China’s Evolving Energy Security: A Conversation with Dr. Michael Davidson
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I'm Bonnie Lin, Director of the China Power Project and Senior Fellow for Asian Security at the Center for Strategic and International Studies. In this episode of the China Power Podcast, we're discussing China's pursuit of energy security, a quest that not only influences China's domestic policies, but also has implications for international relations.

How has China's energy landscape evolved over the years? What current issues does China face at home and abroad as it searches for new sources of energy? Dr. Michael Davidson joins us to answer these questions and more. Dr. Michael Davidson is an assistant professor at the School of Global Policy and Strategy at the Mechanical and Aerospace Engineering Department of the Jacobs School of Engineering. Michael Davidson's research focuses on the engineering implications and institutional conflicts inherent in deploying or

renewable energies at scale. He is particularly interested in China's energy system, which he has studied for over 15 years. Dr. Davison was previously the U.S.-China Climate Policy Coordinator for the environmental nonprofit Natural Resources Defense Council, NRDC. He was a Public Intellectuals Program Fellow at the National Committee of U.S.-China Relations, is a current fellow with Penn Project on the Future of U.S.-China Relations, and a former Fulbright Scholar.

Prior to joining UC San Diego, Dr. Davison was a postdoctoral research fellow at the Harvard Kennedy School Belfast Center's Environment and Natural Resources Program. He received his Ph.D. in Engineering Systems and a Master's in Technology and Policy from MIT. Michael, thanks for joining me today. Thank you for having me. Excited to be on the show.

Can you start off by giving us an overview of China's energy landscape? Where does China get its energy from and what is produced domestically versus what does China import? Yeah. I mean, as most people probably know, China gets the majority of its energy from coal currently. So in terms of primary energy, that's about 55%. After that, you have oil at about 18%. And then coal

which is about tied with renewable energy, including hydro, and then gas and nuclear make up the remaining. Now note for some of the keen listeners, if you're comparing those percentage points with the IEA, there are some differences in terms of the methodology.

But I'll be using those numbers, which is more relevant for China's formal targets, which I can talk about a little bit later. By comparison, the U.S. gets about 10% of its primary energy from coal and about a third from gas and oil. So China's structure is quite different from the U.S.,

Incidentally, India has a similar dependence on coal as China, though its share of RE is lower in its overall mix. That's sort of the overall energy, primary energy. In terms of power generation, China's getting about a third of its power, electric power, from renewable energy. And of this, wind and solar is growing very rapidly.

Last year, it was about 17%. Now, the global average on that is about 13%. Coal is still the majority of power generation as well. But in terms of power capacity, it's a little bit different. So if we think about we install...

sort of a gigawatt of power generation capacity, that's different than how much energy is actually produced from it because the wind isn't always blowing and the sun isn't always shining. So in terms of power capacity, China actually reached a more symbolic landmark of greater than 50% of its power capacity is now coming from renewable energy. So that's have an enormous growth, particularly in the wind and solar sector in recent years.

There's a couple of, I think, interesting stats there. So three quarters of all of China's power generation investment was in wind and solar, almost 300 gigawatts. And that was up from the previous year. So just as a comparison, the U.S. installed about 40 gigawatts in the same year, which is still a record for the United States, but you can just see the scale in China.

is enormous. And about 40% of all of the world's newly installed capacity in wind and solar was in China. Still, China has been permitting and putting in the pipeline a lot of coal on the order of around 200 gigawatts over the last several years.

Not all of that is going to be built, but it's still a very worrying sign for the climate if all of that coal infrastructure is put in place. And then if we zoom in just on the imports, which is going to be most relevant to sort of traditional discussions around energy security, China's importing record amounts of crude oil.

Russia is the largest and the US is also increasing in terms of their import sources. So about 70% of all their crude oil is imported. Natural gas, you're looking at about 40%. Coal is mostly domestic, less than 10% of that is imported. So it gives you a little bit of a sense of where China's current energy structure is and also some of the recent trend lines.

Thanks, Michael. And overall, what percentage of China's energy is it importing? Including all of these energy sources on a primary energy basis, China imports about 20% of its energy. So it seems to me that even though China may be worried about the security of its energy imports, China is relatively secure compared to many of its neighbors that import significantly more energy. Is that right?

Yes, yes. And that's also improving over time with the increasing in domestic locally sourced energies. It was also very striking to me when you mentioned that most of the new global investment in wind and solar are coming from China. What are some of the drivers for this? Is it because renewable energy is cleaner and domestic for China? Yeah, so about, I think it's about 40% of...

global new investment in wind and solar is coming from China. So much larger than any other country. There's a number of drivers. Certainly recent growth is driven by policies to support renewable energy and climate change, but also the falling costs of these renewable technologies

which make it very advantageous to install. And I think we'll probably chat a little bit more later about energy security and some of the concerns around that and how those things are changing. Certainly, renewable energy changes the game on energy security. And that is also another reason why China and other countries choose to invest in

Great. Thank you. And as you look at China's energy security, have you seen China's energy needs and priorities change over recent years? So for example, what is China focusing on now with respect to energy compared to say 10 or 20 years ago?

Yeah, globally, energy security concerns are increasing, right? So you have, of course, the Russia-Ukraine war putting constraints on some fossil fuel supplies. There's the COVID and the COVID rebound, which are putting a lot of pressure on energy demand.

In addition, climate change ambitions are growing globally, which is putting additional pressure on energy systems. So, I mean, the result of that is that there's an increased focus on local supplies and also more low carbon sources generally. China, of course, is similar to that with some differences. But overall, China's priorities here are to increase energy.

renewable energy and other clean energy sources, how it defines it, to secure the supply for fossil energies, especially coal, to increase electrification across the economy. So, it's less dependent on fossil fuels and more on electricity, which has different sources, which it can, again, localize. And then,

There's also enormous concern on economic growth. And whenever there's an economic growth concern or slowdown, there's going to be additional pressures on the energy sector because of the high cost of energy inputs to some key economic growth sectors. So those, if we were to take a look at sort of the 14 five-year plan, you

There is a focus on developing what's called a modern energy system, and it's focused on low carbon, also intelligent sort of smart grid issues diversified with multiple energy sources, but also recognizing that China lives in a multipolar world where there is now increasing geopolitical conflict around the energy sector.

sector as well as the energy transition, the clean energy transition. So it's now focusing on how to deal with those particular issues. Michael, you mentioned China seeks to increase electrification across its economy. Could you share more about what is electrification and what progress is China making on this front?

So, in the power grid, we can think about supply and demand. So, on the supply side, you've got the total amount of power generation capacity. That's how many gigawatts of power could you generate if it was operating at full capacity, full output. Then you have generation, which is how much electricity is actually generated from that equipment.

And because the wind isn't always blowing, the sun is always shining, the capacity of renewable energy is usually much larger than its generation relative to the fossil fuel and traditional sources. And then on the demand side, you've got different sources of electricity demand. You've got sources from industry.

from residential, commercial, etc. Electrification, so electrifying transportation sectors and then electrifying some traditional consumption which is coming from fossil fuels, that is converting that into an electrified process will also add to demand in the future. If you think about the transportation sector, heavily reliant on oil,

And as we talked about China's importing 70% of its oil, if you electrify it, then you get that energy from the power grid. And the power grid sources are more diversified and have a far lower import dependency. So coal is less than 10% and then renewables and nuclear and hydro, there's no import dependency.

So, if you electrify, you're reducing your reliance on some of the most dependent imported fossil fuels. So, that's electrification. Now, in terms of the penetration on EVs, EVs are growing really rapidly right now in China. We're looking at about a quarter of new car sales in China are electric vehicles.

and over 35% if you also include plugin hybrids.

So, those are new sales. The total stock, of course, is much lower because it takes time to turn over. You also can talk about electrification in other sectors like heating. So, moving from coal-based heating to electricity-based heating, which could take advantage of some of these other sources like renewables. And then in the far future, we're not quite there yet, there's going to be a push towards electrifying industry.

Industry is a huge consumer in China of coal. But if we look at globally, many other countries have switched their fuel stocks from coal to other fossil fuels like gas. That would be very problematic from China's perspective because of the large reliance on gas imports and the high volatility of natural gas or liquefied natural gas prices, LNG prices globally. So it's looking to

swap out some of those coal-based processes for electricity or hydrogen-based processes, which again could be fueled by more local low-carbon sources. But that's more in the future at this point. Thank you. And Michael, you mentioned the relationship between economic growth and higher energy consumption. Could you talk a little bit more on what you typically see on the energy side?

