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Oct 25, 2023

Column: China's shrewd grab for green energy recycling dominance

Wind turbines and solar panels are seen at a wind and solar energy storage and transmission power station from State Grid Corporation of China, in Zhangjiakou of Hebei province, China, March 18, 2016.

Wind turbines and solar panels are seen at a wind and solar energy storage and transmission power station from State Grid Corporation of China, in Zhangjiakou of Hebei province, China, March 18, 2016. REUTERS/Jason Lee/Files Acquire Licensing Rights

LITTLETON, Colorado, Aug 17 (Reuters) - China's plan to set up a recycling system for obsolete wind turbines and solar panels is likely to be a lucrative market in the country, which is well placed to become a global hub for the recycling of several forms of outdated green energy equipment.

China has been the clear leader in renewable energy production for more than a decade, and in 2022 generated over twice the amount of electricity from solar power and 75% more wind-powered electricity than the United States, the second largest green energy producer, according to Ember.

The sheer scale of China's wind and solar farms will provide any nascent recycling specialists with a steady flow of worn-out parts and panels in need of overhaul, especially with several utility-scale sites from the early 2000s now approaching their end of life.

Moreover, China's world-leading recycling and scrap processing industry is well placed to branch out into the wholesale handling of renewable energy cast-offs, as it has unmatched expertise at tearing down spent parts and machinery to generate valuable inputs for other sectors.

China's large scrap and recycling hubs are also well connected via train, road and river systems to commercial zones throughout the country, and already handle bulky loads of industrial detritus similar to the streams of old panels and turbine blades anticipated in the years ahead.

China's recyclers also have strong international supply lines thanks to the country's vast export-oriented manufacturing sector and resulting dominance in global shipping container trade.

Prior to being disrupted by COVID-19 outbreaks that upended several local and international businesses, China was the dominant manufacturer and exporter of furniture, toys, electronics, gym equipment, clothing and shoes - among other items - which were all distributed worldwide via container vessel.

As China is primarily a net exporter of goods, many shipping containers historically returned to the country empty or filled with plastic and other waste products that China's recyclers processed until Beijing banned the imports of several waste items from 2018.

Going forward, many of those underused containers could haul stacks of outdated solar panels and other renewable energy parts that have reached their end of life in other countries that may lack the recycling capacity that exists in China.

And as China's potential recyclers will likely require large volumes of spent parts to operate profitably, they may offer competitive prices for old panels and turbines and look to exploit the cost advantages available when booking cargo space on return journeys to China, known as backhaul.

China's plan to develop a large scale recycling sector for the renewables industry is in keeping with the country's practice of developing interdependent ecosystems around key industries.

In manufacturing, China has famously built up such an effective and integrated textiles sector that a large share of the world's clothing is made in China even though labour costs can be far lower elsewhere.

The key to the country's enduring dominance is that no other nation can match China's co-located network of support businesses, which includes firms that dye, embroider, print, trim and weave fabrics and cloths that are imported from other countries, before exporting higher-priced T-shirts and jeans to global consumers.

The country aims to develop similar strongholds in auto and electronics manufacturing, and may now extend that framework to the renewables energy sector, which Beijing has identified as a key industry for the remainder of this century.

Beyond panels and turbine blades, recyclers may also look to recycle rechargeable batteries that often already contain components manufactured in China, including graphite cathodes and electrode materials made from nickel, lithium and cobalt.

For recycling firms based elsewhere that had been planning to scale up their handling of older green energy equipment, the prospect of a government-backed competitor in China may be a cause for concern.

But for businesses and consumers who support the development of a circular economy that reduces waste and reuses key infrastructure, China's ambitions to develop a new global champion in renewables recycling will be a cause for optimism.

The opinions expressed here are those of the author, a columnist for Reuters.

Reporting By Gavin Maguire; Editing by Jamie Freed

Our Standards: The Thomson Reuters Trust Principles.

Thomson Reuters

Gavin Maguire is the Global Energy Transition Columnist. He was previously Asia Commodities and Energy editor.