Weekly Climate Recap: Understanding 2023 Emissions and Investment
Very interesting week full of data and results from the previous year. Firstly is a story about emissions in 2023, the role of hydro, and the relationship between economic growth and fossil fuel emissions. Second up, tallying the investment in clean technologies experienced in 2023 in the USA. Rounding out the stories this week is an incredibly interesting analysis on the psychology of climate change denial. Enjoy!
🚰 Importance of Hydro in the Context of Global Emissions
Hydroelectric power can be considered the backbone of the energy transition. It is by far the most deployed low carbon emissions resource that and it is considered dispatchable and firm capacity. However, that assumption is being challenged with the rise of frequency of droughts.
The CO2 Emissions in 2023 report from the IEA dives into exactly that, the emissions that were estimated to have been released in 2023. The headline takeaway:
“Global energy-related CO2 emissions increased as exceptional droughts hit hydropower, but rise was lower than in 2022 thanks to expansion of technologies such as solar, wind & EVs”
Emissions increased by 410 million tonnes, equivalent to 1.1%, in 2023 which was a slower rate of growth than 2022 in which there were 490 million tonnes of increase. While the rate of growth is slowing, this means we still experienced record high emissions in 2023 of 37.4 billion tonnes.
As you can gather from the title, droughts across the world resulted in shortfalls of hydroelectric production and to fill the gap left by this lack of hydro, many economies such as China and the US turned to fossil fuel based alternatives. The report notes that if droughts had not occurred, emissions from electricity generation would have declined.
The sheer drop in hydro production is shown in the chart above, noting that this chart accounts for January 2023 → June 2023 compared to the same period in 2022.
While the statistic on hydro was very interesting, another key point to note is the trend in advanced economies, namely, that advanced economies GDP grew by 1.7% but emissions fell by 4.5%. Further, coal demand in advanced economies is down to levels of ~1900. This shows that advanced economies can decouple economic growth from emissions.
Takeaway: Very interesting report that has so many dynamics to it. From the role of hydro in our zero carbon electricity system and the negative feedback loop enforced by droughts to the decoupling of growth and emissions. The takeaway here is that the rate of increase in emissions is slowing and we can have economic growth independent of fossil fuels.
📈 Clean Investment Surges in the US
Investment in clean industries surged in 2023 with the Clean Investment Monitor reporting a growth of 38% compared to 2022. In 2023 total clean investment came to US$239B compared to US$174B in 2022.
As shown above, the CIM has three groups:
- Retail: purchase and installation of technologies by individual households and businesses
- Energy & Industry: investment in the deployment of clean technology to produce energy or decarbonize industrial processes
- Manufacturing: investment in the manufacturing of emissions reducing technology
The results in funding in 2023 are as follows:
- Retail: Total retail purchases of zero-emission vehicles, distributed renewable electricity and storage, and heat pumps amounted to $118 billion in 2023, up from $101 billion in 2022, with ZEV sales driving most of the growth, reaching $77 billion in investment. Although total ZEV sales increased by 52% year-on-year by volume to 1.4 million, declining ZEV prices resulted in total investment growing by only 30%. Conversely, heat pump investment experienced the weakest performance, with a decline of more than 30% in Q4 and a full-year 2023 investment of $19.5 billion, a 16% decrease from 2022, as heat pump sales eventually began to decline rapidly compared to gas and oil furnaces.
- Energy & Industry: Utility-scale solar and storage investment accounted for $53 billion out of a total $72 billion in new investment in clean energy production and industrial decarbonization, with a record $15 billion invested in Q4 alone, marking an 11% increase over Q3 2023 and a 53% increase relative to Q4 2022. Wind investment slightly increased to $2.5 billion in Q4, but experienced a 3% year-on-year decline, totalling $9 billion for the full year, down 37% from 2022. In the energy & industry segment, emerging climate technologies such as clean hydrogen, carbon management, and sustainable aviation fuels saw rapid growth, with $4.3 billion invested in Q4, a 60% increase relative to Q3 and a ten-fold increase relative to Q4 2022.
- Manufacturing: In Q4 2023, the electric vehicle (EV) supply chain dominated clean manufacturing investment, totalling $12 billion out of a total of $15 billion, marking a significant increase from 2022 with a total investment of $42 billion, up by 142%. Additionally, solar manufacturing investment saw a substantial rise, reaching $2 billion in Q4 2023, six times higher than Q4 2022, while full year 2023 investment amounted to $5.1 billion, compared to $0.9 billion in 2022.
