As we near the end of the year and the COP28 gathering, we take the opportunity to review recent developments in the global clean tech landscape and assess where we might be heading in 2024. We started this year with the alarming observation that global fossil CO2 emissions reached a new record-high level of around 38.5 gigatonnes per annum (Gtpa) amid the ongoing global energy crisis, reintegration of coal into the power mix, and recovery in industrial activity in China. Yet we also highlighted the increasing likelihood of an upcoming peak in global CO2 emissions already in 2025.

With the latest data and policy development in 2023, we reiterate our call that peak CO2 emissions are just around the corner and that we will inevitably enter the structural decarbonization phase from the second half of the 2020s. We specifically highlight faster-than-expected deployment of abatement solutions in European industrial applications (amid the outperformance of total CO2 footprint which is partially driven by reduced industrial activity since 2022) and faster integration of renewables into the power mix of many developing countries. Nonetheless, we argue that more efforts can still be made within Chinese industrial sectors, the Indian power sector, and global transportation (especially beyond light-duty vehicles) if the world is serious about delivering on the 1.5-2.0 DG Celsius carbon budget range compliant with the Paris Agreement.

A Remarkable Year for Solar Installations and Electric Vehicle Sales in 2023

This year will inevitably end with positive surprises for global solar installations and light-duty electric vehicle (EV) sales despite the supply chain bottlenecks highlighted early in 2023. Several countries with fairly mature EV markets (e.g., China, Germany, France) revoked certain consumer incentives for EV buyers at the start of the year. As a result, we saw a temporary drop in global EV sales in 1Q23. Since then, collapsing battery mineral prices and cell oversupply incentivized car manufacturers to start an EV price war (in China for instance) and by now, the impact of these eliminated subsidies has been fully offset by a reduction in vehicle prices. By August, global EV sales had already recovered to 4Q22 peaks, and we will surely get new records (both in absolute terms and in terms of EV market share) in 4Q23. Battery-electric vehicle (BEV) sales are on track to grow from about 7.8 million units in 2022 (around 12% of new LDV sales) to about 10-11 million units in 2023 (15% of new LDV sales).

When it comes to solar PV, China alone is on track to add about 160 gigawatts (GWAC) of new capacity (utility-scale and distributed combined) in 2023, which corresponds to almost 100% market growth from the 87 GWAC installed last year. The United States saw unprecedented progress in the amount of capital flowing into its domestic solar module manufacturing sector on the back of improved tax credit support from the Inflation Reduction Act and can become self-sufficient on solar modules as early as 2025.

The US leads the way: A surge in Carbon Capture and Storage activity in 2023

The US also attracted most of the global carbon capture, utilization, and storage (CCUS) activity this year amid an unprecedented number of new commercial-scale project announcements coupled with some significant financial investment decisions (FIDs), offtake agreements from emitters (e.g., Nucor Corporation and ExxonMobil) and major deals like ExxonMobil’s acquisition of Denbury. The number of pending Class VI CO2 injection applications skyrocketed from ~45 at the end of 2022 to more than 160 currently (including the applications that are still going through the review phase). Moreover, the Environmental Protection Authority (EPA) has finally started moving some applications from technical review to the actual draft permit, public comment, and final permit status as ADM’s Class VI wells in Illinois were finally joined by two Wabash permits in Vigo County, Indiana – currently going through final permit preparation phase.

Hydrogen market is setting the stage for 2024 FID boom

In the clean hydrogen space, both the US and Europe saw significant traction related to actual FIDs and maturing policy framework. The European Hydrogen Bank has recently released the details of its much-anticipated first auction round for green hydrogen, indicating that a maximum support of €4.5 per kg will be offered to projects. Such significant financial support, in fact, allows solar-driven green hydrogen in Spain to compete with pure solar or solar + wind hybrid initiatives in Texas, when factoring in EHB and IRA tax credits, respectively. While 2023 was still a big year for policy maturation, we believe that 2024 will be the year of FIDs in both blue and green hydrogen.

Geothermal Energy's Rising Prospects: EGS Innovations and the Path to a Pivotal 2024

The geothermal sector is also facing growing traction in multiple regions as enhanced geothermal systems (EGS) represent a promising frontier to provide reliable, clean baseload power generation or heating. The US, with its rich geological diversity, vast energy needs and extensive experience in oil and gas drilling has been at the forefront of EGS development and exploration. A fair dozen of EGS pilots were recorded in the US historically, with the most recent one being Fervo Energy’s Project Red in northern Nevada. The developer has announced the completion of a 30-day test, and considering the synergetic nature of geothermal’s business case with direct air capture (DAC) and lithium extraction (DLE from brine) initiatives, we are very likely to see a series of new announcements in US geothermal in 2024.

Finally, 2023 brought a major shock to voluntary carbon markets (VCM) amid growing concerns about the future regulatory environment and the quality of credits currently dominating the supply from major certifiers. We observed a complete collapse in the prices of both nature-based solutions and other offsets this year, and there is significant uncertainty in the development of VCM in 2024. The final framework around Article 6 of the Paris Agreement (which is expected to be finalized at COP28) will likely shape the direction of VCM development, thus COP28 is an absolute catalyst in this space.

Better equipped to navigate the energy transition

Our Clean Tech data and research solutions are being expanded continuously as new energy sectors mature. In 2023, we significantly expanded the cost modeling and economic analytics capabilities of our CCUS, Hydrogen and Batteries solutions, and enriched our technical data coverage in our Geothermal solution. We have also published a series of fundamental regional reports on the future of energy systems in both developed countries (e.g., the US) and developing economies (e.g., Colombia). Finally, we have migrated our energy scenarios framework from global to country and sector-level resolution in our ScenarioCube product. As we head into 2024, we will keep all our clients and community members updated on the latest developments. In particular, stay tuned for our upcoming launch of Bioenergy, VCM and ETS solutions.