When it comes to California’s efforts to tackle climate change, China and California are linked in a critical way: The world’s most populous country processes the vast majority of rare metals needed for electric car batteries.
This week Gov. Gavin Newsom, a Democrat, is touring China with an emphasis on the environment, namely on how California and China can cooperate on climate.
Newsom is the third California governor in a row to make an official trip to China, and he does so at a moment when California is perhaps more heavily dependent than ever on the country to meet its own climate goals.
China’s role as a raw materials processor makes it a linchpin in California’s requirement that all new cars sold in the state are zero-emission vehicles by 2035. The relationship between the two governments is a longstanding one, and California and China have traded notes on everything from climate regulation to technology in recent years.
A California-China Climate Institute, led by former Gov. Jerry Brown, hosts a partnership between UC Berkeley and Tsinghua University in Beijing. The state and the government share similar policies, including emissions reduction targets, electric vehicle mandates and carbon trading programs.
“They look at what California is doing, and they treat it as a benchmark,” said Mary Nichols, former chairperson of the California Air Resources Board, which sets climate and air quality control policies. “They definitely are watching what happens in California.”
The governor’s overseas trip comes after he took a high-profile swing at the oil industry in a United Nations address, where he was the only U.S. representative to speak at the Climate Ambition Summit during New York Climate Week.
On Wednesday, Newsom’s climate diplomacy reached a new level of visibility when the governor held an unscheduled meeting with Chinese leader Xi Jinping in Beijing. The two politicians discussed ways to “accelerate our progress on climate in meaningful and substantive ways,” Newsom said, according to The Associated Press.
The trip comes at a tense moment in U.S.-China relations. Last week, the differences in world alliances were on full display as Xi hosted Russian leader Vladimir Putin.
By keeping his focus on climate change and cooperation, Newsom has the chance to sidestep some diplomatic thorniness.
California’s climate regulations
Unlike the U.S. government, California has enshrined specific greenhouse gas emissions reductions targets into law. China has also taken that step, though its emissions goals are less ambitious than California’s, with the Chinese government seeking to achieve carbon neutrality by 2060, 15 years after California’s target.
Earlier this month, the governor signed two bills into law aimed at forcing large companies to disclose their greenhouse gas emissions and their financial risks. Given that many major U.S. companies have operations in China, getting clear industry data in that country will be critical for these reporting requirements.
The California Air Resources Board “is going to be examining the data that is submitted by companies that are subject to our statutes, and the Chinese are going to be very interested in following what California is doing — as they always are,” Nichols said.
“China is very clean in some parts of their system and very dirty in others, so data is everything here,” Stern said.
China embraces electric cars
In some aspects, the Chinese are ahead of California in clean vehicle adoption. The governor on his trip this week visited the Guangdong province, where the city of Shenzhen was the world’s first to adopt an all-electric bus fleet, with 16,000 buses and 40,000 charging stations, according to the governor’s office.
The Chinese electric vehicle company BYD has a battery-electric bus manufacturing plant in Los Angeles County. Newsom on Tuesday test-drove a hybrid vehicle manufactured by the company.
The governor also has plans to visit an offshore wind facility in the province of Jiangsu. His administration envisions offshore wind farms producing 25 gigawatts of electricity by 2045, powering 25 million California homes and providing about 13% of the state’s power supply.
And the Chinese are a critical supplier of electric vehicles to the world. The governor will complete his trip in Shanghai, visiting the Tesla Shanghai gigafactory, the world’s most productive electric vehicle plant.
California’s electric car mandate has helped kick off an automobile industry race to make cheaper, longer-lasting batteries that take less time to charge. The demand for electric vehicles has, in turn, sparked a worldwide rush to mine the needed materials, and China is at the center of that rush.
Chinese vendors have a near-complete monopoly on processing essential car battery materials.
Biden’s EV battery incentives
The Biden Administration is aiming to change that dynamic. The federal Inflation Reduction Act requires that by next year at least half of the battery components in electric vehicles be sourced in the U.S., or from a country that the U.S. has a free trade agreement with, in order for electric car buyers to qualify for rebates. That does not include China. The share of sourced materials increases to 80% in 2026. Chinese vendors are looking to develop their ties with companies here in the U.S. in response.
Nevertheless, the Chinese hold 80% of the world’s cobalt processing, which is used for lithium NCM batteries, along with 76% of the world’s natural graphite processing, 56% of synthetic graphite and 60% of the world’s processing capacity for lithium compounds, according to the U.K.-based firm TechInsights Inc.
China also produces 50% of the world’s sodium hydroxide, which is used for sodium ion batteries.
“China has developed the battery supply chain for many years in advance of other countries,” said Kevin Mak, an analyst for TechInsights Inc. “The Chinese government planned this early on.”
Mines and factories in Africa, Australia, South America, and Asia produce the raw materials for batteries, and the hunt for those metals has become increasingly intense, with exploration in the Arctic Circle now being considered. Deep seabed mining is also underway, with China poised to dominate that particular underwater push, The Washington Post recently reported.k
China has forged other key economic and trading relationships that governments may have to rely on as they seek solutions for the climate crisis. China’s Belt and Road Initiative has made $1 trillion in infrastructure investments in developing countries across the world.
“Those relationships will affect supply chains on many materials,” said Duncan Jepson, a former Hong Kong attorney, and labor and human rights investigator, who now lives in Los Angeles. “Components right now — and in the future — are going to be vulnerable to control by the Chinese and their partners.”
An antagonistic relationship with the United States could make tackling those initiatives more complicated — and a relationship with California might help.
“One thing you have to consider here is that, particularly in California, you do have the largest Asian population, and a very large Chinese population, and that’s meaningful,” Jepson said. “California looks east.”