Energy Technology Perspectives 2024
About this report
The deepening connections between energy, trade, manufacturing and climate are the focus of this latest edition of Energy Technology Perspectives (ETP), the IEA’s flagship technology publication. Building on the comprehensive assessment of clean energy technology supply chains set out in ETP-2023, this year’s edition offers cutting-edge analysis based on rich and detailed new data, granular surveys of industry, and a bottom-up approach to fresh modelling. Its significance is amplified by what has been, until now, a dearth of information in this space, and it will provide policymakers with an in-depth, quantified basis to inform their deliberations for years to come.
Three strategic areas of public policy – energy, industry and trade – are increasingly interwoven
The new energy economy that is emerging presents major opportunities for countries looking to manufacture clean technologies, their components and related materials. But it also presents challenging decisions for governments, which face tensions and trade-offs based on the industrial and trade policies they opt to pursue.
Governments must reconcile their commitment to well-functioning markets and cost-effective clean energy transitions, on the one hand, with the need to establish secure, resilient clean technology supply chains, on the other. This involves tough decisions around choosing which industries to support, how to structure trading relationships and where to prioritise innovation efforts.
The 2024 edition of Energy Technology Perspectives (ETP) – which serves as the world’s clean energy technology guidebook – maps out the evolving role of manufacturing and international trade as energy transitions advance, supporting decision-making in these areas. ETP-2024 is the first analysis of its kind to do so with granular sectoral detail across supply chains, based on a unique bottom-up dataset and a quantitative assessment of countries’ industrial strategies.
The sizeable economic opportunities associated with manufacturing clean energy technologies are a top priority for government and industry
The global market value for the key six mass-manufactured clean energy technologies – solar PV, wind, electric vehicles (EVs), batteries, electrolysers and heat pumps – grew nearly fourfold between 2015 and 2023, when it surpassed USD 700 billion, or around half the value of all the natural gas produced globally that year. Growth has been driven by surging clean technology deployment, particularly for EVs, solar PV and wind. Under today’s policy settings, the market for these clean technologies is set to nearly triple by 2035 to more than USD 2 trillion. This is close to the average value of the global crude oil market in recent years.
A major wave of investment in manufacturing clean technologies is underway, with many new factories being built across the world
Global investment in clean technology manufacturing rose by 50% in 2023, reaching USD 235 billion. This increase is equal to nearly 10% of the growth in investment across the entire world economy. Four-fifths of the clean technology manufacturing investment in 2023 went to solar PV and battery manufacturing, with EV plants accounting for a further 15%.
The amount of manufacturing capacity being added has been comfortably outpacing current deployment levels. Despite some recent cancellations and postponements of solar PV and battery manufacturing projects, investment in clean technology manufacturing facilities is set to remain close to its recent record levels, at around USD 200 billion in 2024.
Materials such as steel, aluminium and ammonia are growing in importance
Steel and aluminium are direct inputs for clean technology manufacturing, as well as for the buildings, vehicles and power plants in which such technologies are deployed. Meanwhile, ammonia is mostly used to make fertilisers, with emerging applications as a fuel in the shipping and power sectors.
The race to bring to market crucial technologies to produce steel, aluminium and ammonia with near-zero emissions is underway. The deployment of these technologies requires an average of over USD 80 billion per year of investment through to 2050 in a scenario compatible with reaching net zero emissions by the same year. Yet the potential market is much larger. By 2050, it is poised to reach around USD 1.2 trillion, supplanting significant chunks of the existing markets for these materials. Even under today's policy settings, the market for near-zero emissions materials exceeds the size of the current market for solar PV modules by 2035.
Clean technology supply chains are highly dependent on trade, and will continue to be in the future
At around USD 200 billion, the value of trade in clean technologies is nearly 30% of their global market value. The biggest element is trade in electric cars – which has doubled since 2020, reaching around one-fifth of trade in all cars in 2023 in value terms – while solar PV is in second place. Under today’s policy settings, overall clean technology trade is on track to reach USD 575 billion by 2035, around 50% more than the current value of global trade in natural gas.
Despite the ongoing implementation of industrial strategies in other countries, the value of China’s clean technology exports is set to exceed USD 340 billion in 2035, based on today’s policy settings. This is roughly equivalent to the projected oil export revenue of both Saudi Arabia and the United Arab Emirates combined in 2024. However, there are still strong opportunities for countries all over the world to enjoy the benefits of increased clean energy manufacturing and trade, depending on the pace of clean energy deployment and the policies adopted.
