Chart: Global clean energy manufacturing, by the numbers

China has a huge lead in building the technologies of the energy transition. Can the U.S. and Europe catch up?
By Maria Virginia Olano

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The overwhelming majority of the world’s clean energy technologies — from solar panels to heat pumps — are manufactured in China.

The Biden administration, as well as several European countries, are trying to change that. These efforts will likely pay off more with some technologies than others, according to a new report by the International Energy Agency.

Around $200 billion was invested in clean technology manufacturing worldwide in 2023 — a 70 percent increase from 2022. But despite a flurry of new public and private spending on domestic production in the U.S. and European countries over the past few years, China alone accounted for three-quarters of this investment.

That lead in spending translates to an equivalently impressive lead in output: As of last year, Chinese factories churned out more than 80 percent of the world’s solar modules and battery cells, as well as nearly 65 percent of wind nacelles and 56 percent of electrolyzers, per IEA data.

By 2030, that picture could change — but only barely for some technologies. China is expected to more or less maintain its share of solar module manufacturing over the coming years, while IEA projects it will grow its share of wind nacelle manufacturing to more than 70 percent.

Heat pumps are the one technology where China is expected to lose its leading share of manufacturing in the years ahead. By the end of the decade, the IEA predicts that the European Union will dominate the market, producing almost 35 percent of the world’s heat pumps, followed by China and the U.S.

Electric-vehicle batteries are also a bright spot for the U.S. and EU as they rev up domestic clean energy manufacturing — their combined EV-battery market share could reach 30 percent by 2030, up from 12.6 percent today. That would be enough to put each region on track to meet their battery deployment needs by the end of the decade, IEA forecasts.

Electrolyzers — the machines that create hydrogen by using electricity — look to be another area where the U.S. and EU can make manufacturing progress. IEA forecasts that the U.S. will make up nearly 20 percent of the electrolyzer manufacturing market by 2030 and the EU 17 percent.

The U.S., embroiled in an escalating trade war with China, is particularly eager to establish its own clean energy supply chains. In 2022, President Biden signed the Inflation Reduction Act, which heavily incentivizes domestic clean energy manufacturing through generous tax incentives. So far, it’s worked: The U.S. is in the midst of an unprecedented boom in clean energy manufacturing. This week, the administration proposed aggressive new tariffs on everything from Chinese-made electric-vehicle components to solar modules — the stick to go with the carrot of the domestic manufacturing subsidies.

Leveling the playing field won’t be easy though. The IEA finds that China is currently the lowest-cost location for producing all of these five key clean technologies. Cheap labor, lax regulations, and an integrated supply chain give China major advantages that could take the U.S. years to effectively compete with.

Maria Virginia Olano is chief of staff at Canary Media.