JANUARY 10, 2024

Good day!

In today’s edition: My annual outlook, a Voices article on the importance of systems thinking and a Data Dive on how high costs are deterring investors from industrial sector emissions courtesy of Amena.

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Illustration by Samson Awosan.

Looking back and ahead: climate tech trends in 2023 and 2024

BY: AMY HARDER

We’ll be watching elections, economics and (nearly) every cleantech shovel going in the ground across the United States this year.

We have a lot to cover in a span short enough to keep your attention, so see below for my 2024 outlook and click here to read my 2023 reflections — and all my outlooks dating back to 2018.

Every year since 2018, I’ve looked back and ahead at the trends shaping the past year and the year to come, including reality checks of my previous predictions.

First, five trends we’re watching in 2024:
 
1.    Go time for Inflation Reduction Act. 
 
Last year was consumed by the boring but essential act of writing all the rules governing the 2022 Inflation Reduction Act, so this year we can expect to see significantly more projects move from the announced to construction phase. Shovels in the ground, in other words.

We’ll be monitoring this closely in our just-launched interactive Cleantech Tracker. Take a spin around the map to see what’s taking root where.

Outside the U.S., we’ll watch how the increase in domestic projects affects global competition, especially as it relates to China, the historical leader in cleantech.

2.    Cleantech rebound?

I’ll be watching to see to what degree the damning trifecta of high interest rates, high inflation and supply chain bottlenecks ease and help lift the macro burdens weighing on clean energy.

Lower interest rates could be key to opening the initial public offering market to more cleantech startups, said Eric Toone, the technical investment lead at Breakthrough Energy Ventures, one of the world’s biggest funders of climate tech startups (whose parent organization, Breakthrough Energy, also supports Cipher).

“These investments have to start returning money to investors and the fact the IPO market remains closed is problematic,” Toone said, though he also expressed optimism about the development of these startups in general.

“Cleantech 2.0 is much more firmly rooted in reality” than cleantech 1.0, Toone said. “It makes me feel good that in 2023 we saw some of the technologies we began supporting in 2017 starting to do pilot and commercial deployments.”

3.    Tangible impacts from COP28 agreement.

The agreement coming out of the United Nations’ summit in Dubai in December included language for the first time ever calling on countries to transition away from fossil fuels.
 
Environmentalist Bill McKibben said the language may have handed activists a tool to use — in lawsuits, in rallies and more — to hold the world accountable for agreeing to transition away from fossil fuels. This change could come slowly, but it’ll be important if/when it does.

4.    Political impacts, U.S. edition.

November’s presidential election could significantly alter the public climate discourse, and possibly much more, if a Republican wins the White House.

Other outlets are writing endlessly about this, so I’ll keep this extra brief. The wheels of the Inflation Reduction Act are likely to keep turning, but a GOP president (and possibly a more conservative Congress) would likely seek to slow processes down and significantly increase oversight looking for misused government funds.

5.    Political impacts, global edition.

The Economist (subscription required) says more people are set to vote this year than ever before. As in the U.S., the impacts on climate (and everything else) will be far-reaching.

European Parliament elections in June could be pivotal to the bloc’s Green Deal and its future climate ambitions, writes Cipher’s chief Europe correspondent Anca Gurzu:

In the five years since the last elections, the costs of the green transition have become palpable to the average citizen (exacerbated by Russia’s invasion of Ukraine that sparked a broader energy crisis). Right-wing parties are keen to capitalize on some people’s apprehension about this transformation, and a tilt to the right could dilute the European Union’s appetite to accelerate the transition.

Other elections around the world we’re watching include those in India and Indonesia, writes Cipher’s senior global correspondent Bill Spindle:

These are the world’s most populous country and the biggest nation in Southeast Asia, respectively. The electoral stakes for the energy transition aren’t as high as in U.S. elections, but whatever occurs in these regions is significant because this is where most future energy demand is coming from.

Both countries (India especially) have across-the-board political support for ramping up renewable energy quickly, albeit on a small base, while also backing continued use of coal as the main way of powering their economies for decades to come.

Editor’s note: Breakthrough Energy Ventures is a program of Breakthrough Energy, which also supports Cipher.

Lunchtime Reads and Hot Takes

5 cleantech startups that didn’t survive to see 2024 — Canary Media
Amy’s take: Worth reading. Also, lest we forget: Most startups fail. Most startups fail. Most startups fail. Most startups fail. Some come back to ultimately succeed, but not until after failing at least once!

Norway parliament votes in favor of seabed mining, as expected — Reuters
Anca’s take: The move puts the country at odds with many of its neighbors, allies and climate activists who have all warned the scheme could have dire environmental consequences.

Can $500 Million Save This Glacier? — The New York Times

Bill’s take: Scientists ponder the construction of a massive wall around a melting glacier. Geoengineering, the ways the earth and its atmosphere could be manipulated to try to thwart the progress of climate change and its fallout, is increasingly gaining acceptance among policymakers.
 
‘Electricity is fundamental to quality of life’: the man bringing off-grid, pay-as-you-go power to Africa — The Guardian
Amy’s take: This is such an inspiring story. The quote about how it’s expensive to be poor in Africa is gut-wrenching.
 
US supreme court rejects big oil’s bid to move Minnesota climate trial — The Guardian
Amena’s take: At least two dozen climate deception cases have been filed, mostly against the oil industry. Expect more following the Supreme Court's refusal to move such a trial from state to federal court for the third time in a year.

