BNEF signposts: Climate, commodities, and energy transition

This analysis is from BloombergNEF. It appeared first on the Bloomberg Terminal.

Each quarter, BNEF Signposts provides a reflection on the major developments in the world of climate, commodities and energy transition, as well as important new findings from our analyst teams. This quarter’s highlights include solid progress on carbon markets, accelerating solar build and progress on hydrogen and carbon capture policy.

• Global climate policy and finance: The effects of the energy crisis linger on as European gas markets remain tense, oil and gas firms slow their divestment activities and G-7 policy makers voice their support for continued natural gas reliance. Still, concrete progress is being made on decarbonization policies across the G-20, and both Europe and California/Quebec are seeing positive developments in their carbon markets. Regulators and financial institutions are ramping up calls for companies to present their climate transition plans.
• Clean power: We are now forecasting enough global solar build by 2030 to get on track for net zero, as momentum continues to grow. Surging power prices in Spain have created a short-term opportunity for solar, but California’s record negative power prices are showing how quickly things can change as the transition accelerates. More clarity is emerging on how the updated US tax credit systems will work, but for solar their benefits may be outweighed by the current high cost environment. Battery storage providers are navigating through a more competitive landscape, while the wind sector in Europe faces a supply crunch.
• Hydrogen, clean fuels and carbon capture: Policy makers in Europe, South Korea and Colorado have developed incentives for hydrogen demand – an important and welcome shift from focusing on supply alone. The UK and Europe are implementing policies to support carbon capture. E-fuels for aviation are on the rise, but are unlikely to ever be cost-competitive.

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