Copyright Forbes
In North America, cleantech is often dismissed as an overpriced niche for tree huggers and climate alarmists. It comes with a “green premium,” say critics who, apparently, have barricaded themselves against the reality that clean innovation is driving exponential change in most of our major industries. This reminds me of the old story where a traveling sage introduces a king to the game of chess. The enthusiastic king offers the sage any reward he can name. The humble man asks for a single grain of rice to be placed on the first square of the chessboard, two on the second, four on the third, with each square having double the amount of the previous one. The king initially agrees, but only later realizes his treasury cannot fulfill the request, as the total number of grains becomes astronomically large by the 64th square, far exceeding his kingdom’s production of rice. Today’s cleantech critics, like the king, cannot fathom exponential growth. But let’s face it: the green premium is dead. China killed it with low-cost solar, wind and batteries, affordable EVs and dominance in critical minerals. Unless North Americans and Europeans wake up to this reality, their citizens will pay a hefty fossil premium with economic and political consequences. Anyone who thinks buying an EV is “virtue signaling” clearly hasn’t heard about the BYD Dolphin Surf, a Chinese-made electric hatchback recently introduced in Europe. It starts at €22,950 ($26,552 USD) with a range of up to 265 miles—a steal next to the €39,990 ($46,172) Tesla 3 with a range starting in the low-to-mid-300s. No wonder BYD outsells Tesla globally. Tariffs are the only thing temporarily saving North American and European carmakers from BYD. The Dolphin Surf starts at $13,375 in China. In the U.S., you won’t find an internal combustion engine hatchback for less than $22,000, let alone an EV anywhere near that range. Nevertheless, North American automakers are scaling back EV production. In Canada, EV and battery projects have been delayed, downsized or canceled, including Northvolt’s planned Quebec plant and GM’s St. Catharines EV facility. Ford might even scrap the electric F-150 Lightning altogether. The excuses—weak consumer demand, fewer incentives and high upfront costs—miss the point. EVs have already won and are getting better and better on range, charging speed, winter driving, etc. People won’t pay the fossil premium for cars unless tariffs force them to do so. MORE FOR YOU The fossil premium has come for electricity production too. Onshore wind and utility-scale solar have been the most affordable sources of energy for the last 10 years, according to financial advisory firm Lazard. Moreover, the International Renewable Energy Agency found that 91% of renewable energy projects commissioned in 2024 “were more cost-effective than any new fossil fuel alternatives.” And not by a small margin: solar was 41% cheaper on average, while onshore wind was 53% cheaper. The IEA estimates that investment in clean energy will hit $2.2 trillion in 2025, about double the $1.1 trillion going to fossil fuels. Most investors are not green idealists. They expect stronger returns from clean energy. By denying reality, North Americans and Europeans are digging an economic grave. China must be thrilled. It already controls an estimated 90% of global solar cell production, 85% of battery cell production capacity, 60% of global wind-turbine manufacturing value, 69% of rare earth mineral production and 90% of rare earth refining. Early in 2025, China’s installed solar and wind capacity surpassed its coal capacity for the first time. Well, skeptics object, if solar, wind, next-gen nuclear, etc. are so great, why haven’t they already displaced all the gas and coal plants? Because it takes time to move from the first square on the chessboard to the 64th. Today, clean energy accounts for over 40% of global electricity production. The transition looks slow only because it’s exponential, and we’re living through its early stages. BloombergNEF founder Michael Liebreich illustrated this recently. He argues that if global energy demand grew at 2% annually, renewables grew at 5% (a conservative estimate) and fossil fuels made up the difference, then fossil fuel use would drop to less than 2025 levels by 2045. By 2065, fossil fuels would be phased out. Unlike with the first cleantech boom of the 2000s, this time the cleantech economics work without subsidies. A $13,000 BYD running on cheap solar and wind is a better value proposition than a $22,000 vehicle running on subsidized gasoline. The West hasn’t lost the future yet. Recall that when Japanese automakers bested their American counterparts in the early 1980s, they started building auto plants in North America and Europe. Their know-how spread. Detroit adapted and became better. Now, however, the U.S. is using tariffs to protect its auto and energy industries from the clean discount. Maybe Canada will choose differently. Why not invite BYD to build an EV plant in Canada, leveraging its cost and manufacturing advantages, to serve both North American and European markets? Imagine a truly affordable electric pickup truck built in Ontario—a symbol not of protectionism, but of pragmatic industrial renewal. Wouldn’t that be a better legacy than fighting tariff wars over soon-to-be outdated technologies? The fossil premium will only grow bigger. Cleantech will soon fuse AI, robotics, advanced materials, fusion energy, carbon-to-value chemistry, smart grids, biochemicals and circular manufacturing. The value chain between mining and recycling minerals and selling finished goods will be highly automated and boost productivity to unknown heights. These are not science-fiction concepts. Real companies in these spaces are raising serious capital to scale up and commercialize. Depending on the sector, this transformation will take a few years or, at most, two to three decades. But it is now unstoppable. Timing is the challenge for investors. Many fear that if they invest in existing solar, wind and battery technology over the next five years, they’ll miss out on better, more efficient technologies due 10 to 20 years from now. The trick is to find the right balance between near-term and later investments. No one wants short-term power shortages or longer-term stranded assets. In a freer market, Western companies probably would have already answered the competition from China. And if they couldn’t beat them, they would have joined them. In the U.S.’s new protectionist oligarchy, however, billionaire magnates don’t want competition. Their worst nightmare would be the government enforcing a Standard Oil-type breakup to stimulate competition. They’d rather use misinformation, privately controlled social media and political donations (crypto or conventional) to box out foreign and domestic disruptors. As long as they bend a knee to the boss and toss him a few shiny trinkets, he’ll keep the trust busters at bay. Protectionist pseudo-democracy will inevitably fail the will and needs of most people. When North Americans and Europeans realize there are better, cleaner and cheaper products and services elsewhere, there will be disillusionment and unrest. Hopefully, our democratic systems will defuse that ticking social bomb, promptly and peacefully. The green premium is dead. Countries that can produce abundant, affordable and clean power will dominate the next century, attracting data centers, enabling new industries, improving manufacturing and raising all the necessary capital. Those clinging to fossil subsidies and bureaucratic inertia will lose competitiveness, jobs and influence—slowly at first but exponentially after 2030. The global rollout of cleantech is well under way. The West should dare to face that reality and act accordingly.
