Any process, product, or service that reduces negative environmental consequences through significant increases in energy efficiency, sustainable resource use, or environmental protection measures. The technology whose process, product, and service lower the negative effect on the environment by increasing the efficiency of energy and using sustainable resources or following environmental actions is the new energy world. The new energy world is at the dawn of a new industrial age—the age of clean energy technology manufacturing—that is creating major new markets and millions of jobs but also raising new risks, prompting countries across the globe to devise industrial strategies to secure their place in the new global energy economy, according to a major new IEA report.
What is “Clean Technology”?
Clean technology, also known as “cleantech,” The term “cleantech” refers to goods and services that increase operational effectiveness, productivity, or efficiency while lowering expenses, input requirements, energy consumption, waste production, or environmental contamination. It has its roots in the growing consumer, governmental, and commercial interest in renewable energy production. Land use organizations and venture capital firms are frequently linked to cleantech.
What is included in Energy Technology Perspectives 2023?
The most recent installment in one of the IEA’s flagship series, Energy Technology Perspectives 2023, is the first global guidebook for the clean technology industries of the future. It outlines how the supply chains for clean energy technologies like solar panels, wind turbines, electric vehicle batteries, hydrogen electrolyzes, and heat pumps will likely change as the clean energy transition moves forward in the coming years and provides a comprehensive analysis of the global manufacturing of these technologies today. If countries worldwide fully implement their announced energy and climate pledges, the global market for key mass-produced clean energy technologies will be worth approximately USD 650 billion annually by 2030, which is more than three times the current level. Manufacturing jobs in clean energy would more than double, from 6 million now to nearly 14 million by 2030. As transitions progress, further rapid industrial and employment growth is anticipated in subsequent decades.
In addition, high geographic concentrations of technology manufacturing and resource processing pose risks in the current supply chains of clean energy technologies. At least 70% of the manufacturing capacity for technologies like solar panels, wind, EV batteries, electrolyzes, and heat pumps is held by the three largest producer nations, with China dominating all of them. Meanwhile, a significant portion of the mining for vital minerals is concentrated in a few nations. For instance, cobalt is produced in the Democratic Republic of the Congo, which also produces more than 70% of the world’s lithium. Only Australia, Chile, and China produce more than 90% of the world’s lithium. Tight supply chains are already posing risks to the world, driving up the cost of clean energy technology and making it more difficult and costly for nations to transition to renewable energy sources. The first-ever price increase in EV batteries was caused by rising costs of cobalt, lithium, and nickel in 2022 when they increased by nearly 10% globally. After years of decline, the cost of wind turbines outside of China has also been rising, and solar photovoltaic (PV) trends are similar.
According to the report, major economies are combining their climate, energy security, and industrial policies into more comprehensive economic strategies. The Inflation Reduction Act in the United States clearly demonstrates this; however, other examples include the European Union’s Fit for 55 package and Repower EU plan, Japan’s Green Transformation program, India’s Production Linked Incentive Scheme, which encourages the manufacturing of solar PV and batteries, and China’s attempt to meet or even exceed the objectives of its most recent Five-Year Plan.
What are investors looking for?
In the meantime, investors and project developers in clean energy are keeping a close eye out for policies that could give them a competitive advantage. The project pipeline has the potential to expand rapidly in an environment that is favorable to investment due to relatively short lead times, which range from one to three years on average, to bring manufacturing facilities online. According to the report, only 25% of the announced manufacturing projects for solar PV are currently under construction or about to begin construction. EV batteries account for about 35% of the total, while electrolyzers account for less than 10%. The outcomes of the remaining projects may be significantly influenced by market developments and government policies.ETP-2023 emphasizes the significance of international trade in supply chains for clean energy technology in the context of regional ambitions for manufacturing expansion. It demonstrates that international trade accounts for nearly 60% of all solar PV modules produced worldwide. Despite their bulk, EV batteries and components for wind turbines play an important role in trade, with China currently being the primary net exporter.
The report also emphasizes the particular difficulties associated with the crucial minerals required for numerous clean energy technologies, noting the lengthy development timelines for new mines and the requirement of stringent environmental, social, and governance standards. International collaboration and strategic partnerships will be essential for ensuring supply security in light of the uneven geographic distribution of crucial mineral resources.
Finally, experts say that the world is going to benefit from more diversified clean technology. Global projects for clean energy technology manufacturing are a large industry, and they are growing. The place where we stand now is making us move forward to meet our international energy and climate goals, and the inventions in this field are still to come. Many economies around the world are competing to be the first to enter the new energy economy. The competition in this field is fair; there is more chance for international collaboration as no country is an energy island. If collaboration doesn’t take place, the transitions become costly. To bring about drastic changes and achieve the goals set by this technology, collaborations work perfectly fine and are one of the best options. If what we’ve discussed becomes a reality, our world would be a better place, with less pollution and more diverse aspects of nature.
