Shota Furuya

Pieces日本語版

From an energy security standpoint, how risky is importing renewable equipment?

“Isn’t most renewable equipment imported from China? Panels, turbines, lithium batteries — freeing ourselves from Middle Eastern oil only to depend on China instead.” Raise renewables in an energy security discussion and this objection always follows. And it has a core of fact: as of 2024, China accounts for more than 80% of world solar module production, about 75% of lithium cells and 85–90% of rare earth refining.

The short answer. (1) Japan’s primary energy self-sufficiency is 12.6% (FY2023, the lowest in the OECD), and fossil fuel imports reached about ¥34 trillion in 2022 — an order of magnitude beyond imports of renewable equipment. Dependence on fossil fuels remains the largest energy security risk. (2) Importing renewable equipment is a one-off; importing fuel is perpetual. The structure of the dependence is not the same thing. (3) The concentration of manufacturing in China, the geography of rare earth refining and the fragility of battery supply chains are nonetheless real risks, and the US IRA, the EU’s critical raw materials act and Japan’s economic security promotion act are all responses. What follows separates the comparison with fossil fuels from the vulnerabilities of the renewable supply chain.

Japan’s self-sufficiency and the scale of fossil fuel imports

METI’s Energy White Paper 2024 puts Japan’s primary energy self-sufficiency at 12.6% in FY2023, the lowest of the 38 OECD members (METI, 2024). About 95% of crude oil comes from the Middle East (Saudi Arabia, the UAE, Qatar and others); LNG comes about 24% from Australia, 9% from Russia and 8% from the Middle East; coal about 65% from Australia and 14% from Indonesia.

On Ministry of Finance trade statistics, fossil fuel imports peaked at about ¥34.4 trillion in 2022 and remained around ¥27 trillion in 2023 — equivalent to 4.5–6% of GDP, continuously exposed to exchange rates and geopolitics. Russia’s invasion of Ukraine in 2022, and tension in the Red Sea and the Strait of Hormuz in 2024, showed again how fragile the fossil supply chain is.

Imports of renewable equipment, by contrast, are estimated at around ¥1 trillion in 2023 (from NEDO and METI data). The two are not directly comparable, but the essential difference is the starting point of the argument: fossil fuel is burned and gone, requiring the same import bill every year, while renewable equipment, once installed, works for 20 to 30 years. Expanding renewables shifts dependence from a flow to a stock.

What dependence on China actually looks like

The concentration is real. On the IEA’s 2024 figures, China accounts for about 93% of polysilicon, 97% of wafers, 85% of cells and 80% of modules (IEA, 2024a). The United States enacted the Uyghur Forced Labor Prevention Act in 2022 and blocks imports of polysilicon originating in Xinjiang.

Wind is similar: six of the world’s ten largest turbine makers are Chinese, and Chinese manufacturers account for about 60% of new capacity (BloombergNEF, 2024). Vestas, Siemens Gamesa and GE Vernova still dominate European markets, while Goldwind, Envision and others are advancing in emerging markets.

Lithium batteries follow the same pattern: about 75% of world cell production is Chinese, along with about 75% of cathode material and 95% of anode material (BloombergNEF, 2024). The rapid growth of EVs and stationary storage is, if anything, reinforcing that concentration.

Refining of critical minerals is more concentrated still: 65% of lithium processing, 75% of cobalt, 85–90% of neodymium refining, 99% of dysprosium, and close to 100% of graphite spheronisation are dominated by China (IEA, 2024a; USGS, 2024). “Fossil fuels from the Middle East, renewables from China” is a fair description of the present numbers.

The dependence differs in kind

What matters here is the quality of the dependence. Fossil fuel dependence is consumed with every use: it is a continuous flow that stops if the tankers stop arriving. A military clash in the Middle East turns into a supply risk within weeks.

Dependence on renewable equipment is a dependence at the moment of installation. Once a panel or turbine is up, it needs nothing further from China for 20 to 30 years, and no fuel. Even if China halted exports tomorrow, installed equipment would keep running. That lowers the risk of energy dependence being weaponised, structurally.

There is continuing dependence for maintenance parts — inverters, blades, replacement cells — and exposure to supply shocks persists as long as new capacity is being built. But it is not the “if tomorrow’s tanker fails to arrive, the lights go out” kind. Daniel Yergin makes the same point in The New Map: the energy transition moves dependence from fuels to technologies and minerals, and the nature of the dependence changes with it (Yergin, 2020).

Renewables are also distributed by nature. Unlike a central station of several gigawatts, they sit on roofs, on farmland and offshore, so a failure in one supply route does not propagate through the whole system. That redundancy is the greatest security advantage renewables have.

How governments are responding

Concern about concentration has driven rapid supply chain policy in Europe, the United States and Japan since 2022.

