Europe is replacing its dependence on Russian gas with a dependence on Chinese clean tech. One chokepoint replaced by another.
Europe’s dependence on Chinese low-carbon technologies is growing rapidly. The risks this creates are poorly understood. The debate so far has focused on whether China could exploit its technology to disrupt European energy systems — a valid concern, but not the biggest one. The deeper risks are economic, political, and geopolitical.
Europe is becoming dangerously dependent on Chinese clean technology
The kill switch threat is real — but economic damage is far more likely
China doesn’t need to hack Europe’s grid. It just needs to stop selling parts
Washington poses the biggest overlooked risk — and it has already forced Europe’s hand before
Europe’s rearmament push has a China problem: batteries and magnets are the new chokepoints
The risks are interconnected, the strategy is missing, and the window is closing
We assess the likelihood and impact of the following risks occurring by 2035.
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Since the 1990s, European governments have hard‑wired decarbonisation goals, efficiency and renewables into the rules that govern how it produces, trades, and uses energy, allowing Europe to successfully drive down emissions. But energy security risks and supply chain dependencies are changing rapidly. European capitals are not assessing, let alone addressing, the national security implications of these changes.
The EU’s 2019 Green Deal and subsequent ‘Fit for 55’ package set a legally binding path to climate neutrality by 2050, with a 55% net emission cut (at least) by 2030 through tighter carbon pricing, higher renewables and efficiency targets, as well as economy‑wide electrification. The UK’s Climate Change Act (2008) and Net-Zero Strategy (2022) also establish a 2050 net‑zero target. To achieve these, European countries need hefty investments in the deployment of wind and solar power. The EU Commission’s solar strategy requires an almost four-fold increase in solar capacity from current levels. Wind Europe estimates that the bloc will need to almost double wind installations by 2030 to meet its climate and energy goal. Battery storage needs are also set to rise to an estimated 200 GW in 2030, up from 89 GW in 2024. The UK government’s own scenarios suggest a similar scale‑up. Meanwhile, the decarbonisation of transport means that electric vehicle (EV) sales in the EU would need to reach 70-80% of new car sales in 2030 in order to be aligned with its net-zero ambitions, or a close to a ten-fold increase from current stock levels.
Europe’s electricity system has already decarbonised rapidly. In 2024, renewables accounted for almost half of the EU’s electricity consumption, a three fold increase from 2004 levels. Nuclear and hydropower are also important pillars of Europe’s energy mix, although they are unevenly distributed across the continent. Nuclear provides around a quarter of Europe’s electricity particularly in France, Sweden, and the UK while hydropower is a significant renewable resource in France, Italy, Austria, and the Nordics. This means that fossil fuels are still critical to energy supply: transport is the single largest energy consumer requiring oil products for personal transport and freight. Houses, schools, and hospitals are heated mostly by gas, although some are moving to electricity, district heating and heat pumps.
Europe’s energy transition strategy, at least until 2022, rested on the assumption that globalisation and market diversification would guarantee a steady flow of low‑carbon inputs that would also allow Russian gas to be phased out gradually. Although the geopolitical vulnerabilities of dependence on Gazprom were recognised, Russia was expected to remain a large, commercially motivated supplier. After all, flows to Europe were underpinned by stable long‑term contracts and physical pipeline infrastructure. New LNG capacity and interconnections would provide an additional layer of energy security in the event of supply disruptions. Meanwhile, imports of competitively priced solar panels, batteries and electric vehicles from China were seen as part of the solution, not the problem.
COVID‑19 challenged these assumptions. Supply‑chain disruptions prompted a broader rethink of dependencies and market concentration. Russia’s invasion of Ukraine in 2022 was a critical inflection point. Russia’s weaponisation of gas supplies raised concerns that fossil fuels, not renewables, were the unreliable and expensive option, accelerating efforts to bolster strategic autonomy in both fuels and transition‑technology inputs. Still, Europe is far from energy independent. North Sea production accounts for roughly one third of Europe’s gas demand but production is declining, while its contribution to oil demand is marginal. As a result, Europe relies on oil and gas imports from the Middle East, North Africa and the Caspian, with the role of the US growing in importance, especially after the sharp reduction in Russian imports in 2022.
European governments have taken comfort in the fact that the availability of globally traded LNG helped European nations avoid major power outages and deeper economic shocks, but it came at a steep cost. In 2022, the EU’s import bill for oil, gas, and coal reached €548.4 billion, a €300 billion increase from 2021 levels, accounting for 3.4% of the EU’s GDP. Moreover, energy subsidies to protect EU consumers from high prices reached €187 billion in 2022. The costs associated with an accelerated energy transition are also rising given higher costs of capital, which coincides with a cost of living crisis in many European countries and rising defence spending needs.
