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The writer is senior associate fellow at the European Leadership Network and author of the upcoming book, ‘Goodbye, Globalisation’
Last month two undersea cables and one pipeline in the Baltic Sea were damaged in what investigators believe were deliberate acts of sabotage. These are just the most recent examples of mysterious damage to sea-based infrastructure. But new risks are also emerging: Chinese companies are suppliers of wind turbines — whose offshore farms are connected to land by cables on the seabed — and will be crucial for the west’s energy transition. To ensure the west doesn’t become dependent on Beijing for our wind technology in the way it has historically relied on Russia for gas, we need to boost domestic manufacturing.
Since the cable sabotage took place, during the course of a few hours between October 7 and 8, Estonian, Finnish and Swedish authorities have investigated the damage sustained within their exclusive economic zones. A suspect has already emerged: the Hong Kong-flagged, Chinese-owned boxship NewNew Polar Bear, which was being escorted by a Russian-flagged vessel. This comes after two undersea cables connecting the Matsu Islands with Taiwan were severed by merchant ships earlier this year, and the mysterious explosions in the Nord Stream pipelines last September.
These incidents are alarming because the west is so dependent on this maritime infrastructure: pipelines to deliver our oil and gas supplies, undersea cables carrying the data for our modern digital economies, and offshore wind to power the energy transition. Wind power currently accounts for 17 per cent of Europe’s electricity, and this figure is set to increase: in an effort to counter the effects of climate change, the EU, Norway and the UK plan to double their offshore wind energy capacity to 400 gigawatts by 2050. That will mean a rapid increase in construction, especially for offshore wind, which has only reached 16GW so far.
The EU recently held a security exercise focusing on wind farms in the North Sea, and operators have begun sharing data from sensors and cameras with their respective ministries of defence in an effort to discourage sabotage. The offshore installations themselves face both sabotage threats and the ever-present risk of cyber intrusion.
Wind farms face a further, troubling vulnerability: dependence on China in their supply chains. Chinese-made wind turbines cost less than half the average price of those manufactured elsewhere — and while the number of European countries that are using them is still low, Chinese companies have declared their interest in participating in European wind energy auctions and in opening up production facilities on the continent.
Chinese suppliers sell such components at “insanely low” prices, a top European wind energy executive tells me. And then for certain raw materials, “China is the main producer and exporter, and this is especially true for some of the raw materials used in permanent magnets,” says Christoph Zipf of Wind Europe, the European wind energy trade association. (These magnets convert the energy generated by turbine blades into electricity).
In recent months, western suppliers of wind turbine equipment have also begun receiving more offers from prospective Chinese investors who want to form joint ventures or buy significant minority stakes. Because wind turbine components are not generally considered frontier technology with implications for defence and security, they are not automatically screened under the Foreign Direct Investment legislation of most western countries.
Indeed, 10 years ago it would have been neither necessary nor desirable to monitor Chinese involvement in wind power: cost-efficient goods made in China (and plentiful oil and gas from Russia) were the great boons of globalisation. Now, however, energy dependence on China is a growing hazard, especially since the country replaced Germany as the world’s leading solar panel producer over a decade ago. It is no surprise that the European Commission recently launched a “wind package” that will double financing for clean energy manufacturing to €1.4bn and guarantee bank loans to wind power suppliers.
Nord Stream was once the symbol of the globalised economy, and even more recently, so were the smooth supply chains that underpin the world’s energy transformation. But the good times are coming to an end. Wind-power businesses would do well to monitor their installations for suspicious activity and work with western governments to encourage more supply and manufacturing at home.
