The rapid growth of clean energy tech offers major opportunities for manufacturing and trade but poses tough choices for governments navigating industrial and trade policies, according to a new International Energy Agency (IEA) report published today.

In what the IEA said is a first of its kind analysis of the global cleantech market, the latest Energy Technology Perspectives focuses on the outlook for the top six mass-manufactured clean energy technologies, namely solar PV, wind turbines, electric cars, batteries, electrolysers and heat pumps. 

According to the report, based on today’s policy settings, the global market for these technologies is set to rise from $700 billion (£537.4 bn) in 2023 to more than $2 trillion (£1.5 tn) by 2035 – close to the value of the world’s crude oil market in recent years.

Trade in clean technologies is also expected to rise sharply, more than tripling to reach $575 billion (£441 bn) in a decade’s time, more than 50% larger than the global trade in natural gas today.

The report examined the global ties between energy, trade, manufacturing and climate using a new bottom-up dataset and quantitative modelling based on countries’ interconnecting policies, mapping out the current state of clean energy manufacturing and trade.

It found that, at $200 billion (£153.5 bn), the trade in clean technologies now represents nearly 30% of the sector’s global market value, with the biggest element being trade in electric cars, doubling since 2020 to reach around one-fifth of trade in all cars by 2023.

Along with growing trade values, the study also highlights that 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, an increase equal to nearly 10% of the growth in investment across the entire world economy.

Most of this spending is concentrated in regions that already have a foothold in the sector, such as China, the EU, the US, and increasingly India, with countries in Southeast Asia, Latin America and Africa accounting for less than 5% of the value generated from producing clean technologies.

Despite that disparity, the report identifies key opportunities for emerging and developing economies based on a country-by-country assessment of more than 60 indicators, including business environment, infrastructure for energy and transport, resource availability and domestic market size that the IEA claims can be used as a blueprint for clean energy economies.

For example, Latin America, particularly Brazil, has the potential to scale up its wind turbine manufacturing for export to other markets in the Americas, while North Africa has the ingredients to become an EV manufacturing hub within the next decade, and Southeast Asia could become one of the cheapest places to produce polysilicon and wafers for solar panels.

“As countries seek to define their role in the new energy economy, three vital policy areas – energy, industry and trade – are becoming more and more interlinked,” said IEA executive director, Fatih Birol.

“Clean energy transitions present a major economic opportunity, as we have shown, and countries are rightly seeking to capitalise on that. However, governments should strive to develop measures that also foster continued competition, innovation and cost reductions, as well as progress towards their energy and climate goals.”

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Finding ways to boost the cleantech market and drive innovation in the sector is vital if countries around the world, including the UK, are to hit their net-zero targets.

In order to do that, governments and policy makers will have to provide clear pathways for growth, which might prove tricky given that a recent poll of UK lawmakers found that although 94% support clean energy targets, they are continually at odds with experts on how best to achieve them.

The public, on the other hand, appears to be more unified on the path forward. A nationwide poll this summer by Aberdeen & Grampian Chamber of Commerce, for instance, revealed that over half of Scotland’s population supports building new energy transmission infrastructure to achieve net zero.