Stop the China Steal - Protect The $40 Trillion Fusion Energy Market
No More China “Give-Aways”
It is often difficult for individuals, companies, and nations to acknowledge when they are making mistakes, and it is even harder and often more costly to make changes when those mistakes are recognized. We can point to dozens of examples in many industries, but we will focus on the energy sector for this example. The U.S. has typically led in invention and intellectual property for solar and wind energy, batteries, high-energy capacitors, and dozens of other technologies, then lost its leadership by making the same strategic mistake… we outsourced manufacturing to China.
The transition of market leadership and intellectual property advantage in industries such as solar energy, wind energy, and batteries for electric vehicles (EVs) from the United States and other countries to China is a multifaceted phenomenon driven by strategic investments, policy support, and aggressive scaling by Chinese firms. Here are examples from these industries illustrating how China came to dominate these sectors.
We Shot the Lead With Solar Energy
The solar energy industry provides a clear example of how China gained a dominant position after other countries initially led in technology and market development. In the early 2000s, countries like Germany and the United States were leaders in solar technology innovation and deployment. However, China rapidly ascended to become the world leader in solar panel manufacturing due to significant government investment, subsidies, and support for domestic manufacturers. Companies such as Suntech Power, founded by Shi Zhengrong, an overseas scientist with Australian citizenship, benefited from these policies. Suntech Power and other Chinese companies like Trina Solar and Longi Green Energy Technology developed into global leaders, controlling at least 60% of global capacity for every solar power supply chain step. Despite initial overcapacity and market challenges, the Chinese government's strategic use of subsidies and incentives helped solidify China's position as the dominant force in solar energy manufacturing and technology.
We Wasted the Lead In Wind Energy
China's wind energy sector mirrors its solar industry's trajectory, leveraging policy support and investment to overtake early leaders in the market. While wind technology and manufacturing development initially occurred in Europe and the United States, China quickly emerged as a global leader in both onshore and offshore wind capacity. China built the world's largest wind power equipment manufacturing base by enforcing localization requirements and employing massive direct and indirect subsidies. The country's aggressive industrial policy, including feed-in tariffs and domestic content requirements, propelled Chinese companies like Goldwind Science and Technology to the forefront of the global wind industry despite initial technological partnerships and licensing agreements with Western firms.
We Lost The Lead on Batteries for Electric Vehicles (EVs)
The EV battery industry is another area where China has established a commanding lead after other countries initially held technological and market advantages. Chinese companies, notably Contemporary Amperex Technology Co. Limited (CATL), have dominated the global EV battery market through significant investments in research and development, manufacturing capacity expansion, and securing raw material supplies. CATL's leadership in patent filings for EV technology underscores China's innovation in this sector. The Chinese government's comprehensive support for the EV industry, including consumer subsidies and incentives for domestic manufacturing, has been instrumental in this shift. This strategic approach has enabled China to lead in battery production and the broader EV market, outpacing competitors in the United States and Europe.
We Need A CHIPS Act for Fusion Energy
The CHIPS and Science Act, signed into law in August 2022, represents a significant investment in the semiconductor industry, which is a critical component of the broader technology sector, including emerging markets like fusion energy. The Act provides nearly $53 billion in funding for U.S. semiconductor manufacturing, research and development, and workforce development plus a 25 percent investment tax credit for capital expenses in semiconductor manufacturing.
At the Fusion Industry Association Policy Event, Bob Mumgaard, the CEO of Commonwealth Fusion Systems stated, “The US must make strategic decisions to create a CHIPS ACT for Fusion Energy.” The Act allocates funds to bolster semiconductor manufacturing in the U.S. Similarly, direct financial support could be provided to fusion energy companies to build infrastructure, conduct research, and scale up operations. This could include grants, loans, and tax incentives to reduce the capital intensity and financial risk of developing fusion energy technologies.
Fund Research and Development
The CHIPS Act emphasizes the importance of R&D for maintaining technological leadership. A similar approach could be taken for fusion energy by funding research initiatives, supporting national laboratories, and fostering partnerships between the private sector and research institutions to accelerate technological advancements in fusion. We are significantly behind China in total investments, and the UKAEA (United Kingdom Atomic Energy Authority) has stepped into leadership in organizing fusion energy into a unified agency focused on development, execution, and training.
Workforce Development Like the UKAEA
The CHIPS Act includes workforce and education funding provisions to promote growth in the semiconductor workforce. For fusion energy, we need to follow the example set by the UKAEA to fund specialized training programs and educational initiatives. Workforce development efforts could be established to ensure a skilled labor force capable of supporting the industry's growth.
U.S.-based Supply Chain Security
The Act contains measures to secure semiconductor supply chains and restricts funding recipients from expanding manufacturing in certain countries. Similar restrictions could be implemented for fusion energy to protect sensitive technologies and intellectual property from international competitors, particularly those with strategic or geopolitical implications.
Allied Nation Partnerships for International Collaboration and Competition
The CHIPS Act includes funding for international technology security and innovation, recognizing the global nature of supply chains and the need for international cooperation. The U.S. could use diplomatic and trade policies in the fusion energy sector to establish international partnerships, set standards, and create a favorable environment for U.S. fusion energy firms to compete globally.
Fusion-Focused Regulatory Framework
The Act could serve as a model for creating a regulatory framework that supports the rapid development and deployment of fusion energy technologies while ensuring safety and environmental protection. This could involve streamlining permitting processes and providing regulatory clarity to encourage investment and innovation in the sector.
Intellectual Property Protection
Intellectual property (IP) protection is crucial for maintaining a competitive edge. The CHIPS Act's focus on securing semiconductor technology could be mirrored in the fusion energy sector by implementing policies safeguarding IP and encouraging domestic and international patent filings[8][15].
Winning in The $40 Trillion Fusion Energy Market
Bloomberg has developed a Global Nuclear Theme Peers index that tracks listed companies with exposure to the industry, which is estimated to achieve a jaw-dropping $40 trillion valuation one day. By adopting a comprehensive approach similar to the CHIPS Act, the U.S. government could create a supportive ecosystem for the fusion energy market that includes funding, research support, workforce development, supply chain security, international collaboration, a favorable regulatory environment, and IP protection. This would help to solidify U.S. leadership in the emerging fusion energy industry and ensure long-term competitiveness in this critical area of clean energy technology.
Citations:
[1] https://www.semiconductors.org/chips/
[2] https://www.pwc.com/us/en/library/chips-act.html
[3] https://www.nist.gov/chips
[6] https://www.theatlantic.com/science/archive/2022/08/chips-act-climate-bill-biden/671095/
[8] https://www.eenews.net/articles/intellectual-property-fights-hobble-doe-fusion-program/
[10] https://www.energy.gov/articles/chips-and-science-act-game-changer-its-first-year
[11] https://bipartisanpolicy.org/blog/chips-science-act-summary/
[12] https://ww2.aip.org/fyi/2022/research-infrastructure-initiatives-chips-and-science-act
[15] https://www.energy.gov/articles/doe-announces-46-million-commercial-fusion-energy-development
[16] https://earth.org/semiconductors/
[17] https://www.congress.gov/bill/117th-congress/house-bill/4346
[19] https://www.nytimes.com/2023/02/28/business/economy/chips-act-childcare.html