Brussels — The European Union, long recognized for its ambitious climate goals, is intensifying efforts to strengthen its position in the global green energy race. As the bloc pursues its target of becoming the world’s first climate-neutral continent by 2050, concerns are growing over its dependence on foreign supply chains and its lagging performance in renewable technology innovation.
To meet its 2030 target of raising renewable energy’s share from 23% to 42.5%, the EU will need vast quantities of critical minerals — including nickel, cobalt, lithium, and rare earth elements. The International Energy Agency projects that global mineral demand could quadruple by 2040, underscoring the strategic urgency of securing reliable access to these materials.
However, 95% of the EU’s rare earth supply currently comes from China, Russia, and Malaysia, while other essential imports such as ferro-niobium and antimony depend on economically unstable partners including Brazil, Turkey, and Tajikistan. China alone accounts for nearly 70% of global rare earth production, leaving Europe vulnerable to geopolitical and trade disruptions. Japan’s 2010 supply crisis following a diplomatic dispute with China remains a stark reminder of such risks.
Balancing Supply Security and Industrial Policy
In contrast, the United States has adopted a multi-layered approach — expanding domestic mining and refining capacities, investing in alternative extraction technologies, and diversifying import sources through partnerships with Canada, Australia, Africa, and South America. Analysts suggest the EU could benefit from a similar strategy, balancing energy sovereignty with foreign investment and strategic protectionism.
Yet, securing raw materials addresses only half the challenge. The EU also trails in technological innovation and manufacturing capacity. Despite sustained investments in green R&D, the bloc’s patent output in areas such as solar cells, fuel cells, and batteries remains modest compared with that of the U.S., China, and Japan.
Infrastructure limitations further compound the issue. Grid congestion across several EU states continues to slow the integration of new renewable power sources. With transmission networks failing to expand at the pace of renewable installations, Europe risks bottlenecks that could delay its energy transition.
China’s Industrial Advantage and Foreign Investment Lessons
China’s leadership in both critical minerals and renewables manufacturing has positioned it as a key player in global clean energy value chains. Chinese companies such as Gotion and EVE Energy are expanding internationally — investing $2 billion in an Illinois lithium-ion battery plant and $3 billion in a Mississippi facility for electric truck batteries, respectively.
However, the U.S. experience shows that foreign investment can bring complications. In September 2025, U.S. immigration authorities raided Hyundai’s Georgia plant, uncovering visa violations involving nearly 500 workers. The incident raised concerns over regulatory loopholes and misuse of local production to evade tariffs.
Washington has since tightened scrutiny on companies with questionable financial records. Xiamen Hithium Energy Storage Co., heavily subsidized by the Chinese state and burdened by years of negative cash flow, has been placed on the U.S. Homeland Security Committee’s ban list. The company’s recent setbacks — failed tenders in Xinjiang’s Kokdala and Karamay projects and an aborted Hong Kong IPO — further illustrate the risks tied to opaque business practices.
Finding Europe’s Strategic Balance
For Brussels, the challenge lies in maintaining openness to investment while ensuring strategic autonomy. Foreign direct investment (FDI) in the EU’s battery sector remains concentrated in Poland, Slovakia, and Hungary, yet total inbound FDI declined for a second consecutive year in 2024.
As the EU accelerates its green transition, it must walk a fine line between protectionism and partnership — encouraging foreign collaboration without compromising technological independence or supply chain resilience.
The bloc’s reliance on China extends beyond minerals. Over 80% of active pharmaceutical ingredients used in both the EU and U.S. are sourced from China, amplifying the urgency for diversification across critical industries.
While Washington’s model still faces its own tests, the U.S. head start in aligning industrial policy, investment incentives, and resource strategy offers valuable lessons. For Europe, the path forward will demand a blend of innovation, cautious diplomacy, and coordinated policymaking — essential ingredients if the continent is to catch up in the global green energy race.
