Capitalism has induced an unprecedented climate crisis. The system is already overshooting critical climate thresholds with average global temperatures rising beyond the 1.5°C target set by the Paris Agreement, and pathways to limiting warming to that level now out of reach[1]. The reasons are well established: historically concentrated and rapidly increasing greenhouse gas emissions, especially CO2, driven primarily by fossil fuel energy systems, serving capitalist accumulation[2].
In the face of this ecological upheaval, many place their hopes in renewable technologies (i.e. solar panels, wind turbines, inverters, and battery storage) as tools to decarbonize energy generation. The argument is straightforward: as innovation-driven cost reductions in renewable technologies diffuse globally through international trade, renewable energy becomes cheaper than fossil-based alternatives and gradually displaces them[3]. This ecological techno-optimism heralds renewable technologies as a technical solution to the climate crisis and the foundation of what we might call “renewables capitalism”[4]. This idea describes a more environmentally sustainable form of capitalism that preserves the core logic of accumulation, the creation and expansion of surplus value, but whose primary energy base has shifted from fossils to renewables. This vision is especially influential in the European Union, reflected in targets such as achieving a 42.5% share of renewable energy in its overall energy mix by 2030 and reaching climate neutrality by 2050[5].
Yet this techno-optimist narrative misses the fundamental contradictions of capitalism, and the tensions and motives that actually shape the potential rise of “renewables capitalism.” This essay draws on Marxist Political Economy to explain why the technological optimist perspective is insufficient, and substantiate why the EU’s ambition to become the leading model of “renewables capitalism” faces serious multiple contradictions, including challenges arising at the intersection of capitalist accumulation with international competition of renewable technologies.
The Structure of the Solar Photovoltaic Value Chain, International Capitalist Competition and Profit
Classical Political Economy teaches us that every capitalist commodity is produced by means of other commodities[6]. Capitalist commodities are produced within a set of physical input-output and social relations, mediated at the highest level of abstraction by distributional struggles between the “three great classes”.
Solar energy, in most cases a capitalist commodity itself, is no different. It is produced using not only a freely available natural condition (sun) but also solar photovoltaic (SPV) equipment and direct and indirect labour. The production chain of solar energy can be broadly schematized as follows. After the initial R&D stage, SPV module production begins with the processing of high-purity polysilicon into ingots. These ingots are then sliced into wafers and subsequently manufactured into solar cells, before being finally assembled into modules. SPV modules are integrated with balance-of-system components such as inverters, transformers, and mounting devices. The final segments include project deployment, grid connection, and long-term operation through the generation and the sale of solar energy either in wholesale markets from energy generators directly or retail from energy resellers.
As Marxist political economy emphasizes, the goal of the production and circulation of capitalist commodities is profit. This holds for both the manufacturing of SPV technologies and largely for the generation of solar energy today. But what determines profitability, and how does investment flow across the different stages of the value chain?
For SPV technologies, profitability is determined by per-unit production costs and the price-based real competitive struggle between producers[7]. Costs are reduced by squeezing wages and raising labour productivity through labour-saving technological change. Since SPV technologies are highly globally traded at every stage, international competition plays a crucial role: manufacturers offer lower prices to outcompete rivals in domestic and third markets, but are constrained by their cost structures and demand from buyers. The competitive struggle might also include some manufacturers compressing profit margins in order to aggressively undercut competitors, pushing those who cannot keep pace out of the market entirely[8]. Lastly, in this international competitive struggle, states mediate in various ways but most prominently through selective trade regimes that aim to boost “domestic” profitability and disadvantage “foreign” competitors[9].
In this type of international competition led by the absolute cost advantage, there is no automatic adjustment where prices or exchange rates adjust, bringing trade into balance regardless of competitiveness, as the neoclassical comparative cost advantage contends[10]. The operation of the turbulent and anarchic capitalist competition tends to produce significant trade imbalances and patterns of unevenness across sectors, regions and countries,[11] not excluding green technology industries on a world scale.