The geopolitics and economics of energy in Europe have now changed fundamentally. The rising costs of energy and the knock-on effects for industrial competitiveness as well as for people’s livelihoods has made energy integral to the domestic energy debate, shifting it from a primarily climate-driven focus to one that is increasingly framed around energy security, resilience, and competitiveness. With the EU now also committed to phasing out imports of Russian pipeline gas and LNG by 2027, it must find alternatives. US LNG is one option. Some European nations are reluctant to rely too heavily on it, as it is perceived as a source of geopolitical leverage, while other governments see it as a means of ensuring US security guarantees. Accelerating electrification is another option, which might mean increasing dependence on Chinese low-carbon technologies.
Europe is already heavily dependent on Chinese low-carbon technologies. In 2024, China accounted for 98% of European solar panels, up from 68% a decade ago. While EV sales are not yet dominated by Chinese imports, China’s share has increased from 12% in 2017 to 45% in 2024. Traditional European carmakers are squeezed by their Chinese peers, especially in compact EV segments. Many are moving their manufacturing to China and exporting to the EU. European suppliers report close to 75,000 jobs cut in 2024 and 2025, driven by weak margins, EV transition costs, and rising Chinese competition. Significantly though, China’s share of the lithium-ion batteries that go into EVs were 88% of total imports in 2024, compared to 75% in 2019. Meanwhile, Chinese supplies of inverters, which convert the direct current (DC) power produced by solar panels, wind turbines, and batteries into alternating current (AC), accounted for 61% of Europe’s total imports in 2024, up from 45% in 2018.
Given rising concerns about dependency on Chinese equipment, the Green Deal Industrial Plan and Net‑Zero Industry Act aim for at least 40% of key net‑zero technologies to be manufactured in Europe by 2030, using fast‑tracked permits as well as looser state‑aid and procurement rules to pull investment out of China‑centric supply chains.
But the EU’s de‑risking goals have so far produced limited funding streams and a few project announcements, and they have not yet translated into a material shift in the geography of clean‑tech manufacturing at scale. Europe remains well below the 40% benchmark in core technologies like solar photovoltaic (PV) modules and batteries. Announced projects are mostly still at final investment decision or permitting stage rather than under construction.
Building out these supply chains is complicated by the fact that China dominates intermediate inputs: for solar, for instance, China controls around 95% of global wafer production and the bulk of cell capacity. Even Europe’s remaining polysilicon producers export most of their output to be processed in China. Similarly, a European company trying to ‘reshore’ lithium-ion battery manufacturing may still need to import cathodes and anodes from China, meaning that new European factories might improve local jobs and resilience at the final assembly stage but do little, in the short term, to reduce exposure to price swings or export restrictions higher up the value chain.
Has Europe been asleep at the wheel? To a certain degree, Europe has failed to recognise the effectiveness of China’s industrial policies. Brussels has for years tried to level the distorted playing field created by Chinese industrial practices, but the appeal of lower cost inputs and efficient supply chains in China was seen to outweigh the risks to European industrial manufacturing. Equally, globalisation and competitive advantages were the organising principles of global trade.
Even today, the complexity and sophistication of industrial policies in China and how they have shaped a dynamic commercial environment are underappreciated in Europe. European policy makers have focused on subsidies while failing to recognise that China’s industrial model is broader and deeper than subsidies. Government support has also included demand stability and policy certainty, alongside industrial clusters, automation, and skill development. As one energy expert we interviewed for this report noted: ‘European companies are used to being the best. They don’t understand how far behind they are, and this denial creates risk.’
Over the course of decades, Chinese firms have developed expertise and a dominance in low-carbon technologies and gradually moved up and down the related supply chains. The end result is that Chinese companies produce more than two thirds of EVs globally and account for the bulk of battery and EV component manufacturing. In lithium-ion batteries, one of the two main battery chemistries, China’s share of cathodes and anodes ranges between 70-80%.
While this paper focuses on the components and end products that European countries need for the energy transition (rather than the minerals required to produce them), China also refines the majority of minerals and metals used to produce cleantech including lithium, cobalt, manganese, and nickel to name but a few. Perhaps most significantly, China accounts for over 90% of rare earth refining and magnet production, a key input into electric vehicles and wind turbines. While transport is the main end user of permanent magnets, they are also critical for industrial motors, electronics, medical devices, and importantly, defence and aerospace. Finally, Chinese firms are also major players in power transformers, inverters, and other high voltage components used in power grids.
For the purposes of this report, we assume the following to 2035:
Europe’s energy transition will be politically contested, but will ultimately continue. Advantageous economic fundamentals and energy security concerns will be key drivers. However, public and political scrutiny of the perceived costs of low-carbon energy will increase. As a result, European governments will be forced to address energy prices as a top priority.
