Clean energy added about US$320 billion to the world economy last year, accounting for 10% of global GDP growth, according to a study from the International Energy Agency (IEA).
The study examined four countries and regions, namely the US, China, the European Union (EU) and India, which together account for two-thirds of global gross domestic product (GDP). Three categories of activity in the clean energy sector were included in the study, such as the manufacturing of clean energy technologies, the deployment of clean power capacity and clean equipment sales.
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In the US, the GDP grew by 2.5% in 2023, partly driven by the Inflation Reduction Act (IRA), which spurred the investment growth in clean energy manufacturing. Clean energy growth accounted for about 6% of GDP growth.
In the EU, clean energy accounted for nearly one-third of GDP growth in 2023 – the highest share of any region assessed – although its share was inflated by weak overall GDP growth of around 0.5%. The EU’s climate targets and policies, including the Net Zero Industry Act (NZIA) are supporting investments in clean energy manufacturing, which more than doubled between 2022 and 2023, driven in particular by battery manufacturing.
China’s clean energy sector accounted for around one-fifth of China’s 5.2% GDP growth in 2023, with the largest increase coming from investment in clean power capacity, followed by clean equipment sales, particularly electric vehicles (EVs). However, clean energy manufacturing only accounted for about 5% of China’s GDP growth in 2023.
IEA added that China’s surplus production capacity in technologies such as batteries may limit the scope of growth in clean energy manufacturing in the future.
Last but not least, although India was the fastest growing large economy in 2023 with the growth rate of 7.7%, clean energy only contributed slightly less than 5% of GDP growth last year, mainly from investment in new solar power capacity.
Investment and sales in clean energy technologies
The study also examined the share of investment and sales in selected clean energy technologies in GDP. In 2023, China led in this category (more than 4%), followed by the EU (about 2%), India (about 1.5%) and the US (slightly over 1%). IEA described the share as “substantial” as these economies are large and diversified.
Additionally, the clean energy sector drove a substantial share of total investment growth across these economies in 2023. Globally, about US$200 billion was invested in clean energy technology manufacturing in 2023, an increase of 75% over the previous year.
In China, the clean energy sector contributed 50% of the growth in total investment in 2023 and 20% in the US.