Trade-led Solar PV Deployment Likely to Create 40 M Jobs by 2050: Study

A new joint report by International Renewable Energy Association (IRENA) and World Trade Organisation (WTO) examines how trade policies can support cost reductions, deployment of components & job creation in the solar PV sector.

The report entitled “Trading into a Bright Energy Future: The Case for Open, High-quality Solar Photovoltaic Markets” finds, among other things, that trade-led solar PV deployment is expected to create 40 million jobs by 2050 in the renewable energy sector.

Having been rapidly deployed, solar PV technologies, which use solar panels to convert sunlight into electricity, have become the cheapest source of new electricity generation in many parts of the world. The cost of the electricity generated by PV plants declined by 77 per cent between 2010 and 2018, while the cumulative installed capacity of solar PV increased 100-fold between 2005 and 2018. As a result, solar PV has become a pillar of the low-carbon sustainable energy system needed to foster access to affordable and reliable energy and help achieve the goals of the Paris Agreement and the 2030 Sustainable Development Agenda.

Underpinning the rapid deployment of solar PV is a globally integrated market in which PV components such as wafers, cells, modules, inverters and combiner boxes, as well as the machines which produce them, routinely criss-cross the world. Trade in solar PV components, which has grown faster than overall manufacturing trade since 2005, has become a critically important means for firms, governments and consumers around the world to access the most efficient, innovative and competitive goods (and services) needed for the transition to sustainable energy systems.

The continued trade-led deployment of solar PV and other renewable energy technologies can help to strengthen the critical infrastructure needed to fight the COVID-19 pandemic and support post-pandemic economic recovery. Off-grid solar energy solutions, including standalone systems and mini-grids, can be ramped up quickly to help healthcare centres improve their level of care and power mobile testing centres and vaccine refrigerators, for example. As well as contributing to tackling the immediate health crisis, trade-led solar PV deployment can help to support economic recovery from the pandemic, not least by creating jobs, which are expected to reach over 40 million worldwide by 2050 in the renewable energy sector.

Open, transparent and inclusive trade policies can support further cost reductions, deployment and job creation in the solar PV sector. Trade policies could build on past efforts to reduce or eliminate solar PV tariffs, which act as a hidden tax on solar PV equipment. On average, tariffs range from a low of 2.2 per cent for PV cells to a high of 10 per cent for PV backsheet (the outermost layer of a PV module). Tariff reduction initiatives should be complemented with efforts to address broader technological, economic, policy and regulatory barriers that hamper the deployment of solar PV.

A well-functioning and robust quality infrastructure (QI) system is essential to ensure that trade fully plays its role in the sustainable energy transition. QI, which refers to the institutional, legal and regulatory framework for product standards, promotes safe and inclusive trade in solar PV goods and services, reduces the risks of underperforming and of unreliable products entering the value chain, and ensures stability for investors and other value chain participants. It can also help domestic companies to meet the requirements of export markets, increasing the likelihood that such companies will participate in solar PV value chains.

International standards are a crucial part of QI. They enable countries to participate in a globalized PV market by promoting regulatory convergence, stimulating competition and fostering innovation. The top countries in terms of solar PV manufacturing and deployment have adopted international standards for solar PV and participate in their development, but many other countries would benefit from more active participation. Technical assistance and capacity-building to improve QI in developing countries, especially the poorest, could support the widespread adoption and enforcement of international solar PV standards, help bring uniformity to regulatory requirements and systems, and provide further impetus to trade safe, high- quality solar PV products.

International cooperation is critically important for a well-functioning QI system that can help governments move to sustainable energy systems, while helping companies along the solar PV value chain to seize trade opportunities and avoid unnecessary costs. International cooperation can range from mutual recognition of standards and regulatory provisions in trade agreements, to formal cooperation partnerships and regulatory harmonization.

The International Renewable Energy Agency (IRENA), as the leading intergovernmental organization for global renewable energy, and the World Trade Organization (WTO), as the only global organization dealing with the rules of trade between nations, state that they support collective efforts to promote a safe and inclusive global solar PV market through the effective use of QI.