Takeaway: The results from this years Clean Investment Monitor are a mixed bag in all honesty. While surging investment in EV manufacturing occurred, wind investment and heat pumps declined. The mantra of the transition is “everything, everywhere, all at once” so to see declines in technologies that are definitely needed in the transition was unfortunate. However, all things equal, this point to increased funding in clean technologies that will drive down emissions.
🧠 Psychology of Climate Change Acceptance
Do you feel like out of every 100 American citizens you meet 14.8 of them don’t believe in climate change? That is the conclusion of a paper titled The social anatomy of climate change denial in the United States published here in the journal Scientific Reports. As can be expected, this denial has correlation with political affiliation, education, COVID-19 vaccination rates, carbon intensity of regional economy, and income.
To gather and analyze data, the authors used data from X (formerly Twitter) gathered from 2017 to 2019 and used a deep learning model to classify 7.4 million tweets that contained key words related to climate change. Based on the analysis, climate change denial is most common in the Central and Southern US with a reported 20% of the population of OK, MS, AL, and ND being climate change deniers, no surprises there. A further shocking (not really) result is that coastal areas have the strongest beliefs in climate change. However, the researchers note that while these trends are to be expected, within states certain counties can have vastly different rates of climate change denial than the state it is located in.
The concept of climate change denial is one that many conservative news outlets and figureheads use platforms such as X to distribute. The research also dived into prominent influential deniers and who peddles the concept of climate change denial. These fall under 3 categories:
- conservative media outlets like The Daily Wire, Daily Caller, Breitbart and thebradfordfile
- mis/disinformation websites including TownHall Media and the Climate Depot
- right-wing producers, political commentators, and activists.
The report highlights the nature of science denial and identity politics clearly stated below:
“The strong correlation between denialism and low COVID-19 vaccination rates indicated a broad skepticism of science generally amongst climate change deniers, which corresponds to resistance to science-based public policies such as shelter-in-place COVID-19 mandates or mask usage. This finding indicates that communities with a high prevalence of deniers are at risk for discounting other science-based health or safety recommendations. According to the theory of identity-protective cognition, people tend to selectively credit or discredit evidence in patterns that reflect beliefs that predominate in their group. This theory helps explain why those who vote Republican are more likely to believe tweets from former President Trump regarding climate change than from other sources; it is identity affirming.”
Takeaway The psychology of climate change is so important when it comes to deploying solutions. Given that red states received the majority of IRA funding so far, and that these overlap with climate change denial states, understanding where these pockets of denial stem from is important for developers. I found this article incredibly interesting to analyze the beliefs of climate change deniers and understand the overlap with various other beliefs.
What Else is in the News
- Canary Media has a great article on how smart EV charging in California can help prevent grid stress caused by the increasing number of electric vehicles on the road. By coordinating charging times to avoid overwhelming power infrastructure, EVs can absorb renewable energy when it’s abundant and reduce the need for costly grid upgrades. Initiatives like the REDWDS program aim to deploy easy-to-use charging products that align with dynamic grid signals, potentially saving the state billions in grid investments. With the goal of having 8 million EVs on the road by 2030, implementing smarter charging options quickly is crucial to support California’s EV growth and grid stability.
- One trend I have been following is how traditional fossil fuel companies treat developing, constructing, and owning their own portfolios of renewables assets. Especially relevant as these companies seek to market themselves as energy companies and pursue renewables. As expected, these profit motivated entities seek profit and that is made no clearer than Shell’s sale of the US solar unit to focus on their more profitable underlying fossil fuel business. Shell’s U.S. solar business, Savion, is selling a quarter of its assets through investment bank Jefferies, totalling up to 10.6 gigawatts of solar generation and storage assets in development. This move follows Shell’s acquisition of Savion in 2021 to expand in the low-carbon energy market and reduce its carbon footprint, part of a broader restructuring that includes staff reductions and exiting various energy sectors.
- A new realm of hydrogen is rapidly growing in popularity and funding, geologic hydrogen. An article from Cipher dives into the latest activity in the geologic hydrogen space. Last month witnessed significant developments in the hydrogen sector: The Energy Department allocated $20 million to 16 projects focusing on natural hydrogen, while Koloma, a geologic hydrogen startup, secured a record-breaking $245.7 million investment, supported by Breakthrough Energy Ventures. Additionally, collaborations between academic institutions like the Colorado School of Mines, the USGS, and major industry players such as BP, Chevron, and Petrobras were announced, alongside a Senate hearing on geologic hydrogen.
