Policy Research Working Paper10696Turning Risks into RewardDiversifying the Global Value Chains of Decarbonization TechnologiesSamuel RosenowPenny MealyInternational Finance CorporationFebruary 2024 Public Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure AuthorizedProduced by the Research Support TeamAbstractThe Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.Policy Research Working Paper 10696Reaching net-zero emissions by 2050 requires unprec-edented scaling up in the global deployment of critical decarbonization technologies, such as solar photovoltaics, wind turbines, and electric vehicles. This challenge is cur-rently rife with both risks and rewards: while securing an adequate supply of these technologies has become an urgent policy priority for many countries, their high-growth global value chains also offer lucrative benefits for those able to meet the burgeoning global demand. Although recent policy responses have sought to nearshore production to reduce risks and capitalize on rewards, this paper instead lays out an evidence-based strategy to help diversify the global value chains of decarbonization technologies across countries with latent production capabilities and resource endowments. To that end, it constructs a new dataset of traded products, components, and materials associated with decarbonization technologies; develops new indexes capturing countries’ current export strengths and future diversification potential in these global value chains; and highlights products with supply risks due to high market concentration levels and those with development rewards in terms of their potential for growth, knowledge spillovers, and technological upgrading. Taken together, the evidence supports the idea that there is plenty of opportunity to diversify these value chains across a larger number of coun-tries to avoid the risks associated with reliance on only a few countries.This paper is a product of the International Finance Corporation. It is part of a larger effort by the World Bank Group to provide open access to its research and make a contribution to development policy discussions around the world. Policy Research Working Papers are also posted on the Web at http://www.worldbank.org/prwp. The...
