Publication: Turning Risks into Reward: Diversifying the Global Value Chains of Decarbonization Technologies
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Date
2024-02-07
ISSN
Published
2024-02-07
Author(s)
Rosenow, Samuel Kaspar
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Abstract
Reaching net-zero emissions by 2050 requires unprecedented scaling up in the global deployment of critical decarbonization technologies, such as solar photovoltaics, wind turbines, and electric vehicles (EVs). This challenge is currently rife with risks and rewards. With global pro-duction perceived to be concentrated in a small number of countries, mitigating against possible supply-side risks has become an urgent policy priority for many countries. At the same time, these technologies’ high-growth potential offer lucrative rewards for countries able to strategically position themselves to produce requisite materials, compo¬nents or assemble final products. As green industrial policies have become an increasingly popular tool for shoring up supply chains and stimulating production in key green sectors, this paper presents a data-driven framework for identifying which countries could have key strengths and latent comparative advantages in the production of solar PV, wind turbines and EVs. It constructs a new dataset of traded products, components, and materials associated with decarbonization technologies and develops new indices capturing countries’ current export strengths and future diversification potential in the global value chains of these technologies. It also highlights products with supply risks due to high market concentration levels and those with development rewards in terms of their potential for growth, knowledge spillovers, and technological upgrading. Our analysis suggests that there is plenty of opportunity to diversify these value chains across a larger number of countries and reduce risks associated with reliance on only a few countries.
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“Rosenow, Samuel Kaspar; Mealy, Penny. 2024. Turning Risks into Reward: Diversifying the Global Value Chains of Decarbonization Technologies. Policy Research Working Paper; 10696. © World Bank. http://hdl.handle.net/10986/41024 License: CC BY 3.0 IGO.”
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