland . . . Wages on foreign and U.K. registered ships carrying out survey work for offshore wind sites, cable laying, and activities are as low as $2.44 (roughly $4) per hour.
Today’s renewable energy companies are playing a risky game. They have gotten this far on the basis that they are climate warriors leading the charge against fossil fuel interests. But the facts tell a different story, and the more that is known about the industry, the more politically vulnerable they will become.
1. Richard Baron, “Renewable Energy: A Route to Decarbonisation in Peril?,” OECD Round Table on Sustainable Development, 2013, available at https://www.oecd.org/sd-roundtable/papersandpublications/ Background%20Paper%20RTSD%20June%202013.pdf.
2. REN21, June 2021, available at https://www. ren21.net/reports/global-status-report/
3. Renewables 2019 Global Status Report, Renewable Energy Policy Network for the 21st Century, 2019, available at https://www.ren21.net/wp-content/uploads/2019/05/gsr_2019_full_report_en.pdf.
4. REN21, June 2021.
6. “Dominant firms—from China and Europe in particular, but also from the US and India— compete head-to-head for market shares.” See: Rasmus Lema, Axel Berger, and Hubert Schmitz, “China’s Impact on the Global Wind Power Industry,” Journal of Current Chinese Affairs 42, no. 1 (2013): 37-69, available at https://journals.sagepub.com/doi/pdf/ 10.1177/186810261304200103.
10. Lema et al., “China’s Impact on the Global Wind Power Industry.”
11. Energy Information Administration, 2018. Wind Manufacturers in the United States—Market Share. 2018. “Three manufacturers—General Electric, Vestas, and Siemens/Gamesa— accounted for 100 percent of turbines put into service in 2016, and these same three have provided 79 percent of all operating turbines.”
12. https://www.reuters.com/article/us-solar-utilities-analysis/handful-of-players-seen-rulingthe-solar-roost-idUSTRE5603SD20090701; Fraunhofer Institute for Solar Energy Systems, ISE, Photovoltaics Report, 5, June 17, 2020. Fraunhofer Institute for Solar Energy Systems, ISE with support of PSE Projects GmbH.
13. https://iea-pvps.org/wp-content/uploads/2020/02/5319-iea-pvps-report-2019-08-lr.pdf, p. 69.
14. “In Broad Daylight: Uyghur Forced Labour and Global Solar Supply Chains,” https://www.shu. ac.uk/helena-kennedy-centre-internationaljustice/research-and-projects/all-projects/in-broad-daylight
15. These five countries (with the European Union considered a country) account for 74% of the world’s total rate of PV installations. See: Victoria Kihlström and Jörgen Elbe, “Constructing Markets for Solar Energy—A Review of Literature about Market Barriers and Government Responses,” Sustainability 13, no. 6 (2021): 3273, doi:10.3390/su13063273.
16. Greenpeace/Global Wind Energy Council, Global wind energy outlook 2014 (Amsterdam: Greenpeace, 2014).
18. This estimate includes 1,000 GW of offshore wind. In 2018, offshore wind accounted for just 23 GW of installed capacity, and 90 percent of it was in Europe, available at https://www.irena.org/-/media/Files/IRENA/Agency/Webinars/07012020_INSIGHTS_webinar_Wind-and-Solar.pdfla=en&hash=BC60764A90CC2C4D80B374C1D169A47FB59C3F9D.
19. https://gwec.net/global-wind-report-2021/, p. 40.
21. International Renewable Energy Agency (IRENA), World Energy Transitions Outlook, 2021, available at https://www.irena.org/publications/2021/March/World-Energy-Transitions-Outlook.
22. Ibid., p. 18.
23. T. Poulsen and R. Lema, “Is the Supply Chain Ready for the Green Transformation? The Case of Offshore Wind Logistics,” Renewable and Sustainable Energy Reviews 73: 758-77, doi: 10.1016/j.rser.2017.01.181. According to the International Energy Agency (IEA), “Much more [solar PV] would be needed to decarbonize the energy sector . . . While some countries take PV seriously, most haven’t yet considered the full potential of an energy source. . . , available at https://ievps.org/wp-content/uploads/2020/02/5319-iea-pvps-report-2019-08-lr.pdf.
24. Lema et al., “China’s Impact on the Global Wind Power Industry.”
26. A. Jäger-Waldau, PV Status Report 2019, EUR 29938 EN, Publications Office of the European Union, Luxembourg, 2019, doi:10.2760/326629.27. https://gwec.net/global-wind-report-2021/.
28. Ibid., see also https://iea-pvps.org/wp-content/uploads/2020/02/5319-iea-pvps-report-2019-08-lr.pdf.
29. “Dominant firms—from China and Europe in particular, but also from the US and India—compete head-to-head for market shares.” See:Lema et al., “China’s Impact on the Global Wind Power Industry.”
30. See: WTO-UNEP, Trade and Climate Change, 2009, available at https://www.wto.org/english/res_e/booksp_e/trade_climate_change_e.pdf; Canada—Certain Measures Affecting the Renewable Energy Generation Sector Appellate Body Report, WT/DS412/AB/R, DS426/AB/R(6 May 2013); See India—Certain Measures relating to Solar Cells and Solar Modules, Request for Consultations by the United States, WT/DS456/1, February 11, 2013. See EU and Certain Member States—Certain Measures on the Importation and Marketing of Biodiesel and Measures Supporting the Biodiesel Industry, Request for Consultations by Argentina, WT/DS459/1, May 23, 2013.
32. “Furthermore: Climate change has the characteristics of a collective action problem at the global scale . . . International cooperation is therefore required to effectively mitigate GHG emissions and address other climate change issues. Furthermore, research and development in support of mitigation creates knowledge spillovers. International cooperation can play a constructive role in the development, diffusion and transfer of knowledge and environmentally sound technologies.” See: Intergovernmental Panel on Climate Change, “IPCC Fifth Assessment Synthesis Report,” available at https://www.ipcc.ch/pdf/assessmentreport/ar5/syr/SYR_AR5_FINAL_full.pdf.
33. UNFCCC 1992, cited in: John H. Barton, Intellectual Property and Access to Clean Energy Technologies in Developing Countries: An Analysis of Solar Photovoltaic, Biofuels and Wind Technologies,” ICTSD Trade and Sustainable Energy Series Issue Paper No. 2, International Centre for Trade and Sustainable Development, Geneva.
42. Scottish Trade Union Congress, Broken Promises and Offshored Jobs: STUC report on employment in the low-carbon and renewable energy economy 2020. Available at: http://www.stuc.org.uk/
43. GMB, Congress 2021: Special Report on Energy and the Environment, https://www.gmb.