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The United States–China Race for Green Transformation: Institutions, Incentives, and Green Industrial Policies

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Abstract

This article provides political analysis of the extent to which new state strategies of involvement in climate technologies have shaped the green markets in both China and the United States. Using rational choice institutionalism and comparative case studies, this article analyzes state involvement in novel governance techniques and green industrial policy competition related to climate technologies in the United States and China. The guiding research question asks to what extent green industrial policy and its related incentives are useful for understanding the transition to green energy in the two countries. This study further explores the ways in which both countries enhance the competitiveness of national industries for science and technology in alternative energy. The rivalry between China and the US has accelerated, to some extent, the process of strengthening regulatory intervention in knowledge creation, public financing for climate technologies, and other domestic economic interests, while the emergence of green industrial policy has become part of the win‒win rhetoric and practices to facilitate a green economy. This research contributes to the comparative understanding of the proliferation of mission-oriented innovation initiatives, as well as the challenges in reorganizing them with new green industrial policy concepts.

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Data Availability

The author confirms that all data generated or analyzed during this study are included in this published article. Furthermore, primary and secondary sources and data supporting the findings of this study were all publicly available at the time of submission.

Notes

  1. Mazzucato, Mission-Oriented Innovation Policies, 806.

  2. Altenburg and Pegels, Sustainability-Oriented Innovation Systems, 12.

  3. Mazzucato, Mission-Oriented Innovation Policies, 808.

  4. Matthew Lockwood et al., Historical Institutionalism and the Politics of Sustainable Energy Transitions, 313.

  5. Wang and Sun, From Globalization to Regionalization, 71.

  6. Block, Swimming Against the Current, 179.

  7. For the description of the support, see, the Authenticated U.S. Government Information, “America Competes Act,” (9 Aug 2007) Public Law 110–69, https://www.govinfo.gov/content/pkg/PLAW-110publ69/pdf/PLAW-110publ69.pdf; Advanced Research Projects Agency – Energy (2022), https://arpa-e.energy.gov/about/budget-requests. Accessed 15 Oct 2023.

  8. National Energy Administration, 2023 Nengyuan gongzuo zhidao yijian [guiding opinions on energy work in 2023], 6 April 2023.

  9. For more details of the industrial policy experiments, see, for example, National Energy Administration, Guojia nengyuan yanfa chuangxin pingtai guanli banfa [Administrative measures for the national energy R&D innovation platforms], 9 Sep 2020. National Energy Administration, Guojia nengyuan ju zonghe si guanyu “shisiwu” di yi pi guojia nengyuan yanfa chuangxin pingtai mingdan de gongsh [Announcement of the General Affairs Department of National Energy Administration on the list of the first batch of national energy R&D innovation platforms during the “14th Five-Year Plan”], 20 Mar 2023.

  10. Meckling and Nahm, Strategic State Capacity, 495.

  11. Kelsey and Meckling, Who Wins in Renewable Energy, 66.

  12. Mazzucato, The Entrepreneurial State, 87.

  13. International Energy Agency, Special Report on Solar PV Global Supply Chains (Paris: IEA), 111–112.

  14. International Energy Agency, Special Report on Solar PV Global Supply Chains (Paris: IEA), 111–112.

  15. Nahm, Collaborative Advantage, 151–157.

  16. Gallagher and Xuan, Titans of the Climate, 114.

  17. See [8]; US Department of Energy. Biden-Harris administration announces $3.7 billion to kick-start America’s carbon dioxide removal industry. 13 Dec 2022. https://www.energy.gov/articles/biden-harris-administration-announces-37-billion-kick-start-americas-carbon-dioxide. Accessed 15 Oct 2023.

  18. Maurice Hewins. One year on from the Inflation Reduction Act – Who are the winners and losers?” 7 Aug 2023. https://www.schroders.com/en-us/us/individual/insights/one-year-on-from-the-inflation-reduction-act-who-are-the-winners-and-losers-/. Accessed 15 Oct 2023.

  19. American Clean Power. Clean energy investing in America. Aug 2023. https://cleanpower.org/resources/clean-energy-investing-in-america-report/. Accessed 15 Oct 2023.

  20. Justin Worland. How the Inflation Reduction Act has reshaped the U.S.—and the world. 11 Aug 2023. https://time.com/6304143/inflation-reduction-act-us-global-impact/. Accessed 15 Oct 2023.