The investment in renewable energy generation is consistent with the core Marxist political economy insight about the centrality of profit. Christophers, in his recent book “The Price is Wrong”, has shown in detail why expected profitability and not price, as ecological techno-optimists assume,[12] is largely dictating electricity decarbonization in advanced capitalist countries.
This insight is particularly true for a world of unbundled and largely deregulated energy markets dominated by profit-driven investors[13]. Investment costs in solar energy generation are mostly upfront, conditioned by land and permitting, prices of SPV modules, balance-of-system (BoS) equipment, construction and grid connection. The share of utility-scale upfront costs attributed to SPV modules and BoS is nevertheless quite high, ranging from 45-65% for USA, China and Europe. Subject to the specific structure of the energy generation market, revenues are generally constrained by competition on the generation side and impacted by extreme volatility stemming from the variable and intermittent nature of solar output. Given these conditions, and on the basis of prevailing discount rates, attracting debt and equity financing requires that the expected profitability of a solar project be high enough to guarantee an adequate risk-adjusted return[14]. Without that, the project will hardly become bankable, and capital will not accelerate into the renewable energy generation sector; there are always other profitable outlets, domestically and internationally, including fossil fuel energy generation and carbon-intensive industries.
EU-China SPV International Competition and Europe’s Green Protectionism: the Net-Zero Industry and Industrial Accelerator Acts
The entire SPV value chain, from R&D to deployment and generation was for many years EU-dominated. China’s competitive ascendancy as a leading manufacturer and innovator of SPV technologies [15] shook the existing structure of costs, prices, and profits across the European SPV value chain bringing significant changes. Through strategic industrial policies, vertical integration, competitive flexibility, and an evolving combination of export-oriented and domestically-oriented development, Chinese producers acquired a competitive advantage that allowed them to progressively match European SPV producers in technology and undercut them on price[16]. This, in turn, created significant competitive pressures on the survival rates of European producers[17]. While the EU accounted for close to 50% of world market shares across all SPV manufacturing segments in the early 2000s, China rapidly rose from virtually nothing to nearly 90% by 2024[18]. For the EU, this translated into persistent trade imbalances, sharply declining market shares, profitability crises, and major bankruptcies across the sector.
These intra-class, profit-driven conflicts between Chinese and European SPV producers, mediated by international competition, set green protectionist policies in motion. The first episode unfolded between 2012 and 2018, following significant lobbying by EU ProSun representing European SPV manufacturers[19]. Green protectionism took the form of tariffs, market share quotas, and sliding minimum import prices against Chinese producers. While these measures sustained SPV prices at around 30% above prevailing market levels[20], directly hampering solar energy deployment[21], they nonetheless failed to reverse the industrial decline of EU producers or restore their market shares and profits[22].
In the interregnum following the termination of green protectionism in 2018, the EU’s SPV value chain continued its downward trajectory while China grappled with significant overcapacity. This led to SPV prices falling sharply across that period. The remaining European SPV manufacturers faced even greater profitability pressures, with bankruptcies continuing, as illustrated by the collapse of Swiss-German manufacturer Meyer Burger in 2025. The scale of the EU’s industrial retreat is stark, as in 2023, Chinese suppliers accounted for 94% of EU supply for SPV modules and cells, 79% for wafers, and 50% for inverters[23]. Compounded by a growing geopolitical contest and a war-induced energy crisis, green protectionism in Europe has returned, this time with the explicit goal of reviving the SPV value chain and restoring the market shares and profitability of the green technology manufacturing sector.
The two most important pillars of today’s European green protectionism are crystallized in the Net-Zero Industry Act (NZIA) and, more ambitiously, the Industrial Accelerator Act (IIA). Both Acts set specific targets for European manufacturing capacity, with NZIA aiming for domestic production of net-zero technologies to meet as much as 40% of the EU’s annual deployment needs by 2030.
