ABU DHABI – The global energy market is on track for a transformative expansion, with five key technologies expected to nearly triple in value to reach an estimated US$2.1 trillion by 2035. According to the International Renewable Energy Agency (IRENA) in its latest World Energy Transitions Outlook 2024, the energy transition is accelerating, driven by electric vehicles (EVs), electrolysers, heat pumps, solar photovoltaic (PV) panels, and wind turbines.
IRENA highlights that these technologies are at the core of the world’s shift to renewable energy, with investment surging due to policy incentives, corporate innovation, and public-sector funding. The agency also underscores the growing role of carbon dioxide removal (CDR) as a crucial component in achieving net-zero emissions.
Key Technologies Fueling the $2 Trillion Market Growth
1. Electric Vehicles (EVs)
The EV market continues to grow at an exponential rate, fueled by government incentives, infrastructure expansion, and advancements in battery technology. By 2035, IRENA projects a significant rise in global EV adoption, with automakers investing billions into R&D to improve efficiency and affordability.
- Global EV sales are expected to surpass 50 million units annually by 2035.
- Automakers like Tesla, BYD, and Volkswagen are driving innovation in battery range and charging speeds.
- China, the U.S., and Europe remain dominant players in EV adoption.
2. Electrolysers for Hydrogen Production
The electrolyser market is experiencing rapid expansion due to the rising demand for green hydrogen. This clean fuel is critical in decarbonizing industries such as steel, aviation, and shipping.
- By 2035, electrolyser manufacturing capacity is expected to increase fivefold.
- The cost of hydrogen production is projected to decline, making it more competitive with fossil fuels.
- Countries like Germany, Japan, and Saudi Arabia are investing heavily in hydrogen infrastructure.
3. Heat Pumps: The Future of Energy-Efficient Heating
Heat pumps are emerging as a key solution for reducing household and industrial energy consumption.
- The global market is forecasted to reach $300 billion by 2035.
- They offer 3-5 times higher efficiency than traditional heating systems.
- Europe and North America lead in adoption due to stricter energy regulations.
4. Solar Photovoltaic (PV) Expansion
The solar PV industry is one of the fastest-growing renewable sectors, with continued advancements in efficiency and affordability.
- Global solar capacity is expected to exceed 10 terawatts (TW) by 2035.
- Countries like China, India, and the U.S. are leading the expansion.
- Innovations in perovskite and tandem solar cells are improving energy conversion rates.
5. Wind Turbine Innovations
Wind energy remains a crucial part of the global energy transition, with both onshore and offshore projects seeing increased investments.
- Offshore wind capacity is set to grow sevenfold by 2035.
- Larger and more efficient turbines, such as 15 MW-class models, are improving energy output.
- The EU, the U.S., and China are investing in wind infrastructure to meet sustainability goals.
Carbon Capture and Storage: A Growing Market
IRENA identifies carbon dioxide removal (CDR) as a rapidly emerging industry, with startups in the sector increasing sevenfold over the last decade. Currently, over 140 companies are developing innovative CDR solutions.
- Around 30 carbon capture facilities are operational across Europe, North America, Japan, and the Middle East.
- Only five facilities capture more than 1,000 tonnes of CO₂ per year.
- The total annual capture capacity surpasses 17,000 tonnes, but commercial adoption remains limited.
One of the leading CDR innovations comes from the UAE, where a project by ADNOC and 44.01 in Fujairah successfully stored 10 tonnes of CO₂ in 2024 by converting captured carbon into rock in less than 100 days.
Public & Private Investments Driving Innovation
IRENA reports that global public spending on energy R&D continues to rise, with a 5% increase in 2023, reaching $50 billion. Growth is expected to continue in 2024 and beyond.
- Japan’s Green Transformation Initiative is propelling advancements in battery storage and renewable energy.
- Norway has significantly increased funding for hydrogen R&D and renewable technologies.
- The United States and Canada are experiencing slower growth in energy R&D investments in 2024.
Corporate Sector Leading the Charge
Private-sector funding for energy innovation is accelerating at three times the pace of GDP growth among IRENA member countries.
- The automotive industry is leading energy R&D investments.
- 13 out of the top 20 companies in energy technology R&D are from the vehicle manufacturing sector.
- Investments in solid-state batteries and fast-charging infrastructure are driving the EV market’s growth.
Conclusion: The Future of Energy Technology
The energy landscape is undergoing a historic transformation, with electric vehicles, electrolysers, heat pumps, solar PV, and wind turbines set to drive a $2.1 trillion market by 2035. As investment in renewable energy innovation surges, governments, corporations, and startups play a pivotal role in shaping a sustainable and low-carbon future.
With initiatives like carbon capture projects in the UAE, rising green hydrogen production, and accelerated solar and wind energy deployment, the world is on track to meet ambitious net-zero goals while unlocking massive economic opportunities in the energy sector.
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