Executive summary

The current global economic development aspirations coincide with intensifying climate risks, growing geo-political adversities, and shrinking carbon space. For several countries, progress on the sustainable development goals (SDGs) is slow, energy demand is rising, and their fiscal bandwidth is stressed as they strike a balance between cleaning up their energy mix and maintaining the affordability of energy supplies for large proportions of their populations (UN 2022, Carbon Tracker and CEEW 2021, Ghosh, A., Ganesan, K. 2015). For the world to achieve a net-zero future, solar and wind power capacities must grow 20 and 11 times between 2020 and 2050, respectively (IRENA 2022, IEA 2021a). With the rise in the share of variable renewable energy (RE) in the electricity systems, storage solutions must see a massive growth. And, for the hard-to-abate sectors, green hydrogen ecosystem must be scaled up rapidly.

The rapid adoption of RE will not only help decarbonise the electricity systems but also help realise the desired impacts of the SDGs. However, a speedy and risk-proof transition to RE will only be possible if countries can secure access to uninterrupted and affordable supply chains of key technologies.

This report presents the current structure of global supply chains for solar photovoltaic (solar PV), onshore and offshore wind, lithium-ion batteries (LIBs), and green hydrogen. It briefly discusses the manufacturing landscape for critical components in these supply chains, including requirements of key minerals, skills, logistics, infrastructure, and associated innovations. Finally, and most importantly, the report captures the evolution of exports and imports of key components and equipment in the aforementioned sectors over the last decade – 2012 to 2021. This analysis further assesses the concentration and dependency of and on key components and products. The key findings include:

• Manufacturing capacities of RE technologies and their sub-components are highly concentrated in a few geographies. The location and quantum of manufacturing capacities are important metrics to determine the global supply-chain resilience. The analysis shows that the manufacturing capabilities across the RE technologies are highly concentrated in a handful of countries. However, the expansion of manufacturing capacities in certain countries has catered to meeting domestic deployment demand for the technology. Therefore, it also important to study two additional aspects of supply chains over time. One, the import dependencies of key components and equipment between countries and regions. Two, the countries that dominate the global supplies of key technologies and components.
• There has been a steady growth in global trade, albeit with a high concentration of exporters. Despite a significant decrease in prices, the traded values of solar modules, LIBs, and wind generators have increased steadily over the last decade. For example, over the last decade, 70 per cent of the global exports in solar PV have come from only 4 countries. Similarly, in wind, only 4 countries accounted for more than 80 per cent of the total exports in the last 10 years.
• Many countries, particularly those with lower incomes, have a highly concentrated import mix across solar, wind, and lithium-ion batteries; the concentration has only increased with time. The concentration of RE-manufacturing facilities has had a drastic effect on the import mix of individual countries. In most cases, the concentration of imports of individual countries was greater than the already high concentration globally. Further, the level of import concentration varies by the income levels of the countries participating in global trade. In 2021, almost 90 per cent of lower-middle income countries and 65 per cent of high-income countries had concentrated imports in solar PV. For wind, more than 90 per cent of the countries have shown a high import concentration over the last decade. In the case of LIBs, 100 per cent of the lower-middle-income countries consistently had concentrated imports over the last 10 years. In the same duration, the number of high-income countries with concentrated battery imports increased from ~30 per cent to over 60 per cent. These trends point to concentrated supply chains, making them vulnerable to risks.
• Green hydrogen is in its nascent stages of development and needs a collaborative effort to scale up efficiently. Globally only 8 GW/yr of electrolyser manufacturing capacity had been deployed (IEA 2022c). To achieve the global net-zero target by 2050, 850 GW of electrolyser needs to be deployed by 2030 (IEA 2022f). To meet these deployment targets we may need at least 100 GW of annual manufacturing capacity whereas whereas country-level commitments only amount to 62 GW per annum by 2030 (IEA 2022c). Similarly, investments worth USD 700 billion are needed (Hydrogen Council 2022), whereas global commitments stand at approximately USD 100 billion within limited geographies. Apart from the capacity and deployment challenges, electrolyser and fuel cells, which are at the heart of the green hydrogen ecosystem, use critical minerals and rare earth elements with the same access issues that plague other RE solutions. Finally, a disconnect between standards, regulations, and certification systems could significantly slow down the scaling-up of the green hydrogen ecosystem. Addressing all these challenges will require a collaborative effort to develop resilient supply chains and provide global access to this new energy vector.

Based on the analysis and insights, the report identifies four strategic priorities for the Group of Twenty (G20) to ensure resilient RE supply chains. These are:

Ensure comprehensive tracking of global RE manufacturing capacity and trade flows to inform expansion and diversification strategies and foster competition in trade. This must include tracking of:

• Trade-flow data with greater accuracy
• Manufacturing capacity across the sectoral value chains
• New and innovative projects, applications and technology demonstrations

Create new avenues of supply and enhanced investments across supply chains to meet the increasing demand for clean technologies. These avenues must lead to:

• Dedicated financing for manufacturing through multilateral development banks
• Development of handbooks and courses to train individuals and institutions on creating local value chains
• Development and prioritisation of infrastructure for the production and movement of raw materials and finished products
• Development of global standards on infusing circularity in RE supply chains

Enable co-development of technologies and innovations. This could happen through:

• Sharing best practices on public procurement models which help scale up advanced technologies
• Formalising collaborations between technology-development labs across the world

Facilitate development of globally accepted standards and certification systems for new and emerging RE technologies such as green hydrogen. This must include:

• Establishment of interoperability in operational and safety standards
• Development of harmonised and universally acceptable certification systems for healthy global trade