Mixed outlook for clean energy technologies

From solar and wind power to electric vehicles – over the past two decades, clean energy and many of its myriad sectors have become major global industries. As countries across the world step up their net-zero transition, these industries are now set for further rapid growth, says the IEA.

In its new report, Energy Technology Perspectives 2023, the IEA gives a comprehensive overview of the world’s clean energy supply chains and how they are likely to evolve. The recent pandemic and Russia’s invasion of Ukraine have had a major impact. Rapidly rising oil and gas costs are encouraging many countries to become more energy independent. However, economic downturns and continued supply chain problems are challenging this shift, with prices rising for the first time in many years for key components in wind turbines, batteries and photovoltaic modules.  

Nevertheless, investment in clean energy reached USD 1.4 trillion in 2022, a 10 per cent increase versus 2021. And if countries fulfil their energy and climate commitments, the IEA expects mass-manufactured clean energy technologies to be worth more than three times their current level by 2030. Meanwhile, jobs in clean energy manufacturing would more than double to almost 14 million, offsetting the loss of 8.5 million in the fossil fuel-related sectors.

The IEA’s analysis highlights several areas to address. Supply chain concentration and resulting bottlenecks remain a risk, with China still dominant in the manufacturing and trade of most clean energy technologies. Minerals such as cobalt and lithium, which are vital for batteries, also mostly come from just a handful of sources.

“The world is not yet on track for secure, resilient and sustainable supply chains,” the report states. “Moving quickly this decade is vital: any delay means that achieving net zero by mid-century will be out of reach or achievable only at greater cost.”

Indeed, despite the rapid expansion of clean energy technologies, the IEA also makes clear just how dependent the world remains on fossil fuels, particularly in emerging and developing countries, which have seen a significant jump in the use of coal. “The scale and speed of the required deployment of clean energy technologies needs to increase dramatically,” it says.  

 

As a result, policymakers must act to reduce processing time for new projects, mobilise investment, help to develop skills and foster innovation in early-stage technologies to accelerate the energy transition. Many of the clean energy technologies required to get to net zero by 2050 are not available at scale today. While the current pipeline of announced projects would exceed clean energy demand in areas like batteries and solar power, there are currently considerable deficits in areas such as wind turbines, heat pumps and fuel cells.

“This highlights the importance of clear and credible deployment targets from governments to limit demand uncertainty and guide investment decisions,” the report states.

It emphasises that while each country will need to develop its own specific strategy to manage the clean energy transition, no nation can go it alone. “Even as countries build their domestic capabilities and strengthen their places in the new global energy economy, there remain huge gains to be had from international co-operation.”

Click here to download the report for free and read more about clean energy supply chains.