  21. See [9, 62].

  22. General Office of the State Council (2014) Guowuyuan bangongting guanyu yinfa nengyuan fazhan zhanlue xingdong jihua (2014–2020 nian) de tongzhi [Notice of the General Office of the State Council on Issuing the Energy Development Strategic Action Plan (2014–2020)]. No. 31.

  23. National Energy Administration (2021) Guojia nengyuanju zonghesi guanyu jianli “yi dai yi lu” nengyuan hezuo huoban guanxi hezuo wangluo de tongzhi [Notice from the General Affairs Department of the National Energy Administration on establishing the “Belt and Road Initiative” energy partnership cooperation networks]. 8 June. For the assessment of the debate, see [45].

  24. Liao, Jessica C. (2021) China’s Green Mercantilism and Environmental Governance: A New Belt and Road to the Global South? The 2020-2021 China Fellowship Report. Washington, D.C.: The Wilson Center, pp. 10–11.

  25. Xu Hongfeng, and Wang Jing (2019) Zhongguo nengyuan jinrong fazhan baogao: Zhongguo yu "yi dai yi lu" guojia kezaisheng nengyuan hezuo ji tourongzi. Beijing: Qinghua daxue chubanshe [Report on China’s energy finance development: Renewable energy cooperation, financing and investment between China and the cooperative countries “the Belt and Road Initiative”. Beijing: Tsinghua University Press], 302.

  26. New Development Bank. Data and Documents. 2021. https://www.ndb.int/data-and-documents/ndb-core-documents/. Accessed 15 Oct 2023.

  27. Xu Hongfeng, and Wang Jing (2019) Zhongguo nengyuan jinrong fazhan baogao: Zhongguo yu "yi dai yi lu" guojia kezaisheng nengyuan hezuo ji tourongzi. Beijing: Qinghua daxue chubanshe [Report on China’s energy finance development: Renewable energy cooperation, financing and investment between China and the cooperative countries “the Belt and Road Initiative”. Beijing: Tsinghua University Press], 309.

  28. The White House. Fact sheet: President Biden and G7 leaders formally launch the partnership for global infrastructure and investment. 26 Jun 2022. https://www.whitehouse.gov/briefing-room/statements-releases/2022/06/26/fact-sheet-president-biden-and-g7-leaders-formally-launch-the-partnership-for-global-infrastructure-and-investment/. Accessed 15 Oct 2023.

  29. OECD. OECD and the Blue Dot Network. 2022. https://www.oecd.org/finance/oecd-and-the-blue-dot-network.htm/. Accessed 15 Oct 2023.

  30. U.S. Department of Energy. Agency financial report fiscal year 2021. 15 Nov 2022. https://www.energy.gov/cfo/articles/fy-2022-doe-agency-financial-report, pp. 18–20. Accessed 15 Oct 2023.

  31. For the discussion and debate of the US changing strategy toward China, see [11, 60].

  32. Hudson Lockett and Edward White. Tesla boosts China investment with plans for Shanghai battery factory.The Financial Times. 9 Apr 2023. https://www.ft.com/content/37b2d801-4850-4aa5-a341-3da08b609913. Accessed 15 Oct 2023.

  33. Norihiko Shirouzu. Focus: China’s BYD takes cautious approach to U.S. in global EV push. Reuters, 18 Jan 2023. https://www.reuters.com/technology/chinas-byd-takes-cautious-approach-us-global-ev-push-2023-01-18/. Accessed 15 Oct 2023.

  34. Joe McDonald. Threatened by shortages, electric car makers race for supplies of lithium for batteries. The Associated Press. 28 Jun 2023. https://apnews.com/article/china-ev-lithium-united-states-battery-87eb9382a0181bb7ee64e835efe7b170. Accessed 15 Oct 2023.

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Acknowledgements

I wish to thank the editors and two reviewers of the Journal of Chinese Political Science for investing considerable time in providing constructive suggestions. I would also like to thank Seungjoo Lee, Heejin Han, Malcolm Campbel-Verduyn, and all participants of both parts of the conference “The U.S.‒China Technology Competition and Economy–Security Nexus in Asia” on 24 August and 24 October 2022 by the Institute of National Interest at Chung-Ang University for their very valuable comments on earlier versions of this paper.

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    Geoffrey C. Chen

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Chen, G.C. The United States–China Race for Green Transformation: Institutions, Incentives, and Green Industrial Policies. J OF CHIN POLIT SCI (2023). https://doi.org/10.1007/s11366-023-09875-x

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