The rise of Chinese low-carbon technology in European markets will continue. More Chinese solar panels, batteries, EVs, and even wind turbines will enter Europe. China’s market share in all technologies will increase, except in solar where it is already at 98%. Chinese technology is likely to become even more cost‑competitive, further squeezing European manufacturers. To comply with growing local content and manufacturing requirements, Chinese producers will seek to expand their operations in Europe.
Relations between the West and China – particularly between the US and China – will continue to deteriorate as China grows more economically, militarily, and diplomatically powerful. There is no outright conflict between the West and China, but there will be several limited-scale flashpoints – for example over trade, human rights, or the South China Sea.
China will develop an increasingly sophisticated set of geoeconomic and statecraft tools, which it uses more frequently to coerce or punish those with whom it has disagreements.
In the aftermath of the full scale Russian invasion of Ukraine, a crisis in the Taiwan Strait has been flagged as a key risk for Europe, in light of its high economic and technological interdependence with China. The argument goes that if (or when) China invades Taiwan, Beijing will use export controls of minerals, components or low-carbon technologies to deter responses from the West. Hence, Europe should reduce its reliance on China. We do not disagree with the notion that Europe should diversify and de-risk its dependencies, but in our view, a large‑scale military attack on Taiwan remains a low‑probability scenario through 2035. We expect China will continue to deploy a growing variety of grey-zone activities and intensify economic coercion and political pressure on Taiwan, but to the extent possible, it will avoid launching a kinetic war (barring a certain number of triggers). Moreover, even in the event of conflict, a unified trans-atlantic approach to sanctions seems highly unlikely. That said, if governments are assuming that cross-Strait conflict is inevitable, and that European countries will be called to choose sides or impose restrictive measures on China, they should proactively reduce critical dependencies on China across a range of sectors, including low‑carbon technologies, but also telecommunications and pharmaceuticals.
As the risk assessment above highlights, dependencies on Chinese low-carbon technologies have vast implications for national security, defined in the broadest sense of the term. Yet it is striking how poorly recognised the risks and their impact appear to be. Few policy makers have system-level understanding of the China / low-carbon technology / national security nexus. Even fewer are aware of the technical likelihood and impact of the risks and how they vary between infrastructure-level equipment such as offshore wind, or more distributed and fragmented low-carbon technologies such as solar panels and batteries. Since policy is often made in silos, governments rarely think about how these risks are interconnected and how some might happen together. The need for a holistic approach to understand and manage them is urgent, yet not currently on decision makers’ agendas.
There has been a narrative since 2022 that acknowledged Europe should avoid replacing its dependence on Russian gas with reliance on Chinese low-carbon technologies. But beyond this high level statement, there is limited understanding of whether this is achievable, at which time scales, at what costs, in what specific technologies, and how this could happen.
Europe’s emerging risks around China and low‑carbon technologies are more complex than a simple replay of its dependence on Russian gas. Reliance on fossil fuels means a continuous, daily flow of molecules into the system. Disruptions have an immediate impact: supply cuts trigger price spikes which in turn can lead to disruptions to industrial production and squeeze household budgets. As this report goes to print, Brent crude has broken above 100 dollars per barrel. European natural gas prices have almost doubled over the past month amid US–Israeli strikes on Iran, Iranian retaliation, and severe disruption risks around the Strait of Hormuz. These price spikes are already lifting fuel costs for consumers and, if shipping and production disruptions persist, could evolve into supply shortfalls that significantly weigh on economic activity.
By contrast, dependence on China in low-carbon technologies revolves around the hardware and inputs for building an electrified and decarbonised system. Disruption of supplies of rare earths, lithium, graphite, or Chinese solar panels do not switch the lights off; instead it delays the rollout of low-carbon technologies and raises costs. But once those assets are installed, they run largely on local wind and sun and need maintenance and spare parts. The security risk is less about short‑term energy supply and more about industrial, technological, and geopolitical leverage over the transition itself. The significance of this is widely underappreciated in Europe.
Discussions of these risks are also complicated by the fact that governments, voters, and businesses hold widely differing views on how to manage both the energy transition, and relations with China. Moreover, while policy makers recognise the risks associated with market concentration, many do not grasp the extent of dependence on China or the complexity of low-carbon technology supply chains. Perceptions of Europe’s dependence on China for low-carbon technologies run the gamut from a cost-saving opportunity to diversify away from Russia to a strategic threat. In many governments, both views coexist, sending mixed signals to industry. Moreover, most governments have not even discussed or tried to reconcile these competing views.
European countries seem incapable of thinking holistically about this challenge. As one interlocutor put it ‘Europe’s inability to manage these risks is itself a risk’. Policy to date has been driven by emissions targets and cheap imports rather than a joined‑up assessment of how global economic and geopolitical paradigms have changed. There is limited consideration to what buying Chinese low-carbon technology means for Europe’s future industrial base, its relations with the US, or its strategic autonomy. One senior industry figure told us that their company has no consistent process for factoring third‑party political risk into major projects or procurement decisions.
Fragmentation compounds the problem: member states have different priorities, risk tolerances, and time horizons. Eastern frontline states, for example, are focused on phasing out Russian oil, gas, and grid dependence. For many of them, China’s dominance in low‑carbon equipment is a ‘tomorrow problem’ compared with the immediate threat from Moscow. As one interviewee put it, the priority in places like Poland is defending against Russian sabotage and securing non‑Russian energy. Draft strategies to 2040 ‘are not very detailed on China.’ Lithuania, by contrast, has explicitly leaned into US LNG and potential US nuclear cooperation, seeing that alliance logic as part of its energy strategy. These divergent lenses make a coherent Europe‑wide approach difficult, as made evident in current “Buy European” debates.
Lack of technical understanding across the energy and defence space is also a major problem. In non-defence communities, there is a striking blind spot around national‑security implications. The European Parliament’s January 2024 resolution on China’s influence over critical infrastructure barely mentions energy, despite China’s deep presence in solar, batteries, cables, vessels, and inverters. The debate that does exist often fails to distinguish between real and perceived risks and is not informed by sufficient technical understanding.
All of this points to a systemic challenge: no single actor is currently joining up the dots between climate targets, industrial policy, supply‑chain structure, security, and geopolitics. EU instruments like the forthcoming Industrial Accelerator Act and local‑content rules are, in practice, more industrial policy than security strategy. They are formed with assumptions based on headline views of markets rather than detailed mapping of where the most critical dependencies actually lie and which can realistically be mitigated. Many national governments like the UK’s have siloed positions on these questions depending on the ministry in question and whether its focus is environment, security, or economic competitiveness.
Unpacking these risks and the trade offs is therefore critical. As governments make choices about their energy systems, they must judge the various trade offs: moving too slowly on the energy transition ties them into an ongoing dependency on fossil fuels and the associated price volatility. It creates carbon lock-in that will be hard to reconcile with their net-zero targets and will undermine the desire of many European governments to be leaders on addressing climate change. The ‘hardware’ of building decarbonised grids will be cheaper using Chinese solar panels, batteries, inverters, cables, and potentially wind turbines. Yet from a broader industrial policy perspective, this solution to one set of energy security risks creates another political and economic concern. Sourcing low cost Chinese clean-tech equipment poses a competitive threat to European manufacturing capabilities. While not an energy security challenge, it is clearly a national security risk.
Attracting Chinese manufacturing into Europe could offset some of those risks, but European countries lack consistent and clear regulatory frameworks to protect local employment and encourage knowledge transfer. There is more focus on Chinese potential ‘kill switches’ in low-carbon equipment than the risk of not having access to spare parts and the potential leverage this gives the Chinese government. There is not enough thinking about acceptable thresholds for dependency, how they vary by state and whether there is a common threshold on an EU level. At the same time, the focus on risks emerging from Chinese components is distracting from the more urgent need to bolster the security of interconnected systems.
Equally, there is not enough thinking about how Chinese dependencies impact European countries’ relations with each other and their ability to find unified positions on key geostrategic questions.
Finally, the geopolitical implications for relations with the US seem to be woefully underestimated or willingly ignored. If Europe waits to be forced by the US to choose whether it is ‘with’ the US or ‘against’ it, then there will be costs whichever way it turns. European policymakers must appreciate that, if they are truly wedded to the US for security reasons, then it is unwise to further deepen dependence on Chinese low-carbon technology now because they will probably have to rip it out later at the US’s insistence and at much greater expense. If Europe doesn’t act to reduce dependency on China by creating its own industrial capabilities, it may be forced to do so on Washington’s terms.
In preparing this report, Loom interviewed around 20 experts from across Europe’s national security and energy communities, from Western and Eastern European states and a wide range of ministries and energy sectors. There was a spectrum of views, but one finding stood out: the two communities often held fundamentally different perspectives on whether China’s role in Europe’s energy transition poses national‑security risks.
For the national security community, the risks from China were perceived as serious and systemic. By contrast, most energy‑sector experts saw the risks as operational, limited, and manageable:
Despite their differences, interviewees identified three common areas of concern:
Interviewees generally spoke less about geoeconomic or geopolitical risks than other categories. Only a small minority demonstrated a coherent, system-level understanding of the nexus between China, low-carbon technology, and national security.
Notably, most participants underestimated the potential impact of US actions. Only a few recognised how abruptly US policy could reshape Europe’s options on China, potentially forcing a rapid decoupling. However, these interviewees noted that policymakers are too focused on near term political and geopolitical challenges to consider these looming risks.