Economic growth concerns typically weigh down on the energy sector because if the government's really trying to stimulate economic activity, any additional input cost is seen as a drag on that. And so there tends to be a larger focus on the cost of energy.

when they're trying to pick up economic activity. And that's even more challenging when those economic growth sectors are energy intensive, meaning they're coming from heavy industry or manufacturing, and they're not coming from, for example, a service sector which has lower energy inputs per GDP created. So in that sense, there's a greater emphasis on bringing down the high cost of energy inputs.

when there is pressure on economic growth. And right now you are seeing that China is bringing down the cost of energy in order to promote growth.

Yeah, so we've seen a pretty consistent emphasis on bringing down the cost of energy for several years now. And this is in part to support renewed economic growth as well as to help aid the energy transition. So, being mindful of not increasing energy tariffs during the clean energy transition.

Given this energy landscape that you portrayed, Michael, how big of a priority is energy security for the CCP and the Chinese leadership? And how important is addressing energy security for China?

Yeah, super important. I mean, reliable energy is always important to any government. So, it's important for people's well-being. So, they need to have heat in winter, for example. It's important for economic growth, as we've talked about, in order to support manufacturing. In particular, reliable electricity is a huge input to high-end manufacturing, both export and as well as for domestic consumption.

And so, if we think about energy policy objectives, there are multiple objectives that they're trying to achieve. One is that energy security, another is affordability. And in the case of China, we also have some concerns around industrial structure. So, what's the appropriate level of state ownership and how to rationalize that? And then more recently, air pollution and climate change.

are also important objectives. But certainly reliable energy is always important. Notably, we had some very significant power shortages occur in China in 2021 and 2022, and those have had a large impact on the senior leadership. So, you know, in those years, we saw over 20 provinces shedding load that is, you know, turning off

to consumers or asking them to reduce power. And even residential consumers were affected by this. So that was a huge impact. Those particular power shortages were quite interesting because you had some weather driving up electricity loads

The coal supply was being tightened due to other policies in the coal sector. But fundamentally, we saw institutions as a big cause of those 2021 power outages. Overall, we saw just a massive increase in attention on energy security, particularly in the power sector.

And I think this has received a lot of high-level attention. Following that 2021 outage, we saw some new policies, high-level attention in that fall.

And actually, just out this summer, there's a new compendium on Xi Jinping's writings just on energy security. I haven't picked it up yet, but I'm really looking forward to digging into that. I think a major theme from these high-level discussions around energy security, one has been this phrase that's been going around called shen li hou po .

which is build it first and then tear it down, sort of my rough translation. So the idea here is that in order to have a secure energy transition,

China should leave the fossil infrastructure in place for the most part while the clean energy is being built before you actually replace it. Another major theme that comes out from these discussions around energy security is coal is central for the time being. And that's going to evolve over time, but they're following those power outages. There was a recentering of coal.

in the energy mix, both rhetorically as well as in some of the supply side. But a third theme also is clear in all of these

high-level discussions is that the climate transition is happening, that these clean energies need to be deployed rapidly, they need to be adopted, but it should be done right not to endanger energy security. How did these power outages in 2021 and 2022 impact China domestically? Did you see them leading to factories or companies shutting down? Did you observe any public protests?

Yeah, it's very difficult to ascribe particular long-term impacts to these. In the short term, factories were getting shut down, right? You have, you know, maybe some factories would only get power two days a week. And that was occurring for a couple months, depending on where you are, maybe even longer. Some parts of the country had already started to sort of

load shed or ration load earlier before the summer. So we see some of those. And then in terms of the residential load, that was not widespread because they really try to keep residential load going as long as they can.

I didn't observe any massive social protests as a result of that. But certainly, it is not a good situation when the power grid is not reliable. China actually has invested enormous in power grids and in energy access. And so, this is not a common occurrence, but it's actually becoming, I think, more complicated to manage the power grid due to a variety of

challenges related to the clean energy transition, but also due to these other global changes. So we could expect there to be even more emphasis in the future and not excluding the fact that there might be more public concern around this in the future. Thank you, Michael.

So when we look at China's energy security, what assumptions is China making about its future energy demands? So for example, does China assume that its future energy demands will be increasing compared to now? Or is there more uncertainty?

Yeah, so energy demand is one of the big uncertainties that China is considering from the context of maintaining a secure and reliable energy system. So if demand is very predictable, it's a lot easier to plan out your supply. So plan out the power capacity that we talked about, plan out the imports for what you need, etc.,

If there's significant demand uncertainty, then you may not have enough or you may build too much and it sits idle. And so that's a big challenge.

China's demand growth has jumped wildly during COVID, post-COVID rebound, and then now due to additional stimulus and economic growth activity. And so, it's cycling, you know, last year it grew by around 7%, which is quite large for recent China trends. That certainly is going to have a big impact on its consideration of energy security.

Aside from this uncertainty in China's energy demand, what do you view as the greatest threat or challenge that Chinese policymakers have in terms of its energy security? Well, certainly the biggest threat and debate right now is how do you manage energy security and climate change goals? This following the power shortages became front and center because I can't

I can recall going to Beijing and we'd have a whole discussion on climate change and we'd almost never mentioned energy security once, you know, going back like 10 years ago. But now you can't have a conversation without also talking about energy security.

thinking about power liability, et cetera. So I think it's important to note that no country is going to turn out the lights to reduce carbon emissions. That is, no country is going to sacrifice energy security to meet their climate objectives. But there is, I think, a need to recognize evolving definitions of energy security. So I think traditionally, energy security was thought about in terms of dependency on imported fossil fuels.

If we go back to sort of the classic IEA, International Energy Agency definition, this was defined as the uninterrupted availability energy sources at an affordable price. But I think recently, China and other countries are broadening energy security definition. So a couple of key terms that might come up. One is

Security of supply, also sometimes called resource adequacy. And this is thought of the ability to meet power demand efficiently over different geographies and over time. And that includes power capacity. There's also power reliability or grid reliability, which is much more of a short term. Do you have enough capacity to withstand disturbances on the grid and meet sudden changes in, for example, in renewable output?

Other energy security concerns that have come up is around cybersecurity. So because power generation equipment and demand, et cetera, is increasingly connected, there's more points of attack from a cybersecurity perspective. I think also there's

From some corners, there's a focus on supply chain security. So those are some important broadening of the definitions of energy security that China's and Chinese policymakers are thinking about. So in terms of the threats, we talked about demand. There's a huge risk to uncertainty associated with demand growth in the future.

Global fossil fuel price volatility is also a large uncertainty just because particularly around natural gas, there's just been a large increase in the price of liquefied natural gas. And also China is now a huge importer, a growing importer.

of those fuels from the United States, which of course introduces from their perspective a geopolitical risk. In addition, there's extreme weather, which is becoming increasingly difficult to manage on the grid.

And then I'd say maybe another sort of the last threat would be around or risk would be around managing air pollution issues, which China's had enormous success in bringing down the levels of air pollution in key urban areas, in part by swapping out fuels, but also by installing new technologies on coal plants and gas.

traditional industrial facilities. But as air pollution concerns and air pollution policies become more tight, that puts more constraints and reduces the options available for the energy system. Thank you, Michael.

I want to go back to your point earlier about how Chinese policymakers are broadening the definition of energy security to go beyond traditional understandings of dependency on fossil fuel imports. You mentioned that Chinese policymakers are looking at security of supply, grid reliability, as well as cybersecurity. Of these three issues, how worried and how problematic are each of these issues for China? Yeah, that's a good question. So if we think about

the security of supply, do you have enough capacity on your system to meet demand efficiently over time and space? So, if we think about the power grid, it's on a network. Even if you have enormous amounts of coal capacity, if it's very far from where you need to consume it or you don't have enough network transmission lines connecting it, then that capacity is useless.

This, I think, has been the main focus of planners and is what's given the most consternation to folks thinking about climate change efforts. And so, more coal plants were thought as one solution to that problem. And you place the coal plants close to the demand in the same province so that you're also less reliant on those interprovincial transfers and networks.

This has been a focus of the central government, but also importantly, local governments, which were the ones actually permitting all of these new coal plants. And I think that's been taking up a lot of time. The other side related to sort of power grid reliability and cybersecurity, so shorter term issues, those are also concerns. I don't think that they've risen to the same broad policymaking level because it's generally a smaller group of folks which are involved in very technical issues.

aspects of managing those sort of sudden disturbances. Michael, how has China responded to all these challenges that you've laid out? What do you see as the most important Chinese policies to address its energy security concerns? So China has several high-level targets to address energy security and climate change issues. So at the highest level, they have explicit climate change targets to peak

CO2 emissions and to move to neutrality, peak by 2030, neutrality by 2060. Also carbon intensity, so CO2 produced per unit of GDP. More explicitly on the energy sector, there are energy intensity reduction targets. There are also wind and solar capacity deployment targets.

And then there's non-fossil energy share targets we talked about before. So there's primary energy and different methodologies. China is targeting 25% of its primary energy coming from non-fossil energy by 2030. They recently hit 17%, so they've still got a ways to go to achieve that.

specifically in the power sector. So we're thinking about security of supply. There were policies following the power shortages to increase fossil fuel supply, particularly coal.

that is raising production quotas and permitting new coal mines, also to intervene in coal prices to keep them from going as high as they did during that episode. Additional policies to build out new renewable energy, as well as other complementary infrastructure like grids and battery storage.

And then to accelerate electricity markets. So as we talked about the power shortages, one of the big causes of them was that the electricity markets were not fully liberalized in terms of being able to pass through those costs effectively.

of increased fuel prices, so coal. So the immediate response was to raise some of those electricity price caps to help alleviate that. And I think there's a broader emphasis on markets here, which I think is worth digging into a little bit, which is prior to 2015, when the latest round of power sector reforms started,

Less than a few percent of power was sold through markets. Virtually all of it was sold through plans, through...

local governments allocating generation to different generators. Now it's 60%. So the majority of electricity in China is now sold through some kind of market mechanism, whether it's an auction or it's a bilateral contract or what have you. And those have been very successful with the exception of those power shortage episodes at bringing down

the costs of that energy. So that's something that another policy area which Chinese government has shown a lot of commitment, willingness to accelerate at the central level and then local localities are all doing their own efforts to accelerate markets and increasing efficiency of the power system.

You had mentioned earlier that one Chinese priority for its energy security is electrification, which of course comes in many forms, including more electric vehicles. We know that China's manufacturing exports of EVs have become quite a contentious issue when it comes to U.S.-China relations, but also China's relations with other countries. Could you share with us a little bit more on what China is doing in this front and what concerns you the most?

Yeah, China's EVs have been growing phenomenally. I mentioned about a quarter of new sales are electric vehicles in China. The US is about 9% in new sales, which is still record breaking. And China's policies to support the adoption of electric vehicles are very impressive. So, consumers are now choosing these electric vehicles even without

the large subsidy, which was sunsetted one, two years ago. We see the lowering costs of EVs and batteries. We've got charging infrastructure in public locations, as well as apartment buildings and others, and then also improvements to the charging, electricity tariffs, et cetera. So China's been doing a lot to deploy electric vehicles.

On the electric vehicle manufacturing side, this has gone hand in hand. So China's had enormous industrial policy supports that have created these very globally competitive brands.

And that's been sort of some of the success story there has been coming from a vertical integration. So electric vehicle companies also building the batteries, even moving into minerals, also sort of agglomeration. So many companies and other, you know, upstream, downstream co-located. So this is sometimes called the Hefei model after Hefei and Ahui, which is

developed this huge electric vehicle ecosystem. And the private firms are really the most exciting, but SOEs are also coming along having major shares. And so these have really kind of caught most of the attention of China's global trading partners, because it's no doubt Chinese firms receive subsidies. Now, countries are trying to repeat China's EV industrial policy success, but we're living in a very different world.

You know, the real question that countries are facing is how do you scale up your EV industries and maybe protect them from these Chinese competition fast enough to create affordable mass market EGs and displace fossil fuel cars to achieve our climate goals? So, this is the big gamble that we're seeing countries making with growing trade measures and protectionism.

And there's some differences in the way that countries see China's industrial policy on EVs. So the European Union has provisional tariffs on Chinese EVs. Those depend on the brand, but they're in the range of sort of 25% to 45%. And these have been in response to sort of a massive influx of imports of Chinese EV brands from about nothing a few years ago up to about 8% last year.

The US, by contrast, proposed tariffs of 100% across the board. Virtually no imports of Chinese EVs so far. So this really wasn't based on any careful calculation of Chinese EV subsidies or supports, but really more of a desire to keep Chinese EVs out of the market. And I think what we're seeing is that China's global dominance in what they're calling the three new things, the xinsanyang, the electric vehicles, batteries, and solar panels,

are really testing the global trading system. So we wrote a paper on this a few years ago on Chinese solar panels. And so we calculated that the learning benefits from globalized flows of solar panels due to talent, capital and technology sort of being available across borders

has saved U.S. consumers on the order of $20 to $30 billion over the period 2008 up to 2020. So we're seeing there's enormous potential savings of using Chinese products, but there's also a lot of political difficulties and how to scale up those industries to meet our climate targets. It's not an easy challenge right now.

Thank you, Michael. I'd like to start wrapping up this podcast with two questions on how China's energy security impacts its foreign policy. So the first question I have is, and it relates to what you mentioned earlier, China's major investments in wind and solar. So if China comes to rely more on wind and solar, which means less reliance on importing oil and gas, how do you see this impacting China's foreign policy?

This gets to the sort of broader question around how energy security has been changing. So, you know, renewables, wind and solar fundamentally change the traditional notions of energy security because once installed, these technologies don't require any significant ongoing material inputs and they can be operated for years or decades without any imports.

Drilling down into the three major fossil fuels that China's importing, crude oil is about 70% imported, with Russia being the largest and increasing in response to the discounted oil following the sanctions. Malaysia,

Brazil, United States also saw huge increases. The Mideast is significant and slightly declining. Moving to natural gas, about 40% is imported. Pipeline, this is mostly Russia. In terms of LNG, liquefied natural gas, we're looking at a decline.

Australia taking the large share, Qatar, Russia, US also growing. And then coal imports are smaller on the order of 8%. So this production is almost all domestic and China is aiming to reduce its reliance

and coal even further by enhancing domestic supply. So as we look out, as China increases the use of wind and solar and other local low carbon solutions, we'd expect to see less dependence on these sets of countries for imports and a greater reliance on some of the upstream components to build the renewable energy and storage technologies that it will need to power its low carbon economy. So overall, we'd expect to see

a shift in the reliance, but also tempering because as mentioned, wind and solar do not require constant streams of material inputs in order to maintain energy supply, unlike oil and gas. So we'd expect to see with increased wind and solar penetration, higher levels of energy security.

And Michael, the last question I have for you is, what are the risks and concerns of cooperating with China on green technology? You suggested earlier in your mentioning of China's Three New Things or Xingsaiyang that the United States may be able to benefit from Chinese technology. So could you walk us through how you think about the pros and cons and how you think about ways in which we should work with China or we should compete more with China?

So we had a paper a few years ago and we looked at across a number of technologies and we focused on economic and national security risks of integrating with China in these low carbon areas.

And so we found the economic risks are very heterogeneous. Some are potentially more acute than others. So supply chain disruptions in particular could be quite significant because of China's dominance, for example, in the supply chain for solar batteries. And in those cases, we're arguing for more diversification of technologies and sources and firms.

National security risks are much more manageable by our assessment. So, and those can be, you can have more focused and targeted policies to address those national security risks of integration. And if we're thinking about where the U.S. and China are,

may need to cooperate more, there is a role for government facilitation and joint demonstrations of more novel emerging technologies. So we're thinking about carbon capture and sequestration and industrial decarbonization, hydrogen, those kinds of things. In more recent work, I've been spending some time thinking about in these new types of cooperations or collaborations between Chinese firms and US firms and communities, how

How do you minimize the risks to US actors, communities and firms? So if a community wants to build a battery plant with Chinese technology, what are the risks? And if they're particularly concerned about ownership, maybe there are other options like technology licensing that could be a good alternative avenue to get access to these technologies and allow firms to quickly get to the global frontier. Another aspect is how you maximize US advantage.

So if a state wants to give a tax credit for manufacturing plants and batteries or solar, how do you structure the tax credits so that they have requirements for wages and worker protections? So I think if we're thinking about clean tech policy recommendations,

It's going to be a mixture of collaboration and competition, but there is a very important need to avoid outright hostility because China's firms really are at the global frontier and U.S. could learn quite a bit and benefit from more interaction as it's trying to develop its own industrial policy in these areas and create some more globally competitive firms. And how concerned are you of China's use of forced labor from Xinjiang in its solar panels?

The solar sector has been implicated in labor abuses in Xinjiang, and U.S. law requires careful tracking of supply chains for anything suspected of being produced in the region. In response to these requirements, many Chinese solar panel firms have been reorienting their upstream supplies to avoid Xinjiang.

procuring polysilicon from other parts of China or even Europe and elsewhere. Many of these panels have been detained but ultimately released by the US Customs, likely because they've been largely been able to meet the current protection rules as a result of their supply chain reorientation. That doesn't mean that more work isn't needed to address leakage implicated panels being shipped to other countries.

Thank you very much, Michael. In the interest of time, we'll need to wrap up here. I've learned a lot from you, including that Chinese policymakers are thinking about energy security beyond just traditional views of import dependence, and that China also faces significant uncertainties with respect to its future energy demands. There's probably a lot more I can highlight here, but I really do appreciate you joining me today and sharing with us your

wide-ranging views and a broader perspective on China's energy security. Thank you again for joining me.