Review: TT26: Week 3 – China clean energy innovation and the global clean energy transition
by Tamunoimim Kalada-GreenView the associated event for this review
Watts Going On in China?
China deployed more renewable energy in 2024 than the rest of the world combined. Its firms dominate global solar manufacturing, battery production, and electric vehicle supply chains. From JinkoSolar and CATL to BYD, Chinese companies have become synonymous with scale, speed, and increasingly, technological sophistication.
How did one country become such a clean energy powerhouse? More importantly, what can the rest of the world learn from it?
These questions framed Anders Hove’s Oxford Energy Network seminar on China’s clean energy innovation and the global energy transition. Hove, a senior research fellow at the Oxford Institute for Energy Studies’ China Energy Programme, brought over a decade of experience working on Chinese energy policy, power markets, and low-carbon development. The seminar challenged the view that China’s clean energy rise can be explained by subsidies and state control alone, presenting it instead as a system of industrial learning shaped by policy direction, domestic deployment, manufacturing strength, and dense industrial clusters.
Hove began by contrasting China’s approach with what he described as the broader Western, or Washington Consensus, model. In this framework, governments typically correct market failures and support research, while long-term investment decisions are largely left to markets.
However, in China the state plays a more active role in identifying strategic industries and directing capital, policy attention, and institutional support towards them. Markets remain important, but they are often used to shape short-term behaviour rather than determine long-term industrial direction. Provincial and local governments then interpret national priorities through their own development strategies. This creates competition to attract investment, deepen industrial clusters, and build local capabilities.
This distinction matters because scaling clean energy technologies requires much more than policy ambition. It requires factories, supply chains, infrastructure, skilled labour, patient capital, and domestic markets capable of absorbing early deployment. Drawing on the Technology Innovation Systems framework associated with Hekkert and Bergek, Hove argued that China’s success rests on a reinforcing ecosystem rather than a single policy lever. Entrepreneurship, knowledge development, market formation, resource mobilisation and legitimacy all mattered, but so did what was termed the “guidance of search”: a clear signal to firms, banks, investors, and local governments about where future opportunities were likely to emerge.
China’s policy support varied across technologies, from feed-in tariffs for renewables to subsidies and pilot programmes for EVs. Yet, Hove was careful to challenge the simplistic assumption that China’s clean energy rise can be explained mainly by subsidies paid to manufacturers. Much of the support was aimed instead at consumers, helping to create domestic demand and accelerate deployment. This produced a large internal market where firms could scale quickly, compete intensely, and improve through experience. In some cases, deployment expanded so rapidly that market realities outpaced official targets, prompting the government to revise its targets and policy support.
Industrial clusters formed another important part of the story. Hove challenged the stereotype that China’s advantage is simply a function of low labour costs or cheap manufacturing. Many leading clean energy firms are located in some of China’s more expensive coastal regions. Their advantage lies in dense supplier networks, skilled work forces, and the proximity that allows firms to learn from one another.
A further insight challenged conventional assumptions about innovation. Because many clean energy technologies are highly manufacturing intensive, innovation occurs on factory floors and within supply chains. This is where tacit knowledge, the practical know-how gained through production and experience, becomes a source of competitive advantage.
The stories of Chinese clean energy entrepreneurs brought this point to life. Hove noted that the founders of major solar companies such as Trina, Yingli, Jinko, and LDK did not all emerge from advanced energy research laboratories. Their backgrounds included detergent, cosmetics, firefighting equipment, and chemical protective clothing. What they shared was manufacturing ability, procurement knowledge, and the confidence to enter a strategic emerging industry.
The Q&A extended these themes to the broader global transition. Questions explored whether advanced economies should focus on ‘higher-value activities’ such as software, robotics, and specialised components while conceding manufacturing to China. Hove cautioned against this view, arguing that manufacturing is not merely a low-value activity but a source of technological learning. Countries that relinquish it may also surrender their ability to shape future innovation.
The discussion also touched on Chinese firms entering European markets, raising questions around supply chain security and political trust. Questions around Octopus Energy’s entry into China added another layer to the discussion, highlighting how innovation is also shaped by market design and consumer behaviour. Hove noted that demand response driven by short-term electricity price signals, as seen in the UK, has gained less traction in China.
Perhaps the seminar’s strongest takeaway was that incremental innovation may be the most important form of innovation. The energy transition is often framed as a search for the next breakthrough technology. Hove’s analysis pointed elsewhere. Breakthroughs matter, but so do manufacturing discipline, diffusion, and the continuous process of learning how to build better systems.
China’s model cannot be carbon-copied. Its scale, political economy, and industrial foundations are distinctive. Yet its rise in clean energy suggests that industrial learning may prove as important as technological discovery in shaping the future of the energy transition. For a global energy transition that depends on turning ambition into deployment, that may be the lesson others cannot afford to ignore.