2022 may indeed have been the tipping point for renewable energy.
Fossil fuels are responsible for more than 30 billion tons of CO2 emissions every year. Temperatures rose 1.5ºF and were almost 1% drier than the last 20 years average, contributing to increasing flammability and fire danger.
According to BP’s 2022 Review of World Energy, energy consumption has been rising worldwide since 2000. But the sources supplying this increasing demand are changing in the energy mix. On slide 12 of the full report, you can see that fossil fuels are the ones supplying most of the demand since the 2000s. The good news is that there was no significant increase of coal or natural gas in the energy mix – and oil decreased its participation significantly. On the other hand, renewables are clearly growing in absolute numbers and in the percentage of the energy mix.
Some of the good news to keep increasing renewables in the world’s energy mix include:
- Oil matters less to GDP. Even though oil is the most frequent and primary fuel – given its increasing efficiency as a fuel over the decades – oil intensity has decreased in the economy since 1984. This means that the correlation between oil consumption and GDP increase has steadily decreased over time, meaning that if the trend continues, we can expect that we can increase GDP while reducing emissions.
- Renewables are growing. Almost 13% of power generation now comes from renewables – vs 1% in 1990. In 2021, wind and solar plants generated more energy than nuclear plants! The US, responsible for 20% of the world’s total renewable generation, has seen its capacity increase three times in the last 10 years – from 200 TWh in 2011 to more than 600TWh in 2021 – and this without considering the 2022 renewables boom.
- Emissions have peaked. According to the Global Carbon Project, emissions per capita reached their peak of 4.9 tons of CO2 per capita in the 2000s, currently at 4.5 tons of CO2 – a 5% reduction. Alongside the facts mentioned above, such as the growth of renewables generation, we could be at the beginning of a trend.
- GDP can decouple from emissions. With all those news, we can start to see the consequence of the oil intensity decrease – GDP decoupling from emissions. Since 1990, GDP increased by 97%, while emissions are almost steady.
- Energy mix is going greener. According to the 2022 Energy Outlook from the US government Energy Information Administration, the incentives for wind and solar developments, combined with lower technology costs, can support a decrease in nuclear and coal dependency in the US electricity mix. Wind and solar are driving the capacity growth in renewable electricity generation. From the new 750 TWh net capacity, solar is responsible for 50% of it, and wind for 25%.
- Renewable energy is cheaper than fossil fuels. And the gap is widening. Even though levelized costs are up because of inflation and cost of capital, onshore wind, and solar projects are 40% cheaper than coal or gas plants -$45-46 per MWh for renewables vs $74-81 per MWh for fossil plants.
Safe to say by this point that most of the world’s governments are somehow involved in fighting climate change. According to the Net Zero tracker, net zero objectives cover 85% of the world population – more than 6.7 billion people! These are 132 countries, responsible for 92% of global GDP and 88% of CO2 emissions. But the challenge is how countries will execute the strategy to meet net zero emissions.
Hard industries could be one important sector to tackle. Sectors such as chemicals, aluminum, plastic, cement, and steel are hard-to-decarbonize, but carry up to 74% of coal-related sources in their manufacturing processes. Those hard sectors have the same emission as big countries – decarbonizing chemicals would be equivalent to decarbonizing India and Germany combined, for instance.
There is [enormous] room for growth in the renewable energy market
Primary energy consumption in the US still mostly comes from fossil fuels. The EIA calculates that 80% of this consumption comes from oil, natural gas, and coal – and only 12% from renewable sources. Even so, supported by governmental policies, the total addressable market for solar itself should be 223 billion dollars by 2026, a 20.5% CAGR.
Storage tech evolution is supporting growth trends
Meanwhile, battery costs have seen a huge decrease over the years. Even though they have seen a 7% increase in costs due to inflation and higher commodity prices, batteries are 90% cheaper than 10 years ago. Also, and leveraged by this cheaper technology, EVs and hybrids have seen an increase in sales – from 6.5 to 10.3 million units, over a 50% increase in a single year! In China, the main driver of this electric revolution, sales may grow by up to 30% in 2023. According to Bloomberg, more than half of US car sales will be EVs by 2030.
Investments in climate technologies are rising
All this scenario is backed up by capital-intensive initiatives. In Bloomberg NEF’s Energy Transition Investment Trends Report, energy transition global investment surpassed the 1 trillion dollars mark in 2022 – a significant leverage when compared to previous years. Renewable energies were up to 17% compared to the prior year, taking almost half of the total commitments. These numbers carry an important milestone – it is the first time energy transition investments match fossil fuels’ – all of that only was possible because of a 40 times increase in investments since 2004.
Total funding for Climate Tech is small when compared to total energy transition investments, but is still quite impressive. With an 89% year-over-year increase, those startups received 70 billion dollars in investments in 2022 alone. The venture capital market has fallen significantly in 2022, which only makes this achievement even more remarkable. And HolonIQ goes even further – by the end of 2023, the US might have invested over 100 billion dollars in Climate Tech solo.
Early-stage companies have seen the most growth in 2022. 125 seed rounds were funded in Climate Techs, doubling from 1 to 2 billion injected in startups. Series As also increased from 5 to 8 billion dollars worth of investment checks, but later rounds did not increase.
Dyme is one of those venture-backed startups. Replacing fossil resources is still capital-intensive and we make it easier for companies and individuals to support this change without having to spend extra, evaluate the best projects to donate to, or be a climate expert. We do this through our unique sustainable gift card program!
Dyme provides organizations the convenience and flexibility of digital gift card spending across a range of partner websites. Additionally, it offers a unique chance to invest directly in carbon reduction by redirecting current gift card expenses into solar power investments through our innovative gift card platform. Dyme turns your spending into renewable energy investments for schools and communities. Download the Chrome extension, link your credit or debit card, and start shopping on a 15,000+ merchants network. This is your chance to prioritize sustainable shopping, sustainable eating, and sustainable brands. When you do that, you earn Dyme Dividends. For each 100 Dyme Dividends you earn, Dyme will invest in a project that will reduce 21.5 lb of CO2 from the atmosphere.