International Energy Agency Publication – A Clean Energy Technology Guidebook

On 30 October 2024, the International Energy Agency (IEA) launched the 2024 edition of its flagship report, Energy Technology Perspectives. Toward the development of secure and resilient supply chains for clean technologies and related materials, this new outlook focuses on the manufacturing and trade of clean energy technologies across the globe.

Based on a manufacturing and trade model developed by the IEA, this analysis explores supply chain dynamics for six key types of clean energy technologies, namely electric vehicles, batteries, solar photovoltaics, wind turbines, heat pumps and electrolysers. This includes the identification of the main shipping routes and logistical chokepoints, as well as the role of ports and ships for decarbonising international trade. The projections in the manufacturing and trade of these six technologies are presented through three different scenarios, which respectively consider: i) domestic and regional policies and measures that are already in place; ii) announced pledges assuming that governments meet all intended climate-related commitments; and iii) measures that achieve global net zero carbon dioxide emissions in the energy sector by 2050, as well as relevant United Nations Sustainable Development Goals. The announced pledges cited for South Africa – an IEA associate nation – are the Just Energy Transition Plan and the Renewable Energy Masterplan.

The Energy Technology Perspectives 2024 report provides insights into the impacts and trade-offs of different technology choices and policy targets, serving as a strategic guidance framework for governments and other stakeholders. Through a worldwide manufacturing and trade lens into the rapidly expanding clean energy economy, the scenario-based modelling produced the following highlights, particularly for developing countries in Africa, Latin-America, and South-East Asia:

• China is by far the largest producer of clean energy technologies and related materials, including steel, aluminium and ammonia. Based on announced projects, geographic concentration in manufacturing is expected to continue to 2030, with China, the
  European Union, and the United States accounting for over 80% of production capacity for the six clean energy technology supply chains.
• More climate ambition does not automatically mean more clean energy technology trade, as climate goals need to be balanced with those for energy security, trade, and industrial development. In the net zero emissions by 2050 scenario, a fair and inclusive transition means that more capacity is co-located with demand in emerging markets and developing economies.
• China will remain the global powerhouse for clean energy technology manufacturing. Around 60% of all electronic vehicles sold worldwide in 2035 are manufactured in China under the current policies scenario. India’s Production Linked Incentive scheme results in the production of solar photovoltaics modules to grow by a factor of nine to 2030, and production of battery cells to grow to a level close to that of the European Union.

• Emerging markets currently account for less than 5% of the global value generated from clean energy technologies. Africa’s business environment, infrastructure, and low domestic demand, make it harder to attract large investments in manufacturing. North Africa is projected to become an electronic vehicle manufacturing hub, exporting 65% of the 1.8 million electronic vehicles produced by 2035 to Europe and North America. Africa also builds on its iron ore and renewable energy resources to produce iron with electrolytic hydrogen.
• Around 50% of all maritime trade in clean energy technologies currently passes through the Strait of Malacca. This dependency on maritime chokepoints poses risks to supply chain resilience, especially as the average clean energy technology cargo is more than ten times the value of the average fossil fuel cargo per tonne.

The Energy Technologies Perspectives 2024 report concludes with a set of strategic considerations to manage identified supply chain risks and ensure a clean energy transition that is people-centred and simultaneously addresses security, resilience, and affordability.

The Energy Technology Perspectives report launch page is available here.

A previous advisory note on the Energy Technology Perspectives 2023 report and the role of mining companies in the new age of clean technology manufacturing is available here.

This advisory note was prepared by ALT Advisory’s Climate Justice & Sustainability Practice (CJS) under its Vigilance and Value Chains Programme, which focuses on traceability, human rights protection, and corporate vigilance throughout product life-cycles to build resilient supply chains. Find out more here.

Please note: The information contained in this note is for general guidance on matters of interest, and does not constitute legal advice. For any enquiries, please contact us at [email protected].