Renewable Energy

The Geographic Concentration of Clean Energy Supply Chains

The top 3 producing countries make up more than half of global output and capacity across most segments of clean energy technology supply chains.

The International Energy Agency has labeled this as “potentially risky levels of concentration”.

For manufacturing, the top three countries together account for around 70-85% of global capacity for technologies such as wind, solar panels and batteries. All of these technologies are critical parts of the clean energy transition.

China is the dominant country across manufacturing, bulk material production and critical mineral production. For critical minerals mining, Chile is the largest producing country for copper, Australia for lithium, Indonesia for nickel and Congo for cobalt.

This supply chain dependency is one of the aspects the EU Net Zero Industry Act sets out to address, with an aim that the EU’s manufacturing capacity of net-zero technologies approaches or reaches at least 40% of annual deployment needs by 2030.

Still, while geographical concentration is high, China’s investments has been key to reducing costs of clean energy technologies. This highlights a potential cost vs supply security trade-off in the coming clean energy acceleration. In their recent Renewables 2023 report, the IEA said this regarding solar PV manufacturing:

“Although developing domestic PV manufacturing will increase the security of supply and bring economic benefits to local communities, replacing imports with more expensive production in the United States, India and the European Union will increase the cost of overall PV deployment in these markets”.

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