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US Export Controls on Green Tech Would Backfire, Expert Says

U.S. export controls on clean technology goods to China would likely be “ineffective” and could backfire on American businesses trying to develop the next generation of green energy products, a researcher for a major European think tank said in a new report this month. The report argues that solar panels, wind turbines, electric vehicle batteries and other green technologies don’t warrant new controls because they have “no dual-use or human-rights applications,” and restrictions could further strain the already fraught U.S.-China relationship.

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Clean technology “hardly qualifies as dual-use equipment,” said the March report, written by Agathe Demarais, who leads the European Council on Foreign Relations' geoeconomics work. Demarais said “solar panels and wind turbines are unlikely to ever help to kill anyone and they do not directly contribute to the development of the” Chinese military. The report was published by the Heinrich Böll Foundation, an organization affiliated with the German Green Party, a political party that lobbies on environmental issues.

The report said the Biden administration in early 2023 “appeared on the verge” of imposing export licensing requirements on mainstream green technology, saying those controls could have been comparable to restrictions under the International Traffic in Arms Regulations, which members of industry have long criticized for placing overly burdensome conditions on defense trade. It’s “unclear” why the administration decided not to move forward with controls, Demarais said, but she said Washington may have “feared fuelling tensions” with both China and European allies that rely on some U.S. clean energy goods.

“American controls on clean tech exports would be unilateral measures, given the lack of appetite for such a policy in the EU at this stage,” the report said. “As a result, such controls would undoubtedly reignite US-EU rows over American extra-territorial economic measures.”

Demarais also suggested that the administration is waiting for the right time to impose the controls. The U.S. may be “keen to keep some powder dry in case US-China tensions escalate further, for instance over Taiwan,” the report said. “In such a case, it would make sense to spare clean tech from such controls for now in a bid to retain leverage over China.”

But the report said those export controls wouldn’t work. It noted that Beijing is the world leader in producing green energy goods, and Chinese companies “already have ample access to clean technology.” New controls also could “undermine the development of US clean tech firms designing the next generation of green energy goods,” such as advanced batteries, electricity storage or low-carbon hydrogen, because they would lose out on revenue from sales that may have gone to China.

“Such policies would also have negative ripple effects beyond US borders: they would strain relations with allies and fuel global resentment against western democracies by showing that the US is not shying away from weaponising access to goods that are crucial for the fight against climate change,” the report said.