Both Acts operate as non-tariff-based protectionist measures, a reflection of the fact that EU producers are simply unable to compete with Chinese SPV manufacturers on price. Recent estimates put Chinese SPV modules at 8.7€ct/Wp, while a fully reshored EU SPV value chain operating at scale would cost around 25.5€ct/Wp[24]. The IIA goes further than the NZIA, incorporating Made-in-Europe provisions. There are different scenarios ranging from application only across public support schemes, auctions, and procurement, to extending local content requirements also to private SPV procurement! While the NZIA is already in effect and the IIA remains under debate within the EU, there are significant disagreements between member states over the depth, speed and tools employed[25], with certain manufacturing blocs openly requesting tariffs against Chinese SPV products[26].
Resituating International Competitive Dynamics and the Core Class Conflicts of EU’s Green Protectionism
The EU’s green protectionism primarily reflects profit-driven class conflicts between European and Chinese SPV producers, generated by the very operation of international capitalist competition. This turn also reflects deepening geopolitical concerns amid escalating imperialist rivalry that has produced an acute energy crisis with severe consequences for energy-intensive industries and household energy costs in Europe and beyond. Around this central, profit-driven conflict, a range of further tensions are structured, each posing additional challenges to the rise of “renewables capitalism” in the EU as a whole.
The first challenge concerns the assumptions embedded in competitive price analysis by the EU, specifically, the estimates used to calculate the price differential between Chinese and European SPV producers. Reports typically apply the concept of the “minimum sustainable price” (MSP) to measure this gap[27], following ideas close to the model of neoclassical “perfect competition”. While China currently offers SPV modules below cost at 8.7€ct/Wp, analysts estimate that the minimum sustainable price for Chinese modules would be 15.9€ct/Wp, an increase of nearly 83%. For European producers manufacturing at scale but still relying on Chinese polysilicon and ingot wafers, this estimate comes down to 19€ct/Wp, leaving a price gap of around 3.1€ct/Wp. These European estimations probably refer to industrially more advanced European member-states, with unevenly developed and severely de-industrialized economies of the European periphery having significantly higher costs and hence prices for SPV modules.
Real capitalist competition, however, does not conform to the idea of minimum sustainable prices. Chinese producers may accept low (or even negative) profit margins for extended periods in order to persistently out-price foreign rivals, positioning themselves to restore profitability once that foreign competition is sufficiently weakened. Nor is there any reason to assume that Chinese producers will not continue reducing costs through new production techniques or wage cuts, allowing them to restore profitability through the cost-channel and offer prices lower than current projections anticipate. This is, after all, a fundamental principle of capitalist competition. Cost reductions may also materialize as Chinese production consolidates, with less overall overcapacity but fewer, larger players benefiting from greater internal economies of scale. Finally, it remains an open question whether Chinese authorities would tolerate a significant rise in SPV module prices even if existing or generally low prices are harmful to the profitability of domestic capitals invested in SPV manufacturing. This last aspect relates to the specific political economy of China’s approach to green transition and energy security[28].
The new wave of green protectionism is also likely to affect European labour, with promises of well-paid jobs failing to materialize. The core tension is that cost-competitiveness in European SPV manufacturing will itself depend on low wages and labour-saving technological change, factors that are especially significant given that labour costs in SPV manufacturing are estimated to be three to four times higher in Europe than in China[29]. Chinese workers have already borne the brunt of the profitability crisis afflicting Chinese SPV producers, as more than one third of the sector’s workforce (around 87,000 workers) was shed in 2024 alone[30]. This dynamic, key to the real operation of competitive dynamics, is likely to intensify on both sides as profit-driven international competition between SPV producers escalates in response to EU green protectionism and China’s ongoing sectoral challenges.
Finally, green protectionism is creating substantial obstacles to the EU decarbonization of energy generation. This green protectionist trade regime generates a direct tension between European SPV producers and European solar energy investors. As module prices rise with the shift from Chinese to European suppliers, solar energy investors face higher upfront investment costs. Given the intense competition and revenue volatility in electricity markets, this shift is likely to reduce the expected profitability of solar energy investment.
