The world is entering a new age of clean technology manufacturing…

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The energy world is at the dawn of a new industrial age – the particular age of clean energy technology manufacturing – that is creating major new markets and millions of jobs but also raising new risks, prompting countries across the globe to devise industrial strategies to secure their place in the new global energy economy, according to a major fresh IEA report.

Energy Technology Perspectives 2023 , the latest instalment in one of the IEA’s flagship series, serves as the world’s first global guidebook for the clean technology industries of the future. It provides a comprehensive analysis associated with global manufacturing of clean energy technologies today – such as solar panels, wind turbines, EV batteries, electrolysers for hydrogen and heat pumps – and their own supply chains around the world, as well as mapping out how they are likely to evolve as the clean power transition advances in the years ahead.

The analysis shows the global market for key mass-manufactured clean energy technologies will be worth around USD 650 billion a year by 2030 – more than three times today’s level – if countries worldwide fully implement their announced energy and climate pledges. The particular related clean energy manufacturing jobs would more than double from 6 million today to nearly 14 million by 2030 – and further rapid commercial and employment growth is expected in the following decades as transitions progress.

At the particular same time, the current supply chains of clear energy technologies present dangers in the form of high geographic concentrations of resource mining and processing as well while technology manufacturing. For technologies like solar panels, blowing wind, EV batteries, electrolysers plus heat pumps, the 3 largest producer countries account for at least 70% of manufacturing capacity for each technology – with China dominant in all of them. Meanwhile, a great deal associated with the mining for critical minerals is concentrated in a small number of countries. For example , the Democratic Republic of Congo produces over 70% of the world’s cobalt, and just three nations – Australia, Chile and China – account with regard to more than 90% of global lithium production.

The world will be already seeing the risks of tight supply chains, which have pushed up clean energy technology prices in recent years, making countries’ clean energy transitions more difficult and costly. Increasing prices for cobalt, lithium and nickel led to the first ever rise in EV battery costs, which jumped by nearly 10% globally in 2022. The cost of wind turbines outside China has also been rising after years of declines, plus similar trends can be seen in solar PV.

“The IEA highlighted almost two years ago that a new global power economy was emerging rapidly. Today, it has become the central pillar of economic strategy and every country needs to identify how it can benefit from the opportunities and navigate the challenges. We’re talking about new clean energy technology markets really worth hundreds of billions of dollars as well as millions of new jobs, ” said IEA Executive Director Fatih Birol. “The encouraging news is the global project pipeline for clean energy technology manufacturing is large and growing. If everything announced as of today gets built, the investment flowing into manufacturing clean energy systems would provide two-thirds associated with what is needed in a pathway to net zero emissions. The current momentum is moving us closer to meeting our international power and climate goals – and there is almost certainly more to come. ”

“At the same time, the world would benefit from more diversified clear technology supply chains, ” Dr Birol added. “As we have seen with Europe’s reliance on Russian gas, when you depend too much on one company, one country or one trade route – you risk paying a heavy price if there is disruption. So, I’m pleased to see many economies all over the world competing today to be leaders in the new energy economy and drive an expansion of clean technologies manufacturing in the race to net zero. It’s important, though, that this competition is fair – and that there is a healthy degree of international collaboration, since no country is an power island and energy changes will be more expensive and slow if countries do not work together. ”

The report notes that major economies are acting to combine their particular climate, energy security and industrial policies into broader strategies for their economies. The Inflation Reduction Act in the United States is a clear example of this, but there is usually also the Fit regarding 55 package and REPowerEU plan within the European Union, Japan’s Green Transformation programme, and the Production Linked Incentive scheme in India that encourages manufacturing associated with solar PV and batteries – and China is definitely working to meet plus even exceed the goals of its latest Five-Year Plan.

At the same time, clean energy project developers and investors are watching closely for the policies that can give them the competitive edge. Relatively short lead times of around 1-3 years on average in order to bring manufacturing facilities online mean that the task pipeline can expand quickly in an environment that can be conducive to investment. Only 25% of the announced manufacturing projects globally for solar PV are under construction or beginning construction imminently, according to the statement. The number is around 35% intended for EV batteries and less than 10% for electrolysers. Government policies and marketplace developments can have a significant effect on where the rest of these projects end upward.

Amid the regional ambitions to get scaling up manufacturing, ETP-2023 underscores the important role of international trade within clean energy technology supply chains. It shows that will nearly 60% of photo voltaic PV modules produced worldwide are traded across borders. Trade is also important for EV batteries and wind turbine components, despite their bulkiness, with China the main net exporter today.

The report also highlights the specific challenges related to the critical minerals needed for many clean energy technologies, noting the long lead times pertaining to developing new mines plus the need for strong environmental, social and governance standards. Given the uneven geographic distribution of crucial mineral resources, international collaboration and strategic partnerships will be crucial for ensuring security of supply.