In the United States (US) 76% of global clean-tech factory investment in 2024 supported manufacturing in mainland China, far surpassing other markets despite efforts by governments to promote “onshoring” and “friendshoring”, said BloombergNEF’s (BNEF) Energy Transition Supply Chains 2025 report.
The BNEF report said the United States remained a leading provider of manufacturing subsidies, but political risks cloud the outlook, with 25% of public clean-tech funding at risk of repeal under the Trump administration. Despite the surging deployment of solar and battery systems and the growing adoption of electric vehicles, the report found that global overcapacity in manufacturing remains acute and is unlikely to ease for years.
Global Clean Energy Imports Shrank For First Time In 2024
The study noted, “The Global clean energy imports as measured in dollar terms shrank for the first time in 2024, a reflection of sharp price declines for solar and battery equipment.” It added, “The Emerging markets now claim a larger share of Chinese clean-tech exports, rising to 43% from 24% over 2022-24, driven by low prices.”
The report further explained, “Global supply chains, long the backbone of the energy transition, have recently come under greater focus as investors navigate a volatile and rapidly changing trade policy environment. Even with clean technology deployment continuing to surge globally, manufacturing capacity far outpaces demand, depressing prices and squeezing producers’ margins. In this uncertain landscape, decision-makers face difficult trade-offs around trade, production, and investment.
Global Clean-Tech Manufacturing Trends
BNEF’s Energy Transition Supply Chains 2025 examines these trends and notes that despite talk of Western onshoring, mainland China continues to dominate clean-tech production, controlling over 70% of global manufacturing capacity in every major segment BNEF studied except hydrogen electrolyzers.
Mainland China further consolidated its market shares in solar and battery supply chains in 2024. It also dominates in attracting new capital for plants to produce clean technology goods such as batteries, solar modules, and wind turbines, with 76% of such investment in 2024 underwriting plants there. Chinese firms’ investment in their home market is five times more than all other countries combined, though this concentration is beginning to slip compared to earlier years.
Driven by this growth, BNEF found that overcapacity is expected to persist through at least 2027, especially in solar and battery manufacturing. In turn, prices have fallen sharply across technologies, and profitability is under pressure, with average EBITDA margins for five major Chinese solar firms dropping to 4.7% in 2024 from 12.4%.
“This year has seen a rapid succession of whipsaw changes to import tariffs and industrial policies, forcing companies to adapt to a fluid environment,” said Antoine Vagneur-Jones, head of trade and supply chains at BNEF and lead author of the report. “The dust has yet to settle, but a few macro trends are clear: overcapacity will define clean technology supply chains for years to come. And emerging markets will rapidly step up imports of energy transition products as prices fall further.”
Overcapacity, Onshoring Manufacturing Remains A Priority
Even with overcapacity, onshoring manufacturing remains a priority for many nations. Governments are making financial commitments to onshore clean-tech manufacturing, but greatly vary in their contributions. The US has led in offering clean-tech manufacturing subsidies, which BNEF estimates will cost $169 trillion through 2032.
In fact, US tax credits are poised to deliver more support than all other countries’ subsidy programs combined. However, progress could well be impeded by recent Trump administration tariffs on Chinese-made materials and equipment used in US manufacturing. For its part, the European Union has set ambitious targets to support onshoring but is only providing $32.5 billion in subsidies. The bloc has seen several flagship manufacturers scale back, or go bankrupt altogether.
Despite its financial incentives, political risks in the US cloud the onshoring outlook, putting $110 billion in planned factories across multiple sectors in jeopardy. This includes grant funding Inflation Reduction Act (IRA), earmarks for manufacturers, and the remaining loan authority from the Department of Energy’s Loan Programs Office. Additionally, the vast majority of global subsidy schemes are technology-agnostic, making it difficult for investors to know what’s available and halting onshoring efforts in a number of markets.
New Tariffs & Trade Measures Can Influence International Trade Patterns
A slew of new tariff announcements and other trade measures are now very much influencing international trade patterns across developed and emerging economies, BNEF finds. With many advanced economies prioritizing protectionism through tariffs, developing markets are receiving a growing share of imports from mainland China. This comes on top of already-changing dynamics in the global trade ecosystem. The average share of Chinese clean-tech exports to emerging markets rose from 24% in 2022 to 43% in 2024.
While the landscape is going to continue to shift based on political and financial risks, it’s likely that investment in China will remain dominant over the next few years, continuing to raise overcapacity levels for a number of key clean-tech sectors. Tariffs are also expected to rise, likely impacting US-China trade and developing economies’ imports.