European investors have indicated that the maximum acceptable “European premium” for EU SPV modules is around 1-2€ct/Wp[31]. Even in the most optimistic scenario for the EU SPV reshoring, the lowest plausible EU prices set against the highest plausible Chinese prices, the gap exceeds that threshold. Other scenarios, illustrated in a simple manner at the table below, show substantially larger differentials. These price gaps, calculated even with the weak MSP concept, translate into massive additional costs and a deeply negative “European premium” on solar energy investment expected profitability, which will most likely discourage sustained growth in solar investment and slow the EU’s decarbonization efforts. This dynamic will be eventually over-determined by potential CAPEX supporting-policies or cost-shifting to downstream segments (i.e. intermediaries or end-users), creating an array of new distributional conflicts around state budgets, electricity costs of energy-intensive industries and ordinary households.
Different Scenarios for EU SPV Market: Prices, Price-Gaps and Extra Costs of 65GW Annual Solar Capacity Additions as set by 2030 Target
| Scenario | European SPV Module Prices | Chinese SPV Module Prices | China-EU Price Gap | Times Above Average of Acceptable “EU Premium” [1.5€ ct/Wp] | Total Annual Costs of 65GW Solar Capacity for EU and Chinese Modules | Total Extra Annual Costs Due to Selection of EU SPV Modules | Total Extra Costs till 2030- Target Due to Selection of EU SPV Modules 2026-2030 |
| Fully EU Reshored at Scale MSP , CHN at Current Prices | 25.5€ct/Wp | 8.7€ct/Wp | 16.8€ct/Wp | x11.2 | EU: €16.575 billions CHN: €5.655 billions | €10.920 billions | €43.68 billions |
| EU Reshored with CHN Polysilicon and Ingot Wafer MSP, CHN MSP | 19€ct/Wp | 15.9€ct/Wp | 3.1€ct/Wp | x2.06 | EU: €12.35 billions CHN: €10.335 billions | €2.015 billions | €8.06 billions |
| EU Reshored with CHN Polysilicon and Ingot MSP, CHN at 50%+Current Prices | 19€ct/Wp | 13.05€ct/Wp | 5.95€ct/Wp | x3.96 | EU: €12.35 billions CHN: €8.482billions | €3.868 billions | €15.472 billions |
Source: European Commission[32]
Profit-related pressures will also weigh on industrial and commercial solar PV installations, potentially reducing annual uptake in those segments too. Higher costs will likewise affect households considering rooftop solar, making it significantly more expensive for the working-class to participate in the energy transition, while bolstering the profitability of EU SPV manufacturers at the direct expense of household disposable income amid rocketing energy costs. Combined utility, industrial-commercial, and residential new annual installations have already contracted by 0.7% in 2025 compared to 2024 (65.1GW against 65.7GW)[33], a sign that the anticipation and early impacts of today’s green protectionism have not contributed to, and most likely are actively hindering, the EU’s ambitious decarbonization targets.
A Green Socialist Future for the Many Requires Questioning the Profit Motive
Overall, the conflicts structured around the rise of “renewables capitalism” are far from incidental. They are expressions of the capitalist response to ecological crises and the mediation of the profit motive and international competitive dynamics. From the intra-class conflict between European manufacturers and solar energy investors, to the international rivalry between Chinese and European industrialists, to the pressures imposed on workers on both sides, profit remains the guiding principle around which green transition dynamics in the more advanced capitalist economies tend to orbit, and around which they often fracture. Addressing this fracture is nevertheless not an abstract but a concrete and historically-determined question since the greening of capitalism is itself a large terrain where many complex class and social struggles over natural, economic and ideological aspects take place.[34]
A socialist path toward decarbonization requires transcending the existing constraints entirely. A socialist response would subordinate energy and industrial planning to collectively defined social and planetary priorities, removing profit as the governing criterion for investment in renewable technologies and infrastructure. Equally, the global dimensions of the green transition, such as the international division of labour across green technology value chains, the transfer of technology, the distribution of costs and benefits, cannot be left to the anarchic law of value and the geopolitical rivalries accompanying it. They must instead be carefully identified and resolved through solidarity, mutual cooperation, and an internationalism grounded in the shared interests of labouring classes across nations.
