2023 Energy Technology Perspectives

As countries race to lead today's and tomorrow's clean energy industries, Energy Technology Perspectives 2023 showcases exciting opportunities and emerging risks.

An era of clean energy technology manufacturing is at its dawn in the energy world. While this is creating major new markets and millions of jobs, it is also posing significant risks for countries around the world. According to a major recently released IEA report, countries across the globe are devising industrial strategies to secure their place in the evolving global energy economy.

The latest edition of the IEA's flagship series, Energy Technology Perspectives 2023, serves as the first global guidebook for the clean technology industries of the future. As a result of the clean energy transition, the report presents a comprehensive analysis of the global manufacturing of clean energy technologies today – solar panels, wind turbines, electric vehicles, hydrogen electrolyzers, and heat pumps – along with their supply chains. It identifies how they will change over the years.

By 2030, the value of the global market for mass-produced clean energy technologies is projected to be around USD 650 billion, more than three times today's level, if countries worldwide keep their energy and climate pledges. Clean energy manufacturing jobs are expected to more than double by 2030 from 6 million to nearly 14 million - and are expected to continue to grow rapidly in the following decades as the transition continues.

In addition, as both the resource mining and processing industries and technology manufacturing are concentrated in high geographic concentrations, clean energy supply chains present risks. Three countries account for 70% or more of manufacturing capacity for technologies such as solar panels, wind turbines, batteries for electric vehicles, electrolysers and heat pumps - with China dominating them all. In contrast, most of the mining for critical minerals occurs in a few countries. For example, the Democratic Republic of Congo produces over 70% of the world’s cobalt, and just three countries – Australia, Chile and China – account for more than 90% of global lithium production.

Several countries are already experiencing the cost and difficulty of transitioning to clean energy due to tight supply chains that have driven up clean energy technology prices in recent years. The price of EV batteries rose by nearly 10% worldwide in 2022 as lithium, cobalt, and nickel prices increased. After years of declines, wind turbine costs outside China have also risen. Solar PV costs have also risen.

“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,” 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 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.”

“At the same time, the world would benefit from more diversified clean 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 around the world competing today to be leaders in the new energy economy and drive an expansion of clean technology 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 energy island and energy transitions will be more costly and slow if countries do not work together.”

In the report, major economies note that energy security, climate and industrial policies are becoming more integrated into their economies' broader strategies. A clear example of this is the United States Inflation Reduction Act, but the European Union's Fit for 55 package and REPowerEU plan, Japan's Green Transformation program, and India's Production Linked Incentive scheme – all of which encourage solar PV and battery manufacturing – and China is working to meet and exceed its latest Five-Year Plan's targets.

Meanwhile, clean energy project developers and investors are watching closely for policies that will enhance their competitiveness. In an environment that is conducive to investment, the project pipeline can expand rapidly due to relatively short lead times of around 1-3 years on average to bring manufacturing facilities online. Globally, only 25% of the announced manufacturing projects for solar PV are under construction or are about to begin construction. EV batteries account for 35% of the total, while electrolysers account for less than 10%. These projects can be influenced significantly by government policies and market developments.

Global trade plays a pivotal role in the supply chain for clean energy technology, especially amid regional ambitions to scale up manufacturing. The report shows that nearly 60% of the solar PV modules produced worldwide are traded internationally. In spite of their bulkiness, EV batteries and wind turbine components are also important trade commodities, with China the main net exporter.

In addition, the report highlights the specific challenges associated with many clean energy technologies, including long lead times for new mines and the need for strong environmental, social, and governance standards. International collaboration and strategic partnerships are crucial for ensuring supply security due to the uneven distribution of critical mineral resources across the world.

Read the full report hear

Iea. “The World Is Entering a New Age of Clean Technology Manufacturing, and Countries' Industrial Strategies Will Be Key to Success - News.” IEA, 1 Jan. 2023, https://www.iea.org/news/the-world-is-entering-a-new-age-of-clean-technology-manufacturing-and-countries-industrial-strategies-will-be-key-to-success.?

IEA (2023), Energy Technology Perspectives 2023, IEA, Paris https://www.iea.org/reports/energy-technology-perspectives-2023, License: CC BY 4.0