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The forthcoming year, 2024, promises to be a transformative epoch in the global energy sector, with hydrogen positioned as a central player in the unfolding narrative.
After 2023, a year which focused so heavily on the energy market, it is important to focus on the trends shaping the energy landscape, with a particular emphasis on why hydrogen is not only a key player but also a catalyst for change in the coming year.
Renewables and the global energy workforce surge
The renewable energy sector has undergone a remarkable surge, experiencing significant job creation and an increase in installed capacity, setting the stage for the evolving energy scenario. With the global workforce in renewables soaring to an impressive 13.7 million, nearly doubling over the last decade, and an 83% surge in installed renewable energy capacity in 2022, renewables now constitute a formidable 40% of the global power capacity.
This surge in renewables represents more than mere statistics; it embodies a paradigm shift in global energy priorities. The commitment at COP28, where governments worldwide pledged to triple renewables and double energy efficiency by 2030, signals a collective effort to stay on the 1.5°C pathway.
Cost competitiveness amidst fossil fuel price crises
The resilience of renewable energy’s cost competitiveness shines through amidst the storms of the fossil fuel price crisis. In 2022, 86% of newly commissioned renewable capacity boasted lower costs than fossil fuel-fired electricity. This translated into substantial cost savings in global fuel expenditures, estimated at $520 billion in the electricity sector, according to the International Renewable Energy Agency (IRENA).
The financial commitments towards IRENA’s climate financing platform, ETAF, have exceeded the $4 billion mark, showing the expanding role of financial tools in facilitating the energy transition. Francesco La Camera, IRENA Director-General, said that securing financing for renewable energy projects is no longer a formidable barrier when the right conditions are in place.
Hydrogen takes centre stage in 2024
In the narrative of 2024, hydrogen emerges as a focal point, driven by legislative acts such as the Infrastructure Investment and Jobs Act (IIJA) and the Infrastructure Investment and Regulatory Act (IRA). The green hydrogen economy is on the verge of takeoff, with over $50 billion in announced investments awaiting realisation. However, this anticipation is tempered by pending Treasury guidance on tax credits, which is expected to make green hydrogen economically competitive.
The alignment of Treasury guidance with the European Union’s approach could potentially unlock significant investments in 2024. The industry awaits developments in seven selected hydrogen hubs and the launch of the country’s first end-to-end green hydrogen system, marking a pivotal moment in the hydrogen narrative.
Energy efficiency and the impact of COP28
While investments following the Infrastructure Investment and Regulatory Act (IRA) fell short of targets, initiatives like the US Climate Alliance’s goal of installing 20 million heat pumps by 2030 could drive growth in energy efficiency. The impact of COP28 is evident in the evolving balance between decarbonisation and the security of supply, influencing investment decisions in gas and LNG.
Currently, the energy sector is at a crossroads, with hydrogen taking centre stage in the transition to a sustainable future. The momentum in renewables, coupled with evolving financial landscapes and government commitments, sets the stage for a transformative year in energy trading.
Keeping a close eye on hydrogen developments, global energy transitions, and emerging trends in the energy markets and energy trading will be crucial for navigating the dynamic landscape of 2024. The energy sector is on the brink of a new chapter, and hydrogen is poised to script its narrative in the year ahead as a beacon of clean energy and a key player in the energy trade.
