For decades, energy security has meant oil. Countries worried about their dependence on the Middle East and Russia, the security of shipping lanes, and the geopolitical consequences of relying on a small number of producers for the oil that powered global economies. The transition to renewable energy was supposed to rebalance that equation. Yet in doing so, we may be creating a potentially greater vulnerability, since the clean energy supply chain is dominated by China.

Take Europe as an example. The year before Russia’s invasion of Ukraine, Russia supplied 45 percent of the EU’s natural gas imports. The war has forced European countries to scramble for new energy sources. 

The war in the Middle East showed again how quickly concentrated energy supplies can become an economic liability. Roughly one-fifth of global oil consumption passes through the Strait of Hormuz – or did, before the strait was effectively closed by the conflict.

Clean energy can reduce exposure to these specific chokepoints, but the world must diversify its energy dependence without simply relocating it.

China leads in the industries powering the next phase of the global economy. It is the world’s largest supplier and exporter of green technology. In July 2026, China’s green energy exports rose 51 percent year-on-year, with new energy vehicles rising an astonishing 90 percent.

China dominates the clean energy value chain. Today, the country provides roughly 85 percent of global solar production capacity and 80 percent of lithium-ion batteries. This is essentially a monopoly. In electric vehicles, China accounted for almost three-quarters of global production in 2025.

Its control also extends upstream. China holds critical positions in processing and refining the minerals essential to new energy technologies, from batteries to electric motors and wind turbines. It also possesses much of the manufacturing expertise – and increasingly the equipment – needed to turn those materials into finished products.

Therefore, clean energy dependence extends across an entire industrial ecosystem – from processing through technology, components and manufacturing equipment to the finished product. A disruption at any point in the supply chain could reverberate through the entire system. 

The International Energy Agency (IEA) estimated that each month of a halt in Chinese battery supply chain exports could reduce output from EV factories elsewhere by some $17 billion, with more than half of those losses occurring in Europe.

The risk is not hypothetical. China’s use of export controls on rare earths and other critical materials has demonstrated how concentrated supply chains translate into strategic leverage. China mines roughly 60 percent of the world’s rare earths but produces about 90 percent of its rare earth permanent magnets, leaving downstream manufacturers with few immediate alternatives.

Oil reserves are fixed by geology, while China’s dominance in clean technology is the product of industrial policy, capital investment, and accumulated manufacturing expertise. That should, in theory, make clean energy dependence more reversible. In practice, however, diversification is difficult. 

A critical part of China’s advantage is manufacturing efficiency. The IEA attributed more than 40 percent of China’s battery cost edge over Europe to automation and efficiency. In critical mineral mining and refining, China’s position also rests on decades of accumulated processing capacity and a willingness to bear environmental costs that many other countries have been reluctant to accept. None of this can be replicated quickly.

China’s enormous investment and innovation in clean technology has helped drive down costs and accelerate deployment. Attempting to exclude China entirely would make the energy transition slower and more expensive. Interdependence is not the problem, and energy security has never required producing everything at home. It requires enough diversity that no single supplier can disrupt the system.

As with trade, the answer is not decoupling but diversification.

Countries should identify where domestic capacity is strategically necessary, build alternative sources of supply with allies and emerging markets, and continue trading and investing with China where it makes economic sense. 

It can be done, but it takes time, capital, and political will. Las Vegas-based MP Materials operates North America’s only rare earth mine of scale, producing more than 10 percent of global rare earth supply. The company is building heavy rare earth processing capacity and investing more than $1.25 billion in a magnet manufacturing campus. Importantly, its strategy is becoming international: in 2025, MP Materials, the U.S. government, and Saudi Arabia’s Maaden agreed to develop a Saudi rare earth refinery to supply rare earth oxides to U.S., Saudi, and allied manufacturers.

This one refinery is not, on its own, a solution, but it points to the kind of allied, government-supported investment in processing that rebalancing requires.

While the world will remain dependent upon fossil fuels for the foreseeable future, the diversification to clean energy will continue, and the stakes will rise as demand grows. The world should not spend decades reducing its dependence on Middle Eastern and Russian hydrocarbons only to discover that it has exchanged one form of strategic dependence for another – this time on China.