# 1. Introduction

For the world to reach net-zero emissions by 2050, the global deployment of low-carbon technologies such as solar photovoltaics (PV), wind turbines and electric vehicles (EVs) needs to dramatically increase. Current projections suggest growth in installed capacity in solar and wind will need to increase by around 3-5-fold between now and 2030, while 18-fold increases are projected for the global scale-up of EVs (IEA, 2021). Unlike technologies such as nuclear and carbon capture, usage and storage (CCUS), persistent cost declines in solar PV, wind turbines and EVs paint a promising and predictable future for their deployment: the more we produce globally of these technologies, the cheaper they become (Way et al., 2022; Lam and Mercure, 2022).

A key risk however, is that production is not particularly ‘global’, but instead concentrated in a small number of countries. Recent analysis indicated that one out of every solar panels produced worldwide is produced by a single facility (IEA, 2022b) and over half of the cobalt, lithium and graphite processing and refining capacity for EV batteries are located in a single country (IEA, 2022c). With global value chains inherently vulnerable to disruptions such as natural disasters, pandemics, conflict and geopolitical events, such high concentration levels could create bottlenecks and supply-side shortages that could slow the roll out of these technologies around the world.

Despite calls for more diversified value chains in decarbonization technologies (IEA, 2023; IMF, 2022), there has been limited work to identify the countries that are best placed to increase their participation in the production of these technologies or to highlight what the growth opportunities could look like for individual countries. With industrial policy becoming a more popular policy tool – and with many recent industrial policies aiming to target key products or components in the value chains of these green technologies, it is helpful to have a sense of where latent comparative advantages are more likely to exist.

To address this gap, this paper makes several contributions. First, we construct a new dataset of key traded products, components and materials associated with solar PV, wind turbines and EVs and map this to country trade data. This dataset enables the exploration of historical and current trade patterns for over 200 countries between 1995-2021 in these global value chains. We focus these specific value chains for three reasons. First, worldwide consensus exists that these technologies are critical in the green transition, irrespective of countries’ economic conditions and political alignment. This contrasts with green and environmental goods whose classification can sometimes be controversial and subject to countries’ political sensitivities. Second, participating in the trade of these value chains offers important economic advantages for countries. As global demand is beginning to shift away from fossil-fuel based production and towards these technologies, developing the capabilities to competitively produce products and associated components can help countries achieve greater economic growth and export diversification prospects. This is especially true for technologically sophisticated products and components as they offer advantages for technological upgrading and knowledge spillovers into other industrial areas (Hidalgo & Hausmann, 2009). Third, given the potential supply-side risks facing these value chains, building greater resilience – through diversifying production across a greater number of countries with latent comparative advantage can help mitigate against potential disruptions or shortages in the global roll-out of these technologies. Further, such diversification can also help ensure that the rewards from participating in these high-growth global value chains are shared more broadly.

Second, we develop novel indices that summarize the breadth and depth of countries’ current export strengths in these value chains. While China, Germany and the US are the leaders in export competitiveness across all three technologies, middle-income countries such as Türkiye, Mexico, India, South Africa and Brazil have export strengths in a variety of key value chain products, components and materials and are well positioned to capitalize on the projected future growth in these areas. These insights complement existing work documenting current production trends in supply chains of energy technologies (e.g., IEA, 2022a; IEA, 2022b), but here we go further to develop a similar set of new indices that aim to capture the breadth and depth of countries’ future diversification potential in these value chains. We show that countries scoring higher in potential are significantly more likely to develop greater competitiveness in the subsequent periods. Countries that lead in diversification potential include 2