IEA: Clean energy was responsible for 10% of GDP growth last year

Clean energy sector delivers a boost to the global economy

New data from the IEA (International Energy Association) has revealed that the clean energy sector contributed $320 billion USD to the world economy in 2023 alone[i]. This represented 10% of global GDP growth, more than the value added by the global aerospace industry last year and equivalent to adding an economy the size of the Czech Republic to global output. The new research drew upon detailed project-by-project analysis delivered on a country-level and sector-level basis.

The study highlighted that clean electricity accounted for around 80% of new capacity additions to the world’s electricity system. Further global investment in clean energy manufacturing is ‘booming’, driven by industrial policies and market demand, the research notes. As reported earlier this month, the expansion of clean energy last year helped dampen a rise in carbon emissions, despite an increase in energy demand[ii]. In addition, the IEA’s latest research finds that employment in clean energy jobs exceeded that of fossil fuels in 2021 and continues to grow, dispelling any lingering claims that the sector remains ‘niche’ within an industry traditionally dominated by the fossil fuel sector.

Notable GDP contributions across regions

On a country level, clean energy made notable contributions to GDP growth for the world’s largest economies. In the US, where GDP growth was 2.5% last year, clean energy accounted for 6% of this. In China, which saw GDP growth of 5.2% last year, clean energy accounted for almost a fifth of growth, and on a regional scale, clean energy accounted for almost a third of the EU’s GDP growth in 2023. However, to put this into context the EU saw overall GDP growth of just 0.5% last year.

The IEA credits policy for helping to drive clean energy growth, it names the EU’s Fit for 55 package and the proposed Net Zero Industry Act which it argues are supporting investments in clean energy manufacturing- a segment which, driven by battery manufacturing, more than doubled between 2022 and 2023, the research claims.

Clean energy is helping to energise investment

Clean energy is helping to energise and draw in investment- in China for example, clean energy accounted for 50% of total investment growth in 2023. Similar was noted in India, where clean energy contributed roughly 5% to GDP growth, fuelled by investments in new solar power capacity, alongside policy initiatives such as the Production Linked Incentive, aimed at attracting investment in clean energy manufacturing[iii].

In the US, the IEA reports that The Inflation Reduction Act (IRA) and the Bipartisan Infrastructure Law drove a surge in investment in clean energy manufacturing, and sales of EVs also grew strongly. It follows research from Bloomberg NEF on the wider Cleantech industry in the US, which found that cleantech investment in the country surpassed $300 billion following the passage of the IRA[iv]. The Sustainable Energy in America Factbook, produced annually for the Business Council for Sustainable Energy, revealed that $303.3 billion in energy transition financing was deployed last year in the US[v]. This figure includes spending on renewable energy, electric vehicles, and power grid investment. It means that on a global scale the US’s investment is second only to China, which spent $676 billion last year.