As the energy sector transforms and energy-related trade shifts towards clean technologies, there will be long-term implications. While supplies of fossil fuels need to be replenished as soon as they are consumed, importing clean technologies results in a durable stock of energy equipment. For comparison, a single journey by a large container ship filled with solar PV modules can provide the means to produce as much electricity as would be generated from the natural gas onboard more than 50 large liquefied natural gas (LNG) tankers, or from coal onboard 100 large ships.
Projected changes in the European Union’s trade balance help illustrate the consequences of this shift. Based on today’s policy settings, the bloc’s net imports of fossil fuels and clean energy technologies is set to reach around USD 400 billion in 2035. But its total import bill is poised to tilt towards a higher share of clean energy technologies, from less than 10% in 2023 to 35% in 2035, at the expense of fossil fuels. This could have a positive impact on energy resilience.
Cost competitiveness is an important driver of manufacturing investment, but not the only one
China is currently the cheapest location for manufacturing the key clean energy technologies considered in this report, without taking into account explicit financial support from governments. It costs up to 40% more on average to produce solar PV modules, wind turbines and battery technologies in the United States, up to 45% more in the European Union, and up to 25% more in India.
Cost competitiveness is a key factor explaining China’s outsized role in clean technology manufacturing today. Relative to other countries, it has greater economies of scale, a larger domestic market and highly integrated firms and facilities along the supply chain for these technologies. However, an IEA survey of more than 50 major manufacturers across clean technology and material supply chains for ETP-2024 reveals the other factors, besides cost, that influence investment decisions. These include various forms of policy support, access to markets, skills and knowledge in the industrial base, and infrastructure.
The door of the new energy economy is still open to emerging markets
Emerging and developing economies in Latin America, Africa and Southeast Asia account for less than 5% of the value generated from producing clean technologies today. A fair and just transition requires enabling more regions to reap the economic benefits from growing supply chains for clean and modern energy technologies.
Political and currency risks, a lack of skilled workers and poor infrastructure – factors that currently deter investment in emerging markets – need to be addressed. However, there is a major potential: beyond the mining and processing of critical minerals, countries in Latin America, Africa and Southeast Asia all have prospects to leverage their competitive advantages and move up the value chain. To identify opportunities, ETP-2024 collected country-by-country data across more than 60 indicators, assessing the business environment, infrastructure for energy and transport, resource availability and domestic market size.
Supply chain concentration puts pressure on the busiest maritime shipping routes
Today, around half of all maritime trade in clean energy technologies passes through the Strait of Malacca, which connects the Indian and Pacific Oceans. While the energy security implications differ, it is useful to note that this is significantly more than the roughly 20% of fossil fuel trade that passes through the Strait of Hormuz.
In the next 10 years, as clean energy transitions accelerate, clean technology shipments through Malacca are set to rise substantially, though their share in total maritime trade remains very small. The dependency on maritime chokepoints poses risks to supply chain resilience worth monitoring, especially since the average clean technology cargo is more than ten times the value of the average fossil fuel cargo per tonne.
Well-designed industrial and trade policies will be crucial for clean energy transitions to continue gathering pace
The tensions and trade-offs between the goals of energy and industrial policies mean that getting policy measures right is essential for clean energy transitions. Trade measures – including both tariffs and non-tariff measures – already increase the cost of clean technologies. A 100% tariff on solar PV modules today would cancel out the decline in technology costs seen over the past five years.
Well-designed industrial strategies can help address competitiveness gaps or reach the innovation frontier sooner, but their interplay with trade policy measures needs careful consideration. Meanwhile, trade policies need to be designed with a view to their role in the new clean energy economy and what they mean for industrial competitiveness today. There is no single recipe to follow for these policies, but the analysis presented in ETP-2024 is designed to help move the debate in this area forward.
Limit disruptions due to
supply chain concentration
Minimise supply crunches
with timely investment
Secure and resilient
Supply chains that promote
orderly clean energy transitions
Alleviate shipping
chokepoint risks
Avoid need for higher
cost supplies through
material efficiency
Affordable
People-centred
Make national transitions
fair and inclusive
Encourage innovation
for cheaper designs
and processes
Support competition
to drive down costs
of clean energy
Ensure developing economies can harness
their potential to become prosperous
and competitive manufacturers