Riyadh: Clean Energy Investments Fueling Global Economy
Investments in clean energy technology are booming, creating new industrial and employment opportunities and strengthening the global economy, according to a recent report.
Global Investment in Clean Energy Technologies Surges
The International Energy Agency reported that global investment in the manufacturing of key clean energy technologies, including solar photovoltaic, wind, batteries, electrolyzers, and heat pumps, increased by 70 percent in 2023 to $200 billion.
These investments are becoming increasingly significant and are starting to impact broader macroeconomic data, accounting for around 0.7 percent of worldwide investment across all sectors of the economy.
Impact on Global GDP Growth
Clean technology manufacturing alone contributed around 4 percent to global GDP growth and nearly 10 percent to global investment growth in 2023, highlighting the growing importance of clean energy technologies in driving economic progress.
Record Investments in Solar PV and Battery Manufacturing
Investments in solar PV manufacturing doubled to $80 billion in 2023, while funding for battery production increased by 60 percent to $100 billion.
Due to these investments, solar PV module manufacturing capacity is already on track to meet 2030 targets for net zero emissions, with battery manufacturing capacity also making significant progress.
Strong Momentum in Clean Energy Transitions
Record output from solar PV and battery plants is driving clean energy transitions, with a strong investment pipeline in new facilities and expansions expected to further accelerate progress in the coming years, according to IEA Executive Director Fatih Birol.
While more investment is needed for some technologies, the overall trend towards clean energy manufacturing is clear, presenting policymakers with an opportunity to design industrial strategies centered around clean energy transitions.
China Leads Clean Energy Manufacturing
China remains the dominant player in clean energy manufacturing, accounting for 80 percent of global solar PV module production capacity. However, the manufacturing of battery cells could become less concentrated geographically by the end of the decade.
Despite higher production costs in countries like India, the US, and Europe, operational costs remain a significant factor in overall production costs, indicating that policy interventions can influence cost differentials and attract investment.
Factors Influencing Investments in Clean Energy Technologies
Cost is not the only factor driving investments in the clean energy technology sector, with factors such as market size, skilled labor availability, and infrastructure readiness also playing crucial roles in attracting investment.
Policy interventions, training programs for workers, and research and development initiatives are essential for stimulating growth in clean energy manufacturing and accelerating advancements in the sector.