All this requires organization and militancy of anti-capitalist labour and social movements as well as serious socialist-oriented re-configurations of existing structures within the different countries. Without this re-orientation, “renewables capitalism” will most likely be a truncated solution to the climate crisis, and another arena of complex contradictions and class exploitation.
[1]International Energy Agency. (2025). World energy outlook 2025. IEA. https://www.iea.org/reports/world-energy-outlook-2025
[2] Hannah Ritchie and Pablo Rosado. (2020). Energy Mix. Published online at OurWorldinData.org. Retrieved from: ‘https://ourworldindata.org/energy-mix’ [Online Resource]
[3]International Renewable Energy Agency. (2016). The power to change: Solar and wind cost reduction potential to 2025. IRENA.
Nemet, G. F. (2019). How solar energy became cheap: A model for low-carbon innovation. Routledge. https://doi.org/10.4324/9780367136604
[4]Arsel, M., & Saad-Filho, A. (2025). Political economy of renewables capitalism: Moving beyond ‘climate change’ vs ‘system change’. Development and Change, 56(4–5), 619–644. https://doi.org/10.1111/dech.70033
[5] European Commission. (2026). Climate strategies & targets. Retrieved April 3, 2026, from https://climate.ec.europa.eu/eu-action/climate-strategies-targets_en
[6] Sraffa, P. (1960). Production of commodities by means of commodities: Prelude to a critique of economic theory. Cambridge University Press.
[7] Shaikh, A. (2016). Capitalism: Competition, conflict, crises. Oxford University Press.
[8]Shaikh, A. (1980a). Marxian competition versus perfect competition: Further comments on the so-called choice of technique. Cambridge Journal of Economics, 4(1), 75–83.
[9]Bougiatiotis, Y. (2025). Means of capitalist development: A radical political economy critique of the trade regime debate. Science & Society, 89(3), 298–325. https://doi.org/10.1177/00368237251352651
[10]Shaikh, A. (1980b). On the laws of international exchange. In E. J. Nell (Ed.), Growth, profits and property: Essays in the revival of political economy (pp. 204–235). Cambridge University Press.
Lapavitsas, C. (1996). The classical adjustment mechanism of international balances: Marx’s critique. Contributions to Political Economy, 15(1), 63–79
[11] Weeks, J. (2001). The expansion of capital and uneven development on a world scale. Capital & Class, 25(2), 9–30.
[12]Christophers, B. (2024). The price is wrong: Why capitalism won’t save the planet. Verso Books.
[13] Emblemsvåg, J. (2025). Rethinking the “Levelized Cost of Energy”: A critical review and evaluation of the concept. Energy Research & Social Science, 119, 103897. https://doi.org/10.1016/j.erss.2024.103897
[14]Halbout, J., & Riboud-Seydoux, M.-N. (2022). Financing of energy investment. In M. Hafner & G. Luciani (Eds.), The Palgrave handbook of international energy economics (pp. 301–324). Palgrave Macmillan. https://doi.org/10.1007/978-3-030-86884-0_17
[15]Zhang, F., & Gallagher, K. S. (2016). Innovation and technology transfer through global value chains: Evidence from China’s PV industry. Energy Policy, 94, 191–203. https://doi.org/10.1016/j.enpol.2016.04.014
[16]Wen, D., Gao, W., Qian, F., Gu, Q., & Ren, J. (2021). Development of solar photovoltaic industry and market in China, Germany, Japan and the United States of America using incentive policies. Energy Exploration & Exploitation, 39(5), 1429–1456. https://doi.org/10.1177/0144598720979256
[17]Andres, P. (2024). Adapting to competition: Solar PV innovation in Europe and the impact of the ‘China Shock’. Environmental and Resource Economics, 87, 3095–3129. https://doi.org/10.1007/s10640-024-00904-8
[18]International Energy Agency. Trends in Photovoltaic Applications (2000-2025). IEA Reports
[19] Goron, C. (2018). Fighting against climate change and for fair trade: Finding the EU’s interest in the solar panels dispute with China. China–EU Law Journal, 6, 103–125. https://doi.org/10.1007/s12689-018-0080-z
