On the first day of her visit to China, 11 October 2023, Ms. Kadri Simson, European Commissioner for Energy, delivered a speech at North China Electric Power University.

Dear faculty members,

Dear students,

Ladies and Gentlemen,

Good afternoon to you all.

Let me first thank the North China Electric Power University for inviting me.

Since its foundation in 1958, this university has been a leading institution promoting scientific and technological progress.

It has nurtured talent and prepared generations of students for successful careers in the fields of energy, engineering, science and more.

It has been home to the engineers, the scientists, the innovators who powered China’s industrial revolution and wrote the story of unprecedented growth and development that we know so well.

Today, just as importantly, perhaps even more importantly, it is training the future leaders of the next industrial revolution: the clean energy transition. As you know, I am in China because tomorrow I will co-chair the 11th EU-China Energy Dialogue along with the Director of the National Energy Administration, Zhang Jianhua. This is our first chance to have a face-to-face dialogue since 2019. It is a welcome opportunity to review the many areas of common interest, at bilateral and global level and identify concrete deliverables for when our leaders, President Xi and President Von der Leyen will meet for the next EU China Summit. China and the EU have a wide range of interests in common in the energy field.

We are trade partners. We are major manufacturers of clean energy technologies. We are both major energy importers, with a common interest in stable, open and predictable gas and oil markets. We both have had to deal with the major disruption in the markets triggered by Russia’s unjustified invasion of Ukraine. We both share a net zero horizon – 2050 for Europe, 2060 for China. We both are leaders in renewable energy deployment. And we are partners in the ITER organisation, the one of a kind project to develop the first nuclear fusion.

It is a great way to kick off my mission to China with this visit to the North China Electric Power University, meeting with you, faculty and students. Because scientific institutions and universities are at the forefront of what is an extraordinary shift that is changing the face of the global energy economy: the transition towards a net zero energy system. A process driven by science and innovation, as much as economics and politics. A new global energy economy is emerging, powered by the accelerated, irreversible spread of clean energy technologies – solar and wind, electric vehicles, heat pumps, hydrogen production, advanced nuclear technologies, batteries and many others. Boosted by the response to the COVID-19 pandemic and the ongoing energy crisis, the momentum behind clean energy technology is gaining strength, and speed. According to the IEA, five years ago, investment in clean technologies were almost on a par with those on conventional energy technologies. Today, for each euro spent on oil and gas, around 1.7 euro is spent on clean technologies. And many of these investments happen in China and in Europe. Everywhere in our respective countries we see the accelerated penetration of clean technologies bringing with them not just lower greenhouse gas emissions, but growth, cleaner air, and more breathable cities. This record level of deployment of clean tech is powering an industrial renaissance. New manufacturing ecosystems are growing in scale and importance. New jobs and new professions are being created. New supply chains are being formed. This disruptive, unstoppable process is bound to change every sector of our economy, and of our societies. It is creating new opportunities, and China, as the EU, is benefiting from that.

Most of all, it will help us fight the most important challenge of our generation: climate change.

That’s why I believe the EU-China dialogue is so important today. Because if we are to win the existential battle against climate change, we must fast forward the clean energy transition, lower the cost of existing commercial technologies and bring new technologies to market as fast as possible, spreading clean tech across the world, especially in developing countries. But this process, essentially a technological one, will only be possible if we are able to collaborate closely in the construction of the global energy system, in this difficult time of geopolitical uncertainty. And this goes to the core of the EU-China relationship on energy and climate. Today I want to speak to you about three key topics:

- the risks that rising geopolitical tension pose for the clean energy transition,

- the EU’s vision of those risks and our policies to reduce them while remaining an open market,

- and how the EU and China can work hand in hand to maintain a positive cooperation on energy and reap the shared benefits of the clean transition.

Let me start with geopolitics and risks.

The full-scale Russian invasion of Ukraine last year marked a defining moment for Europe. It brought the horror of war, and all the suffering that goes with it, back to our continent. The EU will stand firm with Ukraine until a just peace has been brokered and invading troops have withdrawn from Ukraine’s territory. Why? The answer is very simple. Because we believe that right, not might, must prevail. Ukraine has the right to freely decide its future, its development path, its desire - so clearly expressed - to be closer to the Europe Union. Independence, sovereignty, and territorial integrity – these are fundamental principles of international law. They are also long-standing principles of China’s own foreign policy.

In the spirit of friendly but frank speaking which is at the heart of good international relationships, we therefore struggle to understand China’s position and its close collaboration with Russia. We do not understand this position, also because, beyond the human tragedy of the war, Russia’s aggression against Ukraine has deeper damaging effects on the energy system, in Europe but also at global level. Russia’s open manipulation of gas prices on the European market, its gas supply blackmail against small neighbouring countries like Moldova has threatened energy security in Europe, has driven up prices and contributed to global inflation and a food price crisis in much of developing world.

