IEA launches global report on clean energy and technology supply chains

IEA has come up with a new publication Energy Technology Perspectives 2023, which is regarded as the world’s first guidebook for future’s clean technology industries.

The global guidebook provides a comprehensive analysis of global manufacturing of clean energy technologies and their supply chains across the world.

It includes technologies of solar panels, wind turbines, EV batteries, electrolysers for hydrogen and heat pumps and their evolving as the clean energy transition advances in future.

The report highlights both major market and opportunities and emerging risks for countries which are putting efforts to lead the clean energy industries. It provides analysis on technology supply chains considering energy security, resilience and sustainability, based on the latest energy, commodity and technology data, and recent energy, climate and industrial policy announcements.

The flagship publication was launched by IEA Executive Director Fatih Birol, who stated that the clean energy technology is flourishing around the globe today. He focused on three major drivers of growth, energy security, climate commitments and pushing clean energy technology options by the manufacturers.

Birol highlighted that the world is entering a new industrial age, the age of clean energy technology manufacturing.

Fatih Birol, commented, “The IEA highlighted almost two years ago that a new global energy economy was emerging rapidly. Today, it has become a 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 worth hundreds of billions of dollars as well as millions of new jobs.”

He further stated, “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 technologies would provide two-thirds of what is needed in a pathway to net zero emissions. The current momentum is moving us closer to meeting our international energy and climate goals – and there is almost certainly more to come.”

He also stressed on healthy degree of international collaboration for expansion of clean technology manufacturing and the new energy economy.

Stating that this new industry can bring billions of market and create millions of jobs, Birol said that the guidebook can be looked at by the countries and can decide for themselves about adopting the appropriate policies.

On the occasion, Timur Gui, Head of Energy Technology Policy Division at IEA, had presented about the main findings of the detailed analysis of the report. He stated that clean technology supply chains concentration risks extend beyond mining, while benefit from international trade, where investment is on the rise.

“Supply chains today are heavenly geographically concentrated…concentration at any point at any supply chain, it is a risk, it makes entire supply chain vulnerable whether they are related to natural disasters, technical failures, individual company policies or so.”

Presenting the statistics on mining concentration, particularly of Lithium, Cobalt and Copper, he said, “The top 3 countries together account for over 70 percent of global capacity for manufacturing key clean technologies,” he said, adding on shares of critical mineral processing and material production.

For technology manufacturing, Gui presented the current shares of countries, stating “Looking at the largest individual producer, China plays a dominant role.”

The presentation mentioned that Solar PV modules has 60 percent share of trade in global deployment, while wind has 20 percent of shares and EV batteries has 10 percent.

The report highlighted the important role of international trade in clean energy technology supply chains, presenting that nearly 60% of solar PV modules produced worldwide are traded across borders.

“A large domestic market created by rapid clean energy technology deployment, combined with concerted industrial policy, have made China the dominant player in global clean technology manufacturing and trade.”

According to the report, the global market for key mass-manufactured clean energy technologies will be worth around USD 650 billion a year by 2030, based on countries’ energy and climate pledges. It stated, “For technologies like solar panels, wind, EV batteries, electrolysers and heat pumps, the three largest producer countries account for at least 70% of manufacturing capacity for each technology with China dominant in all of them.”

It also stressed that clean energy technology prices have gone high in recent years, making clean energy transitions more costly.

“Clean technology manufacturing is increased rapidly, owing in part to short project lead times. If they materialize, announced manufacturing projects would fulfill two-thirds of the investment needs to 2030 in NZE,” he shared in the presentation.

He further said that markets for clean energy technology constitute a major opportunity for the countries, presenting the market sizes for supply from announced projects and demand under announced pledges for key clean technologies, 2030. China tops the list followed by the European Union, United States, India, and other Asia Pacific countries.

Gui remarked that committed projects in the US and EU account for less than 20 percent of domestic expansion plans, leaving significant opportunity to increase production in fulfilling announced climate pledges.

Under the heading of competitiveness as a key consideration for industrial strategies, he presented statistics on production costs using electrolysis and variable renewables under announced climate pledges.

“Climate goals and innovation policy are driving new project announcements for energy intensive commodities, but persistent cost competitiveness gaps indicate the need for strategic partnerships and international collaboration,” he commented.

Meanwhile, he also presented the key takeaways including:

• The energy world is in the early phase of a new industrial age - the age of clean energy technology manufacturing; reaping the benefits requires an all-of-government approach.

• High geographical and market concentrations threaten supply security; the policies to deal with such threats differ by supply chain, and must build on competitive advantages and strengths.

• Boosting supply chain resilience and sustainability is crucial; market disruptions and input price fluctuations can have profound cost implications.

• Participating in the emerging new energy economy requires industrial strategies that build on a mapping of domestic opportunities and identify strategic partnerships.

Meanwhile, Jethro Mullen, Editor-in-Chief of IEA, had facilitated for the Q & A session with the journalists following the presentation on the report.