IEA report highlights economic growth driven by clean energy technology manufacturing

Jakarta—A significant boost in the manufacturing of clean energy technologies, including solar photovoltaic (PV) panels and batteries, is pivotal in driving global economic growth, according to a new report from the International Energy Agency (IEA). The report, titled “Advancing Clean Technology Manufacturing,” details a substantial increase in investments in this sector, which reached USD 200 billion in 2023, marking a more than 70% jump from the previous year and contributing approximately 4% to global GDP growth.

The report underscores that current manufacturing capacities for solar PV are already sufficient to meet the needs of a net zero pathway by 2030, with battery manufacturing close behind. Investment in solar PV manufacturing has more than doubled while funding for battery production has surged by around 60%. Furthermore, if the projects currently announced are realised, battery manufacturing will meet 90% of the required capacity for the same period.

IEA Executive Director Fatih Birol underscored the transformative impact of these investments. “Record output from solar PV and battery plants is not just a statistic, but a testament to the power of clean energy transitions – and the strong investment pipeline in new facilities and factory expansions is set to add further momentum in the years ahead,” he stated. This transformative impact should inspire policymakers and industry leaders to continue supporting and investing in clean energy technology manufacturing.

Despite this progress, the report also points out the geographic concentration of clean energy manufacturing, with China housing over 80% of the global solar PV module manufacturing capacity. However, there is potential for greater geographic distribution, particularly in battery cell manufacturing, with Europe and the United States each projected to reach around 15% of global capacity by 2030 if all planned projects proceed.

The analysis also revealed cost disparities in manufacturing across different regions, with China remaining the lowest-cost producer. However, the majority of production costs are tied to operational expenses such as energy, labour, and materials, suggesting that these cost gaps could be addressed through strategic policy interventions. This highlights the importance of policymakers and industry leaders in implementing these interventions to level the playing field and promote fair competition in clean energy technology manufacturing.

The report, produced in response to a request from G7 leaders in 2023, offers guidance for policymakers preparing to integrate clean energy manufacturing into their industrial strategies. It emphasises that while there is no one-size-fits-all approach, the principles laid out could help shape robust planning for the future.

“Advancing Clean Technology Manufacturing” builds on insights from a high-level dialogue held in Paris and integrates findings from the latest IEA publications and briefings on clean technology manufacturing, aiming to steer global efforts towards sustainable economic growth through clean energy technologies. (nsh)

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