EV Outlook 2023, LCOE Update, Regional Energy Outlooks, Cobalt Supply & Green Steel

Hi, welcome to the 14th edition of?The Race to NetZero?Newsletter, a monthly round-up of the best research and news from?BloombergNEF .

Find below the best content published by our analyst team in the past month:

Electric Vehicle Outlook 2023

The Electric Vehicle Outlook is our annual long-term publication looking at how electrification, shared mobility, autonomous driving and other factors will impact road transport in the coming decades. The report draws on our team of specialists around the world and looks at scenarios for how these trends will impact the automotive, oil, electricity, infrastructure and battery materials markets, as well as CO2 emissions.

Electric Vehicle Fleet Set to Hit 100 Million by 2026, but Stronger Push Needed to Stay on Track for Net Zero

EV adoption is set to soar in the coming years, with over 100 million passenger EVs expected on the roads by 2026 and over 700 million by 2040, up from 27 million at the beginning of this year, according to research company BloombergNEF’s (BNEF) latest annual?Long-Term Electric Vehicle Outlook?(EVO). Electrification is now spreading quickly to all sectors of road transport from rickshaws to heavy trucks and is also picking up in emerging economies like India, Thailand and Indonesia.

As momentum grows, new economic opportunities are taking shape. The cