{"id":28127,"date":"2026-06-03T13:52:04","date_gmt":"2026-06-03T13:52:04","guid":{"rendered":"https:\/\/www.rbc.com\/en\/?post_type=rbc_tl&#038;p=28127"},"modified":"2026-06-03T13:52:06","modified_gmt":"2026-06-03T13:52:06","slug":"red-power-how-the-hormuz-crisis-is-accelerating-chinas-clean-tech-dominance","status":"publish","type":"rbc_tl","link":"https:\/\/www.rbc.com\/en\/thought-leadership\/climate-action-institute\/energy-reports\/red-power-how-the-hormuz-crisis-is-accelerating-chinas-clean-tech-dominance\/","title":{"rendered":"Red Power: How the Hormuz crisis is accelerating China\u2019s clean-tech dominance"},"content":{"rendered":"\n<section class=\"wp-block-rbc-section-block  pos-rel\" style=\"border-radius:0px\">\n<div class=\"wp-block-rbc-section-inner-block  section-inner\" style=\"border-radius:0x\">\n<p class=\"mar-b-dbl mob-mar-b-dbl wp-block-paragraph\">The Strait of Hormuz blockade has exposed two chokepoints amid the Middle East conflict: one for fossil fuels, and another for Western decarbonization policies. In many respects, it is China that\u2019s leading the global energy transition. Emerging trade data highlights China\u2019s often-underappreciated position in global clean energy supply chains, which has only accelerated with the Hormuz crisis.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full mar-b mob-mar-b\"><img loading=\"lazy\" decoding=\"async\" width=\"4000\" height=\"2389\" src=\"https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-A-sea-of-red.png\" alt=\"A sea of Red on the clean-tech scoreboard. Top clean energy exporters by product and global share (2025)\" class=\"wp-image-28150\" srcset=\"https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-A-sea-of-red.png 4000w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-A-sea-of-red.png?resize=300,179 300w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-A-sea-of-red.png?resize=768,459 768w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-A-sea-of-red.png?resize=1024,612 1024w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-A-sea-of-red.png?resize=1536,917 1536w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-A-sea-of-red.png?resize=2048,1223 2048w\" sizes=\"auto, (max-width: 4000px) 100vw, 4000px\" \/><\/figure>\n\n\n\n<p class=\"mob-mar-b-dbl mar-b-dbl wp-block-paragraph\">China is the largest exporter of almost every major clean technology, often by a significant margin. Non-Chinese leaders\u2014the E.U. for wind towers and turbines, and South Korea for battery components\u2014either source from, or invest alongside, China. In North America, geopolitical sensitivities (to date) have outweighed benefitting from China\u2019s structural advantage.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full mar-b-dbl mob-mar-b-dbl\"><img loading=\"lazy\" decoding=\"async\" width=\"4000\" height=\"2064\" src=\"https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-State-capital-underpins.png\" alt=\"State capital underpins a Chinese clean manufacturing machine. Weighted average cost of capital\" class=\"wp-image-28149\" srcset=\"https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-State-capital-underpins.png 4000w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-State-capital-underpins.png?resize=300,155 300w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-State-capital-underpins.png?resize=768,396 768w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-State-capital-underpins.png?resize=1024,528 1024w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-State-capital-underpins.png?resize=1536,793 1536w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-State-capital-underpins.png?resize=2048,1057 2048w\" sizes=\"auto, (max-width: 4000px) 100vw, 4000px\" \/><\/figure>\n\n\n\n<figure class=\"wp-block-image size-full mob-mar-b mar-b\"><img loading=\"lazy\" decoding=\"async\" width=\"4000\" height=\"2064\" src=\"https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-Global-overcapacity.png\" alt=\"Global overcapacity across major clean technologies. Many clean-tech segments face a supply glut\" class=\"wp-image-28148\" srcset=\"https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-Global-overcapacity.png 4000w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-Global-overcapacity.png?resize=300,155 300w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-Global-overcapacity.png?resize=768,396 