[20]Kenning, T. (2017). MIP replacement approved. PV Tech. https://www.pv-tech.org/mip-replacement-approved/
[21]Cheng, Y. S., Tsang, K. P., & Woo, C. K. (2025). Protectionism’s adverse impact on renewable energy deployment: Evidence from the European Union’s import duties on China-made photovoltaic panels. Energy Policy, 206, 114789. https://doi.org/10.1016/j.enpol.2025.114789
[22]McCarthy, K. J. (2016). On the influence of the European trade barrier on the Chinese PV industry: Is the solution to the solar-dispute “successful”? Energy Policy, 99, 154–157. https://doi.org/10.1016/j.enpol.2016.09.055
[23] European Commission. (2026, March 4). Impact assessment report: Accompanying the document Proposal for a Regulation of the European Parliament and of the Council establishing a framework of measures for the acceleration of industrial capacity and decarbonisation in strategic sectors and amending Regulations (EU) 2018/1724, (EU) 2024/1735 and (EU) 2024/3110 (Commission Staff Working Document SWD(2026) 71 final). https://ec.europa.eu/transparency/documents-register/detail?ref=SWD(2026)71〈=en
[24]ibid
[25] Euronews. (2026). EU slams door on China with ‘Made in Europe’ push. https://www.euronews.com/my-europe/2026/03/04/eu-slams-door-on-china-with-made-in-europe-push.
[26]European Solar Manufacturing Council. (2024). Solar PV manufacturing should be prioritized during the new mandate of the European Commission. https://esmc.solar/wp-content/uploads/2024/10/Solar-PV-manufacturing-should-be-prioritized-during-the-new-mandate-of-the-European-Commission-reply.pdf
[27] To calculate MIP, aggregated and anonymized data input by NLER, RCT and ISE are used for each manufacturing stage. These calculations included input factors and locational dependent drivers (equipment depreciation, building depreciation, labor, utilities, labour, maintenance and materials) and overhead (R&D and Sales, General and Administrative) and a given net profit of 5% for each stage and region, excluding direct subsidies and transport of products.
[28]Lo, D., Nyangchak, N., & Lin, F. (2025). China and renewables capitalism in the green transition. Development and Change, 56(4–5), 847–870. https://doi.org/10.1111/dech.70019
Chen, Y. (2025). Renewables capitalism and the contradictions of green industrialization: The case of China. Development and Change, 56(4–5), 871–896. https://doi.org/10.1111/dech.70018
[29]Nold, S., Goraya, B., Preu, R., Rentsch, J., Reichle, J., Jooß, W., Fath, P., Woodhouse, M. (2024). Comparative global PV manufacturing cost and sustainable pricing assessment: China, Southeast Asia, India, USA, and Europe [Paper presentation]. 41st European Photovoltaic Solar Energy Conference and Exhibition (EU PVSEC), Vienna, Austria.
[30] Howe, C. (2025). China’s solar giants quietly shed a third of their workforces last year. Reuters. https://www.reuters.com/business/world-at-work/chinas-solar-giants-quietly-shed-third-their-workforces-last-year-2025-08-01/
[31]SolarPower Europe. (2025). Reshoring solar module manufacturing to Europe: A cost gap analysis and policy impact simulation. https://www.solarpowereurope.org/insights/thematic-reports/reshoring-solar-manufacturing-to-europe
[32] European Commission. (2026, March 4). Impact assessment report: Accompanying the document Proposal for a Regulation of the European Parliament and of the Council establishing a framework of measures for the acceleration of industrial capacity and decarbonisation in strategic sectors and amending Regulations (EU) 2018/1724, (EU) 2024/1735 and (EU) 2024/3110 (Commission Staff Working Document SWD(2026) 71 final). https://ec.europa.eu/transparency/documents-register/detail?ref=SWD(2026)71〈=en
[33] SolarPower Europe. (2024). EU Solar Market Outlook 2025-2030. Retrieved from solarpowereurope.org
[34]Vlachou, A. (2005a). Environmental regulation: A value-theoretic and class-based analysis. Cambridge Journal of Economics, 29(4), 577–599.