Energy Technology Perspectives 2023 is the latest in the series of IEA’s flagship reports and the world’s first global guidebook for the clean technology industries of the future. In this year’s edition of the report, the six most important clean energy technology supply chains are analyzed – and heat pumps are one of them, together with solar PV, wind power, low-emission hydrogen, electric vehicles, and fuel cell trucks.
On January 11 the Executive Director of IEA, Fatih Birol, introduced the launch of the report stating that a new global clean energy economy is developing, and all clean energy technologies are flourishing around the world. The report highlights major market and employment opportunities, as well as the emerging risks for countries racing to lead the clean energy industries of today and tomorrow.
Opportunities and risks
According to the report, the new energy economy brings opportunities and risks. For example, related clean energy manufacturing jobs would more than double from 6 million today to nearly 14 million by 2030, with over half of these jobs tied to electric vehicles, solar PV, wind and heat pumps. But there are potentially risky levels of concentration in clean energy supply chains. For mass manufactured technologies like wind, batteries, electrolyzers, solar panels and heat pumps, the three largest producer countries account for at least 70% of manufacturing capacity for each technology – with China dominant in all of them.
Need for a skilled workforce
According to the analysis performed by IEA an adequately skilled and sufficiently large workforce will be central to the energy transition. However, a dearth of tradesmen, such as plumbers, pipefitters, electricians, heating technicians and construction workers, is already restricting the pace of installations of clean energy technologies in Europe and the United States, including solar PV, wind turbines and heat pumps. For solar PV, wind and heat pump systems, the number of additional workers needed to install the technologies will outnumber those required to manufacture them around two-to-one and about 800 000 additional workers to install heat pumps will be needed to be able to reach IEA’s Net Zero Emissions by 2050 (NZE) scenario.
Trade of heat pumps
The analysis shows that heat pumps are not widely traded. For example, heat pumps within the boundaries of this analysis are traded much less than solar PV modules, though some individual components are widely traded. The share of inter-regional trade in global manufacturing is less than 10% for heat pumps, compared with nearly 60% for solar PV. In Europe, intra-regional trade is common, but the sudden surge in demand for heat pumps in 2021, combined with an open trade policy, led to a sharp increase in imports from outside the continent, almost exclusively from Asian countries.
Expansion plans and the gap with the net zero trajectory
The report tells that the announced manufacturing pipeline to 2030 is very large for many clean energy technologies. The current global pipeline of announced projects would exceed demand for some technologies (solar PV, batteries and electrolyzers) and fall significantly short for others (wind components, heat pumps and fuel cells). Under the NZE Scenario, expanding the global manufacturing capacity of the six selected clean energy technologies reviewed in this report will require cumulative investments of around USD 640 billion (in real 2021 US dollars) over 2022-2030. Shortfalls in investment to 2030 amount to around USD 90 billion for EV batteries, USD 45 billion for fuel cells and fuel cell trucks, and around USD 15 billion for heat pumps. According to IEA, this highlights the importance of clear and credible deployment targets from governments to limit demand uncertainty and guide investment decisions.
Manufacturing capacity for heat pumps is set to grow in the next few years, but how quickly is very uncertain. Capacity expansion that would result from publicly announced projects under way or planned falls far short of this goal and of the collective targets set by governments around the world, although in reality, expansion is likely to be much greater by 2030 according to IEA.
The Technology Collaboration Programme on Heat Pumping Technologies (HPT TCP) by IEA has contributed with input of facts and data to and review of this report.