The US Inflation Reduction Act combines tax credits for domestic manufacturing of modules, turbines and batteries (the Section 45X production credit) with sourcing requirements for critical minerals from North America or free trade partners in the EV credit. Within two years, more than 150 new cell and battery plants were announced in the United States, with large investments from Qcells (Georgia), First Solar (Ohio), Hanwha and LG Energy Solution.

The EU’s Net-Zero Industry Act (2024) targets 40% domestic manufacturing of strategic clean technologies by 2030, with simplified permitting and preferential public procurement. The parallel Critical Raw Materials Act sets numerical targets for strategic minerals: 10% mined, 40% processed and 25% recycled within the EU, with no more than 65% from any single third country.

In Japan, the economic security promotion act (2022) designates rare earths, batteries and semiconductors as critical materials and strengthens JOGMEC’s framework for securing interests and stockpiles. Perovskite solar cells are being pushed towards mass production by Sekisui Chemical, Panasonic and Toshiba; their feedstock iodine is one of the few domestic resources where Japan holds about 30% of world production. The offshore wind industry vision sets a 60% domestic content target, with Toshiba, Hitachi, JFE and Sumitomo Electric entering the supporting industries.

The Minerals Security Partnership, launched in 2022 with 14 participating countries including Japan, the United States, Europe, Canada, Australia and South Korea, coordinates sourcing among allies and investment in third countries.

Objections, limits and common misreadings

Several caveats belong here.

First, the “swapping one dependence for another” criticism has a point. However different the structures, dependence on China for rare earths and battery materials is a continuing risk as long as new capacity is built, and reducing it will only be gradual into the 2030s.

Second, cost. The IRA, the CRMA and Japan’s localisation policies all raise costs in the short run. Keep relying on cheap Chinese equipment, or pay more for domestic and allied production: the trade-off between economics and security is real.

Third, fossil dependence deserves attention first. Concern about Chinese concentration in renewable supply chains is loud, while the much larger dependence on Middle Eastern and Russian fossil fuels attracts surprisingly little. Get the priorities wrong and the outcome is the worst of both: avoiding renewables and prolonging fossil fuels.

Fourth, supply chain transparency. As Xinjiang shows, human rights and labour conditions in manufacturing are not technical questions. Building traceability has to run alongside diversification.

What matters next in Japan

Three points. First, remembering that renewables are the only domestic source of electricity. Nuclear and fossil generation both depend on imported fuel. Solar, wind, geothermal, hydro and biomass have no fuel cost and, once the equipment is there, generate entirely within the country. The realistic ways to raise self-sufficiency are renewables and efficiency; there are no others.

Second, rebuilding domestic and near-domestic supply chains. Perovskites, floating offshore wind, solid-state batteries — moving quickly to mass production in the next-generation fields where Japan has an edge, while building a division of labour with allies, is the practical answer. Not everything has to be made at home; the goal is to replace dependence on a single country with several friendly ones plus a degree of domestic manufacturing.

Third, arguing in comparison with fossil dependence. Rather than examining Chinese concentration in renewables in isolation, a sound energy security debate compares fossil fuels, nuclear and renewables side by side on the risks each dependence carries.

Summary

  • Japan’s primary energy self-sufficiency is 12.6% (FY2023, lowest in the OECD), and fossil fuel imports reached about ¥34 trillion in 2022. The largest dependence is still fossil fuel.
  • China’s share of renewable equipment — 93% of polysilicon, 80% of modules, 60% of turbines, 75% of battery cells — makes the concentration real.
  • But the dependence differs in kind: fossil fuel is a continuous flow, renewable equipment a one-off at installation. The scope for weaponisation is fundamentally different.
  • Renewables are distributed, so a failure in one supply route propagates less.
  • The US IRA, the EU’s CRMA and Net-Zero Industry Act, and Japan’s economic security act are accelerating diversification away from China.
  • Japan has room to localise in perovskites, floating offshore wind and solid-state batteries, with iodine and geothermal as strategically valuable domestic resources.

“Renewables mean dependence on China” is true in part, and has to be placed next to dependence on fossil fuels. Japan imports more than 87% of its primary energy, and its greatest security exposure is to fossil fuels at the mercy of the Middle East and Russia. Expanding renewables is not a simple swap of one dependence for another; it is a structural change from flow to stock, from centralised to distributed, from procuring fuel to procuring technology and minerals. The questions that matter have moved to diversifying supply chains, rebuilding domestic manufacturing and sharing production with allies — industrial policy and diplomacy rather than technology.

References and data sources

Self-sufficiency and fossil fuel imports

Critical minerals and supply chains

Policy and institutions

Energy security

Japanese industry

← Back to list