Contact Us
The International Energy Agency (IEA) has recently released its comprehensive report, "Perspectives on Energy Technology," which explores the intricate correlations between energy, industrial, and trade policies. The report focuses predominantly on key clean energy technologies essential for the transition to cleaner energy, such as photovoltaics (solar), wind turbines, electric vehicles (EVs), batteries, electrolysers, and heat pumps. These technologies are manufactured on a mass scale, and the IEA examines various aspects, including market trends, manufacturing investments, trade flows, and value chains.
The market for these clean energy technologies, according to the IEA, has nearly quadrupled since 2015, reaching approximately $700 billion in 2023. This is comparable to half of the total global natural gas produced that year. With current political guidelines, the IEA projects this figure to exceed $2 trillion by 2035, mirroring the value of the global crude oil market in recent years.
In addition to market volume, derived from the quantity and market value of clean energy technologies, the IEA calculates global trade volume for different technologies. Traditional fossil-based energies account for about 10% of global trade, while clean energy technologies account for just 1%, albeit with a fast-growing trend. Electric vehicles (EVs) lead this growth, making up a fifth of all cars traded globally in 2023, with photovoltaics (solar) coming in second. The IEA expects trade in these clean energy technologies to surpass natural gas trading by 50% within the next decade.
Global investments in manufacturing clean energy technologies fell by 50% in 2023, reaching $235 billion. This represents almost 10% of the world economy's total investment growth and about 3% of global GDP growth. The IEA states that a significant number of new factories are being built worldwide. Of the 2023 investments, four-fifths were allocated to photovoltaic solar and battery production, while an additional 15% went to electric vehicle (EV) manufacturing.
However, many of these new production capacities are underutilized, with cancellations and delays recorded in both photovoltaic and battery production. The IEA estimates investments in 2024 will drop further to around $200 billion.
Cost competitiveness plays a major role in the manufacturing investments of clean energy technologies, with China continuing to be the most cost-effective location. Without considering government financial support, the production costs of solar PV modules, wind turbines, and batteries are about 40% higher in the USA, 45% higher in the EU, and still 25% higher in India compared to China.
Despite this, trade in these new energy technologies will have a long-term effect on global trade volumes. Unlike fossil resources, which ensure constant flows of goods, clean energy technologies produce durable goods. For example, a solar module transported by a container ship can generate as much electricity as the fuel transported by 50 LNG tankers or 100 coal freighters, thereby enhancing energy resilience in receiving countries.
The future of clean-tech production in the European Union will largely depend on the success of the Net Zero Industry Act (NZIA). The NZIA targets for the final manufacturing phases of wind components and heat pumps are relatively achievable. However, the IEA notes that the EU automobile industry faces significant challenges in reducing electric vehicle (EV) manufacturing costs. Full integration of supply chains, including batteries, is crucial. In 2023, imports from China represented about 20% of electric vehicle sales in the EU. Despite proposed import duties, the IEA predicts this proportion will rise to around 40%. However, achieving the NZIA goals and establishing a fully integrated supply chain for electric vehicles and batteries could help maintain this figure at 20%.
Our expert will reach you out if you have any questions!