2024 reflections: AI power, elections and more

BY: AMY HARDER

Read this article and more of the latest on climate & tech at ciphernews.com.

We knew some of what this year would bring — like consequential elections — while some events took many of us by surprise — like a sudden boom in electricity demand fueled (largely) by artificial intelligence.

Here are the trends I’m reflecting on, including those I previously predicted would dominate this year. All these insights benefit greatly from my Cipher colleagues around the globe.

Every year since 2018, I’ve looked at the trends that shaped the past year and what I expect in the year to come; that included reality-checking what I predicted each January. To take a quick look back, here are my Cipher outlooks for?2024, 2023 and 2022; and my outlooks while reporting at Axios in?2021, 2020, 2019 and 2018. Stay tuned early next month for my 2025 outlook.

1. Go time for Inflation Reduction Act.

Over 50% of the more than 800 cleantech projects announced in the United States between the first and third quarters of this year have moved forward to either construction or operation. That’s according to Cipher’s analysis of the Clean Investment Monitor’s latest quarterly update analyzing cleantech investments eligible for support from the Biden administration’s mammoth climate law, the 2022 Inflation Reduction Act.

But for emerging technologies, we are seeing a downward trend in new projects this year, with announced investments dwindling to less than half the amount announced during the same period in 2023, as my colleague Amena Saiyid reports in an article?published earlier this week.

Take a spin around our interactive?Cleantech Tracker to see what’s taking root and where.

Outside the U.S., the IRA is accentuating the global cleantech race, including Latin America, China and Europe. My colleague Anca Gurzu, based in Brussels, reports from across the Atlantic:

While European companies did not flock to the U.S. in the numbers initially feared, the U.S. cleantech push is adding to an existing competitiveness gap with the European Union. The 27-member bloc is facing a steady and worrying deindustrialization trend as a result of high energy prices, complicated EU-wide rules and international competition.

2. Cleantech rebound?

I referred to the “damning trifecta” of high interest rates, high inflation and supply chain bottlenecks in my 2024 outlook, but it does look like those economic pressures are easing to some degree.

My colleague Bill Spindle wrote about how lower interest rates are helping boost renewable energy, while Mads Nipper, CEO of the world’s largest offshore wind producer, ?rsted,?said the economic outlook was improving; he spoke during a fireside chat I conducted at a Climate Week event hosted by the Dynamo Energy Hub in New York City in September.

Still, climate tech venture capital spending is set to drop nearly 18% this year compared to 2023, according to data from PitchBook — and more than 45% from the high in 2021.

“The irrational exuberance is largely gone, and you have to work a little bit harder to find co-investors, but do I think things are completely shut down? Absolutely not,” said Eric Toone, the chief technology officer of Breakthrough Energy (which supports Cipher), whose venture arm is one of the biggest funders of climate tech startups.

3. Power frenzy.

One trend I didn’t foresee at the start of the year is the explosive growth in electricity demand, led by (but not limited to) the aggressive development of data centers to support the boom in artificial intelligence. The demand for energy-hungry AI has also prompted the trend of a nuclear renaissance, driven by America’s biggest tech firms: Meta, Google and Amazon, as my colleague Cat Clifford writes:

• The five-year projected growth forecast for electricity demand has jumped fivefold over the last two years, according to a December report from consultancy Grid Strategies; more than half of that is likely to come from data centers. This explosive growth comes after decades of mostly stagnant power demand.
• The AI race is prompting fierce competition among large tech companies, all of which have deep pockets and strong corporate sustainability goals. Nuclear energy delivers the always-on, carbon-free electricity tech companies are seeking.

“There is a big increased demand for clean firm power,” said Toone, adding that data-center energy demand is just one part of the overall economy that is increasingly being run on electricity, ranging from cars to heat pumps.

4. Tangible impacts from COP28 agreement.

The historic language agreed to at last year’s United Nations climate conference in Dubai, United Arab Emirates — for the first time ever calling on countries to transition away from fossil fuels — managed to stay alive at this year’s COP29 confab in Baku, Azerbaijan, but just barely, as Anca, who was there on behalf of Cipher, writes:

• The COP29 language references the Dubai deal but does not specifically repeat the call for a transition away from fossil fuels. It also doesn’t lay out actions to accelerate toward the goal, which the EU and U.S. negotiators had wanted. Saudi Arabia fought hard to have no mention of fossil fuels in the final text. Considering the push to backtrack on last year’s written commitment, even the vaguer final reference could be considered a win. Some climate analysts, however, worry this might be the beginning of a dilution that could spread to next year’s conference. The language is not legally binding but is politically powerful and sets the direction of travel.

5. Political impacts, U.S. edition.

Energy and climate change wasn’t a dominant focus in this year’s elections, but I still see lessons in the subsequent Republican sweep in both chambers of Congress and the White House.

First, some energy and climate topics are now squarely in society’s culture war, particularly electric cars, which means policies related to these topics are more vulnerable than others to being rolled back.

Second, voter concerns about inflation, although not directly tied to energy and climate, are nonetheless relevant. It’s a cautionary reminder that voters are very unlikely to accept higher costs to address climate change, which means lowering the costs of cleantech is more vital than ever.

6. Political impacts, global edition.

The overseas elections we watched most closely included those in the European Parliament, India and Indonesia.

Anca, reporting from Brussels, on the EU:

• The 2024 European elections saw the rise of far-right populist parties that campaigned in part on rolling back climate policies. The trend was in sharp contrast with the elections from five years earlier, when a green wave swept across the continent, resulting in the set of climate proposals known as the European Green Deal. Despite this year’s undisputable shift to the right, mainstream parties still hold the balance of power, ensuring the newly formed European Commission can carry on with the EU’s green transition, albeit a little slower.

Senior global correspondent Bill Spindle on India and Indonesia:

• While neither election turned directly on climate or energy, the results of both could influence the course of the global energy transition.
• In India, Prime Minister Narendra Modi’s BJP party performed below expectations, but well enough to remain entrenched in power. Modi has supported renewable energy generally, even while embracing fossil fuels, too.
• In Indonesia, winner Prabowo Subianto recently announced, to the surprise of many, the country would close coal and other fossil fuel power plants by 2040, a highly ambitious goal. Many environmentalists applauded the move, then wondered how the government would manage the shift with no plan yet in place or even under real discussion.

Up next: Stay tuned for my 2025 outlook due out the first week of next year!

Editor’s note: Breakthrough Energy, where Eric Toone is the chief technology officer, also supports Cipher.