China could use wind power dominance to force EU-US rift over Taiwan, warns Dutch

China could use any future European over-dependence on its offshore wind turbine components to launch cyberattacks or to try and force a split between the EU and US in the event of a war over Taiwan, according to a new Dutch government-backed report.

The energy transition offers the EU a “unique opportunity” to reduce energy dependencies from “untrusted suppliers” like Russia, said the report from research institute TNO, which received support from the Dutch government.

“Current trends, however, suggest that the transition to green energy will most likely lead to a new, extensive strategic dependence, namely on China.”

China’s wind giants are currently enjoying historic levels of dominance in the sector, with recent analysis finding the country boasts six of the top 10 turbine makers globally.

Amide white-hot competition domestically, Chinese turbine makers are increasingly setting their sights on Europe – where they have received an often suspicious and sometimes outright hostile reception from European industry and policymakers.

‘Laying the groundwork for cyber-attacks’

TNO, which is based in The Hague, warned in its report that fostering a dependence on Chinese firms for complex turbine components and end-products “may make cyber-attacks by the Chinese state, both more likely and effective.”

An executive at Chinese wind giant Envision recently laughed off the idea its turbines could be used to spy on Europe in an interview with Recharge.

But the TNO report says that Chinese companies are obliged by law to help state intelligence agencies if called upon.

This makes even private companies, including turbine suppliers, “subject to the Chinese government’s geopolitical aims and methods,” said TNO.

Chinese equipment and software “might have vulnerabilities, either intentionally embedded or inadvertently present,” which companies can be forced to share with state agencies.

China has had an “offensive cyber program for a long time,” said TNO. This includes searching for “vulnerabilities in the critical infrastructure of rivals.”

TNO said embedding complex Chinese products into energy systems hands the Chinese state “greater opportunities” to find vulnerabilities and “execute attacks at a later point.”

Reliance on Chinese companies supplying updates, maintenance and technical support for their technology “provides renewed points of entry that may be exploited to introduce malicious software at a later point,” said TNO.

The Dutch intelligence and security agency has noted an uptick in the use of seemingly innocent management and maintenance software to “lay the groundwork for cyber-attacks,” said TNO.

If a war were to break out in the future over Taiwan, which China claims is part of its territory, China could use its penetration in European energy infrastructure to threaten or carry out cyber-attacks to deter the EU from taking action against it.

War over Taiwan would be like Ukraine – but worse

If Chinese firms become the “sole suppliers of wind turbines,” TNO warned the impact of an export ban on these would be “severe.”

Current dependence on China in the EU for wind turbines is “limited,” said the report, “with the notable exception of a near complete dependence on almost the entire supply chain of rare earth-based permanent magnets for offshore wind generators.”

China would only implement a ban in an “extreme scenario” where its relations with the EU reached “breaking point,” said TNO, with a war over Taiwan one obvious example, and a conflict in the South China Sea another.

If China tries to invade Taiwan, allies of the US in Europe will likely impose “severe sanctions”, even if they are not direct parties to the conflict, “either of their own accord or under severe US pressure.”

If that happened, a ban on turbines could be part of a “far broader sanctions spiral,” said TNO.

“The tit-for-tat escalation of sanctions in 2022 that ended with Russia limiting gas exports to the EU by 80% may provide lessons,” said TNO.

A conflict over Taiwan may be even more severe, said TNO, as while there are no US boots on the ground in Ukraine, US President Joe Biden has made increasingly explicit verbal guarantees to Taiwan.

“If the US is involved in a conflict in East Asia, the pressure on the EU to hit China as hard as possible economically will be enormous.”

“in turn, the goal of Beijing’s large-scale sanctioning of the EU would be to compel and deter the Netherlands and the EU from acting against China’s core interests,” said TNO.

“in other words, Beijing would try to get the EU and its member-states to change policy, by peeling them off from the US-led sanctions effort.”

‘A losing game for the EU’

China is trying to grow its strategic industries, including its renewables sector, as fast as possible, said TNO.

“This is not just an economic strategy,” said TNO. It is part of China’s broader strategy to achieve “greater self-reliance and to expand dependence on the rest of the world on China.”

“This leaves the EU with two unattractive options.”

The first, said TNO, is to “bear the costs” of raising trade barriers to China and growing the EU’s own wind industry through subsidies and other mechanisms, “which are likely to be costly for taxpayers.”

The second option is to bear the “economic and national security costs” of increased Chinese market dominance.

This includes accepting “new high-risk strategic dependencies, likely including for complex components and end-products.”

This could add financial strain on the EU’s own struggling wind players and “may threaten their survival.”

Joseph Webster, a senior fellow at the Atlantic Council’s Global Energy Center, tells Recharge the report highlights how ‘smart’ components that are connected to the internet, including in wind installations, “could pose significant risks for Europe in a crisis” with China.

“The EU and the US should work together to determine where Chinese-made components pose threats – and also, critically, where they do not.”

Europe and its friends should diversify rare earth elements and critical minerals supply chains while “exploring solutions that could reduce demand for these items,” he said.

“Similarly, Brussels should scrutinize potential Chinese wind investments into the EU very, very carefully.”