What does it take to make clean energy technologies?

What you need to know about clean energy supply chains

Energy production – mainly the burning of coal, oil, and gas – is the largest source of climate-warming emissions.

Reducing those emissions requires a shift of our energy systems away from fossil fuels to renewable sources, such as solar and wind. At the Cop28 climate talks in Dubai in December 2023, countries agreed to triple renewable energy capacity by 2030 to decarbonise the power system and achieve net zero emissions by 2050.

This transformation requires a massive increase in the manufacturing and deployment of clean energy technologies, from solar panels and wind turbines to the batteries needed to store energy. The supply chains needed to produce clean energy technologies are a critical – yet sometimes overlooked – part of the energy transition.

Can clean energy replace fossil fuels in the power sector?

Yes. There is widespread scientific consensus that renewable energy and other clean sources, such as nuclear power, can and must dominate energy systems in the future to meet global climate goals. But there are different ways to get there.

The International Energy Agency (IEA) has set out a scenario aligned with reaching net zero emissions in the power sector and limiting warming to 1.5C. Under this scenario, renewable energy sources would meet two-thirds of global energy supply – including for transport, heating and industrial uses – and nearly 90% of electricity generation by 2050. Achieving this would require global energy use to fall by 8% through energy savings and behaviour change in wealthy countries, the use of coal to be virtually phased out, gas whose emissions are not captured to decline by 88%, and oil by 77%.

Alternative pathways to transform energy systems from fossil fuels to renewables make different assumptions, such as limiting the use of unproven technology and requiring greater reductions in energy demand. Some scientists argue that the world can reach 100% renewable energy systems by 2050.

Yet, these visions of the future remain a long way from the world we currently live in. Around 80% of global energy supply still comes from fossil fuels, which account for about three-quarters of global greenhouse gas emissions. At the same time, the growth of renewable energy sources, particularly solar and wind, is rapidly accelerating.

The IEA says global renewables capacity is on course to increase by two-and-a-half times by 2030 and governments have the tools to achieve the goal of tripling global capacity. In most parts of the world, renewable energy is the cheapest power option.

By early 2025, renewables are expected to become the largest source of electricity generation. Widespread electrification, including through the roll-out of electric vehicles and heat pumps, will help cut power sector emissions.

And yet, global energy demand has so far been growing faster than the adoption of clean energy sources. As a result, the world continues to produce more energy from fossil fuels and emissions from the power sector continue to grow, albeit at a slower pace. The IEA forecasts that demand for all fossil fuels will peak by 2030, but their use will need to fall dramatically to meet global climate goals.

What are the key steps to manufacture clean energy technologies?

Manufacturing clean energy technologies, such as solar panels, wind turbines and batteries, all begin in a similar way: by extracting and mining metals and minerals. Once out of the ground, these minerals need refining and processing – an energy-hungry process. Key components are then manufactured and assembled before being transported to where the technology will be installed.

 

Clean energy technologies will eventually reach the end of their lifespans (20-25 years for wind turbines and 25-30 years for solar panels) and need to be decommissioned. Without proper management, this is an environmental time-bomb. There are emerging efforts to recycle and reuse certain minerals and components of these technologies. Our Q&A on electric vehicles has more on emerging practices to recycle EV batteries.

How much does the clean energy supply chain need to grow to deliver on climate goals?

Every stage of the supply chain needs to expand for the world to decarbonise the global economy. Clean energy power systems require more minerals to build than their fossil fuel-based counterparts. The IEA estimates that achieving net zero emissions globally by 2050 requires a six-fold increase in the supply of critical minerals by 2040.

Manufacturing must rapidly scale up. If met in full, current plans to expand solar manufacturing capacity would be sufficient to meet solar panel demand by 2030 in a scenario that limits global warming to 1.5C. But there are considerable gaps in the manufacturing capacity for wind turbines, for example.

The IEA estimates an additional 12 million workers will be needed this decade to manufacture and install solar panels, wind turbines, heat pumps, and EVs. To triple global renewable energy capacity, energy storage capacity should increase sixfold by 2030, with batteries accounting for 90% of the increase. And electricity transmission lines need to expand by around 2 million kilometres every year this decade to meet needs in line with achieving net zero by 2050.

Is manufacturing clean energy technologies more polluting than continuing to burn fossil fuels?

Although there are significant emissions linked to the mining of minerals and manufacturing of clean energy technologies, the life-cycle emissions of solar panels, wind turbines and EV batteries remain far lower than those of fossil fuel-based technologies. Studies have shown that emissions from manufacturing solar panels and wind turbines are dwarfed by the emissions saved from avoiding burning fossil fuels.

However, clean energy supply chains remain an important source of pollution. In China, the manufacturing of polysilicon – the key component of solar panels – is powered by the availability of cheap coal. In Indonesia, coal plants are being built to power the energy-hungry processing of minerals for the battery industry.

And mining energy transition minerals is a dirty business, which if poorly managed risks increasing social harms and environmental degradation, such as deforestation, water depletion and pollution, and biodiversity loss. It is possible to mitigate and reduce those impacts including through regulation, community participation, resource efficiency such as reusing and recycling minerals, and energy demand reductions in some parts of the world.

Why are clean energy supply chains vulnerable?

Clean energy supply chains are highly concentrated in specific places, making them prone to geopolitical and trade disruptions.

Mining is the most concentrated stage, with a handful of countries responsible for nearly all critical mineral extraction. The Democratic Republic of Congo supplies 70% of the world’s cobalt, while Australia accounts for more than half of global lithium mining, and Indonesia 40% of nickel – all key components for EV batteries.

Across the supply chain, China has become a clean energy juggernaut. It supplies 60% of the world’s rare earth elements used to produce magnets for EVs and wind turbines, towers over the processing of critical minerals, dominates around 80% of all solar power production stages, and supplies 80% of battery cells worldwide.

This concentration leaves supply chains exposed to economic shocks and market volatility. Trade disruptions caused by the Covid-19 pandemic and Russia’s invasion of Ukraine, coupled with fears of a supply crunch for energy transition minerals, saw prices soar in recent years. However, in 2023 battery materials prices dropped following a glut in the market and a slowdown in EV demand.

At times, the supply chain is concentrated in places with poor labour and environmental regulations, leaving it open to human rights violations. In the DRC, cobalt mining has been linked to child labour and human rights abuses. Between one third and one half of the world’s solar-grade polysilicon used in solar panels is produced in China’s Xinjiang region, where the government is accused of subjecting members of the Uyghur ethnic group to forced labour.

What does the move to “de-risk” global supply chains mean?

The concentration of the clean energy supply chain in China has got western governments, including in the US and the EU, concerned. In response, they are investing in their own manufacturing capacity and in securing alternative supplies to reduce their reliance on Chinese imports. “De-risking” refers to this diversification drive.

This signals a shift away from earlier rhetoric of a full economic decoupling from China, which would have drastic global implications for the transition. Analysis from the energy consultancy firm Wood Mackenzie found that reaching net-zero by 2050 would cost 20% more – or about $6 trillion – without the supply of low-cost clean tech from China.