The Problem with De-Risking — Foreign Affairs
Bill’s take: Western economies can’t accomplish their decarbonization goals by blocking Chinese competition and subsidizing their own industries, this essay argues. Europe and the United States have no choice but to work with China.

Global shipping fleet ages as shipowners resist shift to greener fuels — Financial Times (paywall)
Anca’s take: This article dives into the classic chicken-and-the-egg scenario: industry is hesitating to order vessels that run on green fuels, amid uncertainty that these greener fuels will be available.

I thought most of us were going to die from the climate crisis. I was wrong — The Guardian
Amy’s take: Data scientist Hannah Ritchie talks about her new book chronicling an optimistic take on tackling climate change. This article highlights the importance of looking backward to predict future change. I was surprised to learn per capita greenhouse gas emissions peaked a decade ago.

Biden Backs Loan to Spot Permian Methane Leaks With Lasers — Bloomberg
Amena’s take: By detecting real-time leaks from the nation's most prolific oil producing region, this technology could really help the U.S. achieve greenhouse gas emissions reductions.
 
China’s ‘dinosaur’ state-owned enterprises make a green pivot — Financial Times (paywall)
Bill’s take: The trend, slow but steady in the way China often implements policy, is one of the reasons why China’s colossal power system is steadily decarbonizing.

More of what we're reading:

• First ever Paris Agreement offsets face integrity questions — Climate Home News

• Azerbaijan appoints state oil company veteran as Cop29 president — Climate Home News
• BP and Equinor Cancel Big New York Offshore Wind Project — Barron’s

The Realities of Supplying Abundant Clean Energy

Illustration by Samson Awosan.

BY: W. D. BUDINGER and PAUL BAUMAN

Bill Budinger, a lifetime trustee of the Aspen Institute, is the founder and former CEO of Rodel, Inc., a global manufacturing company founded in the 1960s that is now a division of DuPont Companies. Dr. Paul Bauman is an energy policy researcher and advisor to private foundations. You can reach them at paulcbauman@gmail.com.

For almost two centuries, the fossil-fueled energy systems that have powered our economy have been damaging our health and climate. They must be replaced.

Well-intentioned efforts to wean us off fossil fuels are already well underway. The world is currently investing over $1 billion per day in renewable energy sources, particularly wind and solar. Yet despite that investment — over $4 trillion so far — the concentration of atmospheric CO2 is not only rising, it is rising faster than ever.

Part of the problem is that energy policymakers around the world have been focusing on favored generation technologies rather than system-wide solutions. And because policies and investments have failed to focus on complete solutions, we are inadvertently creating systems that either will not eliminate CO2, or will produce less abundant and less reliable energy.

The solution is to focus on the complete energy system. A clean and effective energy system must meet five critical criteria.

Read the full article on Cipher’s website.

High costs deter investors from industrial sector technologies

Source: Bloomberg NEF, Scaling Technologies for Greening Heavy Industry • BNEF began tracking investments in CCUS, hydrogen and sustainable materials in 2018. CCUS refers to carbon capture, utilization and storage, while sustainable materials includes production of bioplastics, energy efficiency and recycling.

BY: AMENA H. SAIYID

Reducing carbon dioxide emissions in the global industrial sector is an uphill battle due to investor reluctance to pour money into costly, emerging technologies like clean hydrogen, according to Bloomberg NEF’s latest findings.

The industrial sector — which includes cement, steel, fertilizers and chemicals — is responsible for nearly a quarter of the world’s greenhouse gas emissions, according to BNEF. In fact, this sector is poised to surpass all others to become the world’s largest source of emissions by 2050.

These industries could clean up their emissions if they employ technologies to capture, utilize and store CO2 emissions (CCUS), use clean hydrogen as a fuel or heating source, make bioplastics and deploy recycling and energy efficiency measures, BNEF wrote in the analysis.

Although CCUS and clean hydrogen can be employed to make low-carbon steel, cement and chemicals, the analysis finds risk-averse investors are shying away from these two technologies because they are “prohibitively costly” and nascent. Instead, investors have been placing their bets on established cleantech like renewable energy, electric vehicles, energy storage and electrified heat pumps.

BNEF began tracking global investments in CCUS, hydrogen and sustainable materials, which includes bioplastics, energy efficiency measures and recycling, in 2018. Since then, the chart shows spending in these emerging technologies more than quadrupled in 2022. However, BNEF said these figures still reflect about 3% in total cleantech spending.

To reach net-zero CO2 levels from the industrial sector, the share of total investment in CCUS, hydrogen and sustainable materials “must quadruple,” equating to a cumulative spending of $24.2 trillion by 2050, BNEF wrote.

BNEF recommends governments pass subsidies and mandates to stimulate more investment and an expansion of infrastructure needed to store and transport CO2 and clean hydrogen. These recommendations indicate some kind of mandates are likely needed to push the industrial sector, especially in the United States where the 2022 Inflation Reduction Act is already providing generous subsidies — although we are still very early in the IRA’s existence.

AND FINALLY...
Power running

I snapped this photo while running on trails in Spokane, WA, over the holidays. I find parks and other outdoor spaces coexist just fine with energy infrastructure. These power lines are likely moving hydropower, the dominant electricity source in Washington State.

Each week, we feature a photo that is somehow related to energy, the thing we all need but don’t notice until it’s expensive or gone. Email your ideas and photos to news@ciphernews.com.

Editor’s note: In addition to supporting Cipher, Breakthrough Energy also supports and partners with a range of entities working to tackle climate change, including nonprofits, corporations, startups and research firms. For more information on Cipher’s editorial policy, click here.