GENEVA (ILO News) – Worldwide employment in renewable energy reached 12.7 million last year, a jump of 700,000 new jobs in one year, despite the lingering effects of COVID-19 and the growing energy crisis, according to a new report. Renewable Energy and Jobs: Annual Review 2022 identifies domestic market size as a major factor influencing employment generation in renewables, along with labour and other costs. Solar energy was found to be the fastest-growing sector. In 2021 it provided 4.3 million jobs, more than a third of the current global workforce in renewable energy.The new report was published by the International Renewable Energy Agency (IRENA) in collaboration with the International Labour Organization (ILO), during the Global Clean Energy Action Forum in Pittsburgh, USA.With rising concerns about climate change, COVID-19 recovery and supply chain disruption, national interest is growing in localizing supply chains and creating jobs at home. The report describes how strong domestic markets are key to anchoring a drive toward clean energy industrialization. Developing renewable technology export capabilities is also dependent on this, it adds.Francesco La Camera, IRENA’s Director-General, said; “In the face of numerous challenges, renewable energy jobs remain resilient, and have been proven to be a reliable job creation engine. My advice to governments around the world is to pursue industrial policies that encourage the expansion of decent renewables jobs at home. Spurring a domestic value chain will not only create business opportunities and new jobs for people and local communities. It also bolsters supply chain reliability and contributes to more energy security overall.”The report shows that an increasing number of countries are creating jobs in renewables. Almost two-thirds of all these jobs are in Asia. China alone accounts for 42 per cent of the global total, followed by the EU and Brazil with ten per cent each, and the USA and India with seven per cent each.ILO Director-General, Guy Ryder, said; “Beyond the numbers, there is a growing focus on the quality of jobs and the conditions of work in renewable energies, to ensure decent and productive employment. The increasing share of female employment suggests that dedicated policies and training can significantly enhance the participation of women in renewable energy occupations, inclusion and ultimately, achieve a just transition for all. I encourage governments, workers’ and employers’ organizations to remain firmly committed to a sustainable energy transition, which is indispensable for the future of work.”The report highlights some notable regional and national developments. These include Southeast Asian countries becoming major solar photovoltaic (PV) manufacturing hubs and biofuel producers. China is the pre-eminent manufacturer and installer of solar PV panels and is creating a growing number of jobs in offshore wind. India added more than 10 Gigawatts of solar PV, generating many installation jobs, but remains heavily dependent on imported panels.Europe now accounts for about 40 per cent of the world’s wind manufacturing output and is the most important exporter of wind power equipment; it is trying to reconstitute its solar PV manufacturing industry. Africa’s role is still limited, but the report points out that there are growing job opportunities in decentralized renewables, especially in support of local commerce, agriculture, and other economic activities.In the Americas, Mexico is the leading supplier of wind turbine blades. Brazil remains the leading employer in biofuels but is also adding many jobs in wind and solar PV installations. The USA is beginning to build a domestic industrial base for the budding offshore wind sector.The report highlights that the expansion of renewable energy needs to be supported with holistic policy packages, including training for workers to ensure jobs are decent, high quality, well paid and diverse in pursuit of a just transition.IRENA is the lead intergovernmental agency for global energy transformation that supports countries in their transition to a sustainable energy future and serves as the principal platform for international cooperation, a centre of excellence, and a repository of policy, technology, resource and financial knowledge on renewables. With 168 Members (167 States and the European Union) and 16 additional countries in the accession process and actively engaged, IRENA promotes the widespread adoption and sustainable use of all forms of renewables in pursuit of sustainable development, energy access, energy security and low-carbon economic growth and prosperity.Established in 1919, the ILO is the only tripartite U.N. agency. It brings together governments, employers and workers of its 187 Member States, to set labour standards, develop policies and devise programmes promoting decent work for all women and men.
Storage is on a similar trajectory as solar. Announced projects could drive almost eightfold growth in battery manufacturing capacity in 2024. Planned cell production could grow the US share of global capacity from 4% in 2022 to 15% by the end of the decade in a segment where China currently holds a 79% share.75 Yet, lithium-ion battery imports also reached a record high in 202376 and the US continues to be fully dependent on imports for some upstream supply chain components.77 Companies have announced projects to manufacture copper foils and cathode active materials, 100 GWh for each, but none are expected to come online in 2024.78 Expanded Uyghur Forced Labor Prevention Act enforcement on batteries could provide further impetus to domestic supply chain development in 2024.
The wind supply chain is more domestically rooted and evenly distributed across components than solar and storage, but the little capacity change planned for 2024 may be raising concerns offshore. China leads the global market for wind too: With turbines selling at prices 70% lower than their Western counterparts, Chinese manufacturer exports jumped to 70% of wind turbine orders announced in the first half of 2023.79 The greater role of developer relationships, specifications, and incentives in offshore wind has relatively insulated its supply chain from import pressure. On the other hand, infrastructure development and capacity additions have lagged demand from offshore wind developers seeking access to domestic content adders that could improve project economics. Meeting the Biden administration’s offshore wind target could require a US$22.4 billion investment in 34 additional manufacturing facilities, 10 dedicated vessels, and 10 ports.80 Whether projects proceed in 2024 hinges on the offshore wind pipeline’s solidity. The development of 18 planned component manufacturing facilities81 and the collaboration between nine East Coast states and federal agencies on offshore wind supply chain buildout are anticipated.82
Explore more:Electrolytic hydrogen is embryonic at a time when industrial policy is ascendant and the global production landscape is still in flux, providing a major opportunity to reshore renewables. The high-efficiency electrolyzers that dominate the US pipeline are more economic, despite higher upfront costs, but they are exposed to competition from low-cost manufacturing regions.83 China is already expected to account for over half of global capacity in 2023.84 In the United States, companies have announced 9 GW of electrolyzer manufacturing capacity, under a quarter of which is expected to come online in 2024.85 Most projects remain at early stages as the market awaits Treasury guidance on green hydrogen that could trigger a burst of electrolyzer demand.86 The Department of Energy (DOE) estimates electrolyzer capacity would need to grow at a 20% compound annual growth rate to meet demand through 2050.87 In 2024, we will be watching the relative competitiveness of manufacturers focused on scale versus modular approaches, and their ability to keep pace with demand. Gaps could prompt domestic content requirements for electrolyzers.
The IRA has driven up energy transition demand for the critical minerals that underpin renewable supply chains. By 2035, this demand is expected to rise 15% and 13% higher than pre-IRA numbers for lithium and cobalt, respectively, which are needed for storage; 14% for nickel, which is in storage, wind, and hydrogen supply chains; and 12% for the copper needed across all energy transition technologies.88 Meanwhile, domestic and free trade agreement country supply that could qualify for IRA incentives is limited. China refines around half of global copper production, two-thirds of lithium, three-quarters of copper, and four-fifths of nickel.89 And Indonesian nickel, which accounts for half of global mining capacity, is mostly Chinese invested.90 Underinvestment in mining amid currently low prices, combined with long lead times for new projects that can stretch over a decade, could yield yawning supply gaps. Shortages ranging from 10% to 40% across these minerals are expected by 2030.91 In 2024, the impact of China’s graphite export controls on critical mineral projects should be observed. The beginning of massive shifts in the lithium market from both the supply and demand sides may also become apparent. The discovery of the world’s largest known lithium deposit in Nevada at the end of 2023 is a potential game-changer.92 And the development of lithium alternatives, such as sodium storage batteries, could accelerate as manufacturers use generative AI to develop new molecules for testing.93
Trends to watch as renewable energy companies reshore in 2024 include the following:
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