768w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-Global-overcapacity.png?resize=1024,528 1024w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-Global-overcapacity.png?resize=1536,793 1536w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-Global-overcapacity.png?resize=2048,1057 2048w\" sizes=\"auto, (max-width: 4000px) 100vw, 4000px\" \/><\/figure>\n\n\n\n<p class=\"mob-mar-b-dbl mar-b-dbl wp-block-paragraph\">Chinese producers carry a structurally lower cost of capital than peers\u2014state backing and preferential financing, which in turn often generates and perpetuates overcapacity at a scale private markets cannot, and would not, sanction. This creates a self-reinforcing cycle of fierce domestic competition where only the fittest survive, resulting in a cost floor that continues to fall. If and when demand responds, China is best suited to gain incremental market share given the overcapacity. China has since tried to slow this competition through self-discipline agreements among manufacturers, but thus far has been unsuccessful.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full mar-b mob-mar-b\"><img loading=\"lazy\" decoding=\"async\" width=\"4000\" height=\"2031\" src=\"https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-Chinas-unrivalled-cost-base.png\" alt=\"China&apos;s unrivalled cost base - $ per kilowatt-hour\" class=\"wp-image-28145\" srcset=\"https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-Chinas-unrivalled-cost-base.png 4000w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-Chinas-unrivalled-cost-base.png?resize=300,152 300w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-Chinas-unrivalled-cost-base.png?resize=768,390 768w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-Chinas-unrivalled-cost-base.png?resize=1024,520 1024w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-Chinas-unrivalled-cost-base.png?resize=1536,780 1536w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-Chinas-unrivalled-cost-base.png?resize=2048,1040 2048w\" sizes=\"auto, (max-width: 4000px) 100vw, 4000px\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">Chinese cell materials and manufacturing account for less than US$50 of an US$84 per kilowatt-hour (kWh) delivered cost for battery cells sold into the U.S. The import tariff adds US$27\/kWh\u2014more than China\u2019s entire manufacturing cost. Still, Chinese exporters earn a 2.7% margin.<\/p>\n\n\n\n<p class=\"mar-b-dbl mob-mar-b-dbl wp-block-paragraph\">By comparison, S&amp;P Global estimates North American NCM811 (nickel-cobalt-manganese) battery cells cost roughly US$95\/kWh, around 90% more expensive than Chinese battery cost. To put this into context, a Tesla Model Y Standard Range carries a 60 kWh LFP (Lithium Iron Phosphate) battery pack. At median Chinese LFP pack prices of US$81\/kWh (as per Bloomberg NEF data), a similar sized battery would cost roughly US$4,900 ($6,500), or about 13% of the Model Y\u2019s Canadian sticker price.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full mar-b mob-mar-b\"><img loading=\"lazy\" decoding=\"async\" width=\"4000\" height=\"2422\" src=\"https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-Chinese-cleantech.png\" alt=\"Chinese clean-tech set to dominate fastest-growing markets. Share of China clean-tech exports by destination country income group\" class=\"wp-image-28146\" srcset=\"https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-Chinese-cleantech.png 4000w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-Chinese-cleantech.png?resize=300,182 300w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-Chinese-cleantech.png?resize=768,465 768w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-Chinese-cleantech.png?resize=1024,620 1024w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-Chinese-cleantech.png?resize=1536,930 1536w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-Chinese-cleantech.png?resize=2048,1240 2048w\" sizes=\"auto, (max-width: 4000px) 100vw, 4000px\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">While the West is often fixated with the higher cost of clean technologies, roughly 40% of China\u2019s EV exports and over 90% of solar cell exports went to lower-income countries in 2025. China\u2019s cost base has unlocked a category of clean buyer no Western producer will likely ever reach\u2014fast-growing markets, concentrated in Asia, where clean energy adoption is accelerating rapidly.