EU must be wary of wider Chinese threat regarding critical infrastructure

After banning Nuctech, a Chinese state-owned manufacturer of security inspection software, from its airports last month, the Lithuanian government has announced it is also in the process of drafting a bill to bar those companies which pose a national security risk from a variety of critical industries, including transport, telecommunications, and energy.

The move is an encouraging sign that EU policymakers may be ready to expand their hitherto narrow focus on Huawei’s 5G technology and its potential impacts upon the telecoms sector, and start considering potential security threats in other important sectors.

In particular, Brussels’s commitment to speeding up its green energy transition risks leaving it dangerously dependent on Beijing. Europe’s dependence on Chinese raw materials has received some attention from policymakers and the press, but there has not been enough focus on the fact that relying on companies like Huawei for the inverters used in solar energy systems could allow Beijing unfettered access into critical infrastructure, with espionage and sabotage very real threats on the landscape. As such, the EU must ensure that it does not sleepwalk into a major security risk elsewhere, even as it works to address potential weak points in the telecoms industry.

Huawei threat not confined to 5G

The planned Lithuanian legislation coincides with warnings from nearby Estonia, whose counter-intelligence unit has highlighted the threat of cyber espionage from China and Russia in recent days. Indeed, the EU does seem to have woken up to the dangers posed by technology firms like Huawei, with both France and Germany taking concrete steps to diminish the company’s influence with regard to their 5G rollout plans. But while Huawei is being successfully marginalized in the European communications sector, its sway appears to be going unnoticed in another industry that is critical to the EU’s coronavirus recovery proposals: renewable energy.

It’s common knowledge that Europe is heavily reliant on Chinese suppliers for the raw materials that are crucial to both solar and wind power generation. At present, the EU sources 69% of its gallium, 58% of its indium, and 20% of its tellurium from China, with all three elements important in the manufacture of solar cells. When it comes to wind power, the dependence is even more alarming; 90% of the neodymium and 99% of the dysprosium used to create turbines come from China. With Brussels targeting a 27% share for renewables in its energy mix by 2030, finding alternatives to these resources could be instrumental in weaning the EU off a growing dependency on Beijing.

Even more concerningly, the role that Huawei plays in the photovoltaic industry appears to have been almost entirely overlooked so far by EU lawmakers. Even as the company has been widely blacklisted with regard to 5G, far too little attention has been paid to the fact that Huawei one of the world’s leading suppliers (with a 22% market share) of the solar inverters which convert DC electricity to AC, often described as the “brains” of a solar energy system. Not only are these devices integral to the functioning of the solar energy system, but their advanced capabilities mean they can optimize, maintain and—in the wrong hands—potentially disrupt entire electrical grids.

US sounding the klaxon

While the concerning implications of Huawei’s rise in the market for renewable energy components may not have yet entered into the EU’s thinking, it’s an issue that has certainly been flagged across the Atlantic. US intelligence agencies have been warning of the threat which both China and Russia pose in terms of cybersecurity for over two years now, with gas pipelines and power networks posited as potential targets for attack. The growing sophistication of US critical infrastructure assets has exacerbated this problem, creating a "growing interdependence" between energy systems, in the words of the US Department of Energy. This means there is a greater possibility for a single attack to shut down entire infrastructure networks for days or weeks at a time.

With some 75 billion electrical devices connected to the grid in homes, offices, and factories around the country, American security forces are concerned there are now an abundance of potential weak links via which their cybersecurity defences could be breached. This unease has filtered through to American lawmakers, with a bipartisan group of 11 senators petitioning the government to instigate an outright ban on Huawei technologies in all facets of American electric grids. The US has already limited the use of Chinese tech in its military bases, and has been encouraging other governments around the world to proceed with similar caution when dealing with Huawei in particular and Chinese firms in general.

EU must pay heed

Given that digitalization has been identified as a cornerstone of the EU’s policy to bolster both its economic and environmental credentials, it’s fitting that the bloc is planning to invest €7.5 billion from the upcoming Multiannual Financial Framework (MFF) into digital technologies over the coming years, not to mention the substantial proportion of the €750 billion EU recovery package that will be going towards green and digitaltechnological advances. Those responsible for allocating these funds, and the institutions and companies which will ultimately receive them, will need to think long and hard about how they apportion that money, especially with regard to a nascent superpower with opaque intentions.

France’s decision to sideline Huawei from its 5G rollout, and Germany’s investment into stimulating its own 5G market, are positive steps in the right direction, but concerns over Huawei’s questionable motives with regard to 5G infrastructure should also extend to the company’s other products, including those playing a major role in Europe’s solar energy industry.

Only by adopting a broader reckoning over the influence of Huawei and other Chinese companies in all areas of critical infrastructure – not just those linked to the telecoms sector – will Europe avoid a situation of harmful dependency on a partner with ulterior motives.

Hopefully, Lithuania’s proposed laws will prove to be just the first dominoes in a wider sea change.

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Gary Cartwright

Gary Cartwright

Gary Cartwright is publishing editor and Brussels correspondent of EU Today.

An experienced journalist and author, he specialises in environment, energy, and defence.

He also has more than 10 years experience of working as a staff member in the EU institutions, working with political groups and MEPs in various policy areas.

Gary's latest book WANTED MAN: THE STORY OF MUKHTAR ABLYAZOV: A Manual for Criminals on How to Avoid Punishment in the EU is currently available from Amazon

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