Clean Energy Markets Expand Despite Economic Headwinds
Despite mounting trade tensions, rising tariffs, and economic uncertainty, clean energy markets continue to grow at a pace that is reshaping the global economy. The International Energy Agency’s (IEA) Energy Technology Perspectives report paints a complex yet clear picture: the world is steadily moving toward an era dominated by electricity and low-emissions energy, even as the transition faces political and industrial challenges.
At a time when governments are competing to protect domestic industries and concerns over China’s dominance in supply chains are intensifying, the numbers suggest that clean energy technologies are no longer merely an environmental trend. They have become a trillion-dollar global market expected to double within the next decade. From electric vehicles and hydrogen to solar power and batteries, the global economy appears to be entering a new industrial phase where technological leadership increasingly defines economic power.
A Market Set to Double — With Electric Vehicles Leading the Way
According to the IEA, the global market value of clean energy technologies reached approximately USD 1.2 trillion in 2025, following average annual growth of 20% over the past decade. Even under the agency’s most conservative scenario, the market is expected to double to nearly USD 2 trillion by 2035 — roughly equivalent to the size of today’s global crude oil market.
Electric vehicles are projected to account for nearly three-quarters of the total future market value of clean energy technologies, making them the primary driver of the industrial and energy transition. This growth has been fueled by the dramatic decline in battery costs, which have fallen by around 75% over the past ten years, allowing electric cars in some emerging markets to become cheaper than traditional combustion-engine vehicles.
Meanwhile, lower costs for solar and wind power have accelerated the global expansion of renewable energy. Around 80% of electricity generated from solar and wind is now cheaper than coal or gas in many markets worldwide.
However, the report stresses that continued growth is far from guaranteed. Much will depend on government policies, particularly those related to infrastructure investment and market incentives. Technological progress alone will not be sufficient without modern electricity grids, charging infrastructure, and long-term financing mechanisms.
Low-Emissions Fuels: Strong Potential but Dependent on Policy Support
Alongside electrification, low-emissions fuels are emerging as one of the most promising sectors, particularly in industries that are difficult to fully electrify, such as aviation, shipping, and heavy industry.
The report expects the market value of low-emissions fuels to rise from roughly USD 215 billion in 2025 to around USD 390 billion by 2035. Nearly 60% of this growth is expected to come from mature biofuels such as bioethanol, biodiesel, and biomethane.
More advanced fuels — including sustainable aviation fuels and hydrogen-based alternatives — still face major obstacles related to cost and limited commercial adoption. According to the IEA, these sectors are unlikely to scale significantly without stronger government support and clearer investment incentives.
The same challenge applies to low- and near-zero emissions industrial materials such as “green” steel, cement, and aluminum. Producing these materials using carbon capture technologies or green hydrogen remains significantly more expensive than conventional methods, making their future heavily reliant on climate policies and public support.
Nevertheless, investment activity remains strong. Global investment in low-emissions hydrogen reached nearly USD 8 billion in 2025, representing annual growth of 80%, while investment in carbon capture technologies exceeded USD 5 billion — a sign that investors continue to see long-term potential in these sectors.
China Dominates Manufacturing — While the World Tries to Catch Up
One of the report’s central themes is China’s growing dominance across clean energy supply chains. China not only leads in the production of electric vehicles, batteries, and solar panels, but has also become the most influential player in global clean energy trade.
The IEA estimates that China currently controls between 60% and 85% of global manufacturing capacity across several key supply chains, with its share exceeding 95% in some critical components.
By 2035, the value of China’s net exports of clean energy technologies is expected to reach around USD 375 billion — equivalent to roughly 10% of the country’s current total goods exports.
In the electric vehicle sector, emerging economies have become a major destination for Chinese exports. In 2020, these markets accounted for less than 5% of China’s EV exports; today, they represent nearly 40%.
In Central and South America, Chinese electric vehicles are projected to account for roughly half of all EV sales by 2035.
This rapid expansion has prompted the United States and the European Union to introduce tariffs and protective trade measures aimed at shielding domestic industries. Yet the report notes that the impact of these restrictions remains relatively limited, as clean energy trade has become broad, interconnected, and global in scope.
At the same time, countries such as India and the United States are accelerating efforts to build domestic manufacturing capacity, particularly in solar and battery production. India, for example, is expected to become a net exporter of solar modules by 2030.
Supply Chains: The Weakest Link in the Green Transition
Despite rapid growth, the report warns that the heavy concentration of supply chains in China represents a major strategic vulnerability for the global economy. Many battery and critical mineral supply chains remain geographically concentrated, making them highly sensitive to geopolitical or trade disruptions.
The IEA estimates that a one-month halt in Chinese battery supply exports could lead to losses of approximately USD 17 billion for electric vehicle factories worldwide, with Europe expected to suffer the largest impact.
Supply chains for rare earth elements — essential for wind turbines, electric vehicles, and advanced technologies — also remain heavily dependent on Chinese refining capacity. These vulnerabilities became more visible after Beijing recently imposed export restrictions on certain rare earth materials.
As a result, many countries are increasingly seeking industrial partnerships and diversified production networks. The report highlights that regions such as the Middle East and North Africa could become important players in energy-intensive industries due to their low-cost renewable energy potential.
For example, importing solar panel components from North Africa could reduce European solar manufacturing costs by nearly 20%. Likewise, industrial cooperation between Europe and India in wind turbine manufacturing could reduce Europe’s cost gap with China by as much as 75%.
The IEA report makes clear that the shift toward clean energy is no longer solely an environmental project — it has become a global industrial and economic contest that will shape geopolitical influence in the decades ahead. Clean energy technologies continue to expand despite political and trade pressures, driven by falling costs and rapidly growing demand.
Yet the path forward remains filled with challenges, ranging from dependence on China and high production costs in certain sectors to the urgent need for more stable and coherent industrial policies.
Ultimately, the key question is no longer whether the world economy will transition toward clean energy, but rather which countries and industries will lead — and control — the technologies and supply chains powering that transformation.
Source: IEA
IEA
IEA