The EU responded against the threat to its energy security with the REPowerEU agenda. We have emerged today, with no black outs, a diversified range of gas suppliers, a record acceleration in the deployment of renewable energy. But the fallout of Russia’s aggression is still felt around the globe and is causing deeper and more lasting damage. Because Russia’s actions undermine the notion that energy trade can be conducted as a purely commercial, neutral activity. And I want to underline this point. For decades, we believed that gas and energy trade would always be independent from political tensions. Even at the height of the Cold War, oil and gas flows between East and West continued, and even developed. But with its aggression, Russia has showed that energy can become a weapon, and a weapon that Russia has chosen recklessly to deploy. The message we take from this is that energy dependence is dangerous, especially vis-a-vis a country like Putin’s Russia.

Energy dependence can give leverage that irresponsible states will use to force the smaller, more vulnerable states, to bend to their will. The lesson is that whoever has leverage on energy resources can, one day or another, use it, with hugely damaging consequences for markets and investment. This sense of energy insecurity goes beyond gas and oil. Look at the conversation happening around the world. It is all about new dependencies. Dependencies in supply chains, critical minerals, critical clean technologies.

Every actor around the world is now reviewing its supply chains, mapping the risks, the possible threats, identifying choking points, promoting policies of near shoring or seeking to boost the domestic production of technologies critical for its transition. Russia’s military aggression is not only damaging Europe. It is damaging the world, and China. Because it has damaged trust in the global energy system. China is a tech – and now a clean tech – manufacturing powerhouse, and has and will benefit from open, transparent, global energy markets. The risk is that this global growing concern around economic and energy security evolves into more protectionist policies and inefficient economic decisions from many actors. For example, if the investment decision for a new technology plant is based not on location or comparative advantages but on confidence, trust or simply political alignment.

Of course, this trend towards de-globalisation existed before, and it became visible during the COVID-19 pandemic. But Russia’s war of aggression is exacerbating it. We run the risk of drifting into a world fragmented into energy blocs, with different jurisdictions or regions building their own clean tech supply chains, their own green manufacturing, their own supply sources. A world of energy islands. This is to no one’s benefit. And it is certainly not in Europe nor China’s interest. It is a world where clean technologies will cost more, where exports will be limited, where the transition to net zero will be slower.  Where China’s natural advantages as an economic and clean tech powerhouse are blunted. Where our partners in the developing world, who are less responsible for carbon emissions, will pay the most in terms of the impact of climate change.

There is a lot of work ahead of us, but the first and best way to help preserve a global energy system where clean technologies can flow from one market to another without unjustified barriers is to stop Russia’s war in Ukraine.  

Let me come to the second point.

Stemming from the analysis I have just given you, the EU has recently started to rethink its policy framework, to cater for the risks implied by this new geopolitical context and support its autonomy in the clean tech sector. I know this evolution is raising questions in China and elsewhere, so I want to use my visit to explain our approach and to dissipate any misunderstandings.

In Europe, we believe in open markets, open competition, open economies. The EU is a fusion of national markets into a single, integrated market. Free circulation of capital, goods, services, people, is in our DNA. That’s been right at the heart of my mandate as Energy Commissioner, and we are proud of what we have achieved. But competition in a free market has to be a fair competition. For Europeans, it is not acceptable that our openness, our belief in competition based on merit is abused or turned against us.

Russia’s unprovoked and unjustified aggression against Ukraine, and before that, our experience with supply chain disruptions in critical equipment during COVID-19, has taught us all a lesson about dependency. That’s why we have been developing a set of tools to promote diversification, reduce the risks of dependency and re-boot our domestic industrial system towards the production of important clean technologies to help advance the green transition. These policies do not aim to build a Fortress Europe, and I really want to underline this point. They do not aim to punish or weaken our competitors. They aim to build in Europe a better, lower risk environment to  nourish and support clean tech investment.

Let’s take the recent EU proposal on promoting domestic manufacturing of clean technologies, the Net Zero Industry Act.  We have a target to ensure that our net-zero technologies manufacturing capacity reaches at least 40% of the Union’s annual deployment needs for corresponding technologies. This means that at least 60% may come from outside Europe. For example, we have a target of 600 GW of solar PV by 2030, and we project that European producers will cover at best 30GW. The much larger part will be provided by international markets. China, we all know, has by far the largest manufacturing capacity in the world on PV. Or let’s take heat pumps. Last year, 5 billion euros were invested in Europe into heat pumps manufacturing. Our deployment rate reached a record plus 47%. At the same time, imports from China doubled in 2021 compared to 2020, and doubled once again in 2022, up to almost 900 million euros. These are all clear signals that we are looking for diversification and partnership in global markets, not self-sufficiency or import substitution.

Even when we promote our policies to promote climate action, sustainability or protection of human rights in our external relations, and I make no apology for supporting European values across the world, we do not target national systems. We set obligations at company level to reward the best performing companies, who for instance show a good track record on low carbon production or high levels of circularity, who will be able to export more to Europe.

We also need to be frank that some EU economic security policies have been developed to respond to concerns raised by policies in other countries. Sometimes, yes, these concerns include China’s practices and policies. Policies to grant unchecked access to state subsidies, to restrict exports of critical materials like Gallium or Germanium, or intrusive policies to protect national security interests such as loosely defined security requirements, forced data localisation, or cumbersome data transfer rules are a serious matter of concern. And they are not in China’s or anyone else’s long-term interest. Any regulator with a sense of responsibility has to recognise the risks these transfer requirements pose for technological transfer or data leakage. But in any case, when we introduce these safeguards, we always aim to be precise and proportionate. Our underlying aim is to promote freer and fairer trade, not to undermine it.

A crucial element for this is a sense of level playing field. European companies face important and increasing access barriers to the Chinese market. The EU Chambers of Commerce in China has listed 1058 this year, up from 967 last year. This lack of level playing field is what is behind our call for reciprocity and transparency. Last year, the EU had the largest ever trade deficit with China, close to 400 billion euros. In the same spirit, when we take trade defence decisions, like the announcement by President Von der Leyen last September of an investigation into battery electric vehicles, we act based on facts and numbers. We will conduct this investigation with impartiality, transparency and in full consultation with all market operators.

These are good examples of what we call de-risking. De-risking, not de-coupling. Decoupling is a strategy of separation, breaking links, building walls. Decoupling leads to a world of energy islands, which I said, it is the worst scenario for the clean energy transition. De-risking is a policy to diversify, prevent dependencies and to maintain Europe as an open continent for exports. It is a policy that can help set the terms of a fair and lasting relation also in energy trade between Europe and China. So we need to use our dialogue to re-energise our engagement, to develop a new course in the common journey to net zero.

And this brings me to my final point – where we see opportunities for EU-China cooperation in energy going forward.

We believe that the energy system of the future will continue to be based strongly on trade and clean technology products will be a large part of it. Europe wants to remain an open continent. It is in our interest to be able to benefit from the expertise, quality and leadership of Chinese technology. And it is in China’s interest to allow European investment in China, which creates local content, jobs and growth. The EU and China stand to mutually gain if for example we coordinate our standards in new green tech areas.

Let’s continue to learn from each other’s experiences.  Let me give you three examples: 

- Europe has long established experience in designing and integrating power markets on a continental scale. We have one of the most advanced systems for grid planning and cross regional interconnection. China is rethinking its power system to integrate different regional markets.  We can mutually benefit from this exchange.

- We also have a common interest, as gas importers, in stable, transparent and predictable gas markets and we can work on coordination and early warning mechanisms. And we need to push gas exporters to send us clean gas in the future with lower methane emissions.  

- China and Europe are top of the league for RES deployment. We can work together to promote renewables at global level.

Ahead of this year’s COP28 meeting in Abu Dhabi, we have proposed to establish a global target for tripling renewable energy and doubling the level of energy efficiency by 2030. This can be a game changing commitment at COP 28, together with a joint effort to increase climate financing and a stronger commitment to phase out the use of fossil fuels. We can expand scientific exchange and collaboration among energy agencies.

There are so many examples where open dialogue and cooperation between China and Europe is mutually beneficial and that’s why it’s important that we discuss what unites us and we understand each other’s point of view.  

Dear students,

What better place to open up this dialogue than at this wonderful university?

Your country has a long and rich history of innovations, scientific discoveries, and inventions. The many exchanges that have taken place between Europe and China have had a deep impact on the world, even changing the course of history. Would the European voyages of discovery have ever been undertaken without China’s invention of the ship’s rudder, the compass and the multiple masts? How differently would knowledge and literacy have spread without the importation of paper and printing from China? All this to say that knowledge, innovation, and skilled people like you are the backbone of today’s clean tech revolution. Together we can promote the collaboration we need to tackle climate change and the energy transition, to build bridges between policies and technologies.

I learned that one of China’s most pre-eminent female scientists was Wang Zhengi, who educated herself in astronomy, maths, geography and medicine during the Qing dynasty. She once said that there were times that she had to put down her pen and sigh. But that she loved the subject so much, so she did not give up.

And this is my message today: One should never give up. One should never stop believing in the power of innovation, and collaboration for positive change. This is a challenging time for the clean energy transition and the fight against climate change. This is the time when you need to stand up as the builders and leaders of a cleaner, greener, and more just future, for China and the world.

I wish you all the best for your studies.

Thank you for listening.

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