The International Energy Agency (IEA) recently released its flagship report, Energy Technology Perspectives 2024. The report sheds light on the critical interplay between energy, industry, and trade in the rapidly evolving clean energy sector. This analysis explores the manufacturing and trade of clean energy technologies. It presents challenges and opportunities for governments. These challenges and opportunities also affect industries and emerging economies worldwide.

A Booming Market for Clean Energy Technologies

The global market for key clean energy technologies has grown nearly fourfold since 2015. It includes solar PV, wind turbines, electric vehicles (EVs), batteries, electrolysers, and heat pumps. This market reached over $700 billion in 2023. Under current policies, this market is expected to triple by 2035. It will surpass $2 trillion. This market is approaching the scale of the global crude oil market.

Trade in clean energy technologies is also accelerating. In 2023, trade volumes reached $200 billion, nearly 30% of the global market value. Electric vehicles led this surge, accounting for one-fifth of global car trade by value. By 2035, the trade in clean technologies is projected to hit $575 billion, a figure 50% larger than the current trade in natural gas.

Investments on the Rise

Manufacturing investments are scaling rapidly to meet growing demand. In 2023, global investment in clean energy manufacturing reached $235 billion, marking a 50% increase compared to the previous year. While China remains the cost leader in manufacturing, countries like the United States and European Union are leveraging industrial strategies, such as the U.S. Inflation Reduction Act and the EU’s Net Zero Industry Act, to boost domestic production and reduce reliance on imports.

Despite China’s dominance—holding 40–98% of the global manufacturing capacity for key technologies—other nations are stepping up. India, for example, could transition from being a net importer to a net exporter of clean technologies by 2035, thanks to its Production Linked Incentive Scheme.

Opportunities for Emerging Economies

While most of the value generated from clean technology manufacturing today is concentrated in developed economies, emerging markets in Latin America, Africa, and Southeast Asia hold significant potential. These regions could move up the value chain by improving infrastructure, enhancing local skills, and leveraging abundant natural resources.

For example:

• Southeast Asia could become a major producer of solar PV components, potentially exporting over 8 million EVs by 2035.

• Latin America, led by Brazil, has a strong foundation in wind turbine manufacturing, with opportunities to scale exports.

• North Africa could emerge as an EV manufacturing hub. Investment is already underway, and if the region is able to achieve its potential in line with achieving net zero emissions by 2050 globally, North Africa in 2035 exports almost half of the3.7 million EVs it produces by then, mostly to the European Union.

Strategic Trade and Industrial Policies

The report emphasizes that well-designed trade and industrial policies are critical to the clean energy transition. Tariffs and non-tariff barriers currently increase costs for clean technologies, with some exceeding those applied to fossil fuels. Lowering these barriers could accelerate adoption while enhancing global supply chain resilience.

At the same time, industrial strategies must strike a balance between protecting domestic industries and fostering global collaboration. Policies tied to clear, measurable goals—such as reducing production costs or enhancing innovation—will be vital in maintaining competitiveness.

Toward a More Sustainable and Equitable Energy Economy

The transition to a clean energy economy offers immense opportunities for economic growth, job creation, and emissions reduction. However, the path forward requires collaboration between governments, industries, and international organizations to ensure these benefits are equitably distributed. Emerging economies, in particular, must be empowered to seize their share of the economic gains.

As the Energy Technology Perspectives 2024 report highlights, this transition is not just about technology; it is about building a resilient, inclusive, and sustainable global energy system. For countries, companies, and communities, the door to this new energy economy remains open—but it requires bold action, strategic investment, and global cooperation.

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