<\/p>\n\n\n\n<p class=\"mar-b-dbl mob-mar-b-dbl wp-block-paragraph\">Pakistan added 18.3 GW of solar in 2025 alone\u201475% of Canada\u2019s entire installed solar and wind capacity to date\u2014mostly imported from China. Adoption of EVs in Vietnam and Thailand\u2014countries where nominal GDP per capita is less than $10,000\u2014run north of 40% and 20%, respectively (Canada\u2019s EV adoption in 2025 stands at 11%). Vietnam and Thailand do not provide fiscal incentives for the purchase of electric vehicles.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large mar-b mob-mar-b\"><img loading=\"lazy\" decoding=\"async\" height=\"578\" width=\"1024\" src=\"https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-Electrification-trend.png?quality=80&amp;w=1024\" alt=\"The electrification trend is in overdrive as Hormuz flows dry up. Solar module and cell exports from China by importing region, by value. Lithium-ion battery exports from China by importing region, by value\" class=\"wp-image-28147\" srcset=\"https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-Electrification-trend.png 4000w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-Electrification-trend.png?resize=300,169 300w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-Electrification-trend.png?resize=768,434 768w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-Electrification-trend.png?resize=1024,578 1024w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-Electrification-trend.png?resize=1536,867 1536w, https:\/\/www.rbc.com\/en\/wp-content\/uploads\/sites\/4\/2025\/03\/CAI-Graphs-Electrification-trend.png?resize=2048,1156 2048w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">The Middle East conflict that choked the Strait of Hormuz brought the electrification trend into focus, with fossil-fuel importing countries accelerating their clean energy procurement.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">As a result, Chinese battery exports reached nearly US$10 billion in March of 2026 alone, with Europe, Southeast Asia and the Middle East absorbing the volume. U.S. demand was just 8% of March exports.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The transition is happening on Chinese terms. South Korea and Europe have treated that as a sourcing and partnership question, rather than a binary one, and have advanced as a result. North America must also pursue strategies that find a balance between utilizing Chinese content but also building a domestic base that can compete and scale up to meet the opportunity offered by the global energy transition.<\/p>\n<\/div>\n<\/section>\n\n\n\n<section class=\"wp-block-rbc-section-block  pos-rel mar-t mob-mar-t mar-b mob-mar-b has-rbc-bright-blue-tint-1-background-color has-background\" style=\"border-radius:0px\">\n<div class=\"wp-block-rbc-section-inner-block  section-inner pad-t mob-pad-t mob-pad-b pad-b\" style=\"border-radius:0x\">\n<p class=\"has-white-color has-text-color has-link-color wp-elements-f09dbee6248e6a00ef5ee85d5f5bf0e6 wp-block-paragraph\"><strong>Shaz Merwat<\/strong> is Energy Policy Lead at the RBC Climate Action Institute<\/p>\n<\/div>\n<\/section>\n","protected":false},"excerpt":{"rendered":"<p>How China is benefitting from an accelerated global energy transition.<\/p>\n","protected":false},"author":337,"featured_media":28136,"parent":0,"menu_order":0,"template":"","meta":{"_acf_changed":false,"disable_focal_point":true,"featured_image_focal_point":{"x":0.5,"y":0.5},"advgb_blocks_editor_width":"","advgb_blocks_columns_visual_guide":"","footnotes":""},"rbc_tl_category":[130,204],"rbc_tl_tag":[],"class_list":["post-28127","rbc_tl","type-rbc_tl","status-publish","has-post-thumbnail","hentry","rbc_tl_category-climate-action-institute","rbc_tl_category-energy-reports"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.5 (Yoast SEO v27.5) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Red Power: How the Hormuz crisis is accelerating China\u2019s clean-tech dominance - RBC<\/title>\n<meta name=\"description\" content=\"How China is benefitting from an accelerated global energy transition.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, 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