In 2023, geopolitical conflicts continue to cast uncertainty, and energy tensions show no sign of abating.

Despite these challenges, the International Energy Agency's (IEA) latest report, Energy Technology Perspectives 2023, released on January 12, heralds a new dawn – the "era of clean energy technology manufacturing."

This paradigm shift towards clean energy not only promises to open new markets and create millions of jobs but also introduces new challenges, prompting nations globally to devise strong industrial strategies to ensure their place in the evolving global energy economy. The move toward clean energy offers vast opportunities for growth and job creation within burgeoning industries.

According to the report, if nations fully implement their declared energy and climate commitments, the global market value of key mass-produced clean energy technologies could soar to approximately $650 billion annually by 2030, more than tripling current levels.

By the same year, clean energy manufacturing jobs could more than double from the current 6 million to nearly 14 million, with over half of these jobs tied to electric vehicles, solar PV, wind, and heat pumps. Further rapid industrial and employment expansion is anticipated over the coming decades as the transition gains momentum.

International trade plays a crucial role in facilitating a swift and affordable transition to clean energy, necessitating greater governmental efforts to diversify and fortify clean energy supply chains. Achieving effective competition across all segments of relevant clean energy technology supply chains proves challenging for most countries.

Competitive specializations often stem from inherent geographical advantages, such as access to low-cost renewable energy or certain mineral resources, which can lower production costs of energy and material commodities.

Additionally, factors like a large domestic market, a highly skilled workforce, or synergies and spillover effects from existing industries can contribute to competitive advantages.

Governments should prioritize assessing and nurturing these advantages as a central tenet of their industrial strategies, which must be designed under international rules and bolstered by strategic partnerships.

Energy costs will remain a primary differentiator of countries' competitiveness in energy-intensive industrial sectors. Today, industrial competitiveness is closely tied to energy costs, particularly natural gas and electricity, which vary significantly across regions. This dynamic persists in the clean energy transition.

For instance, the cost of producing hydrogen from renewable electricity using the best resources available in the U.S. today ($3-4/kg) may be substantially lower than in Japan and Western Europe ($5-7/kg), resulting in similar discrepancies in the production costs of derived commodities like ammonia and steel.

As nations progress in their climate commitments and renewable electricity costs continue to decline, alongside rapid reductions in electrolyzer costs, disparities in costs between regions may somewhat diminish.

However, the competitiveness gap is likely to persist. Careful deliberation on where to achieve domestic specialization within the supply chain, coupled with strategic partnerships or direct investments in third countries, should be fundamental considerations in nations' industrial strategies.

The transition to clean energy offers immense promise for economic growth and job creation, but it also presents complex challenges that require strategic and coordinated efforts at the national and international levels.

By leveraging competitive advantages, fostering innovation, and embracing international collaboration, countries can navigate the clean energy revolution and position themselves for success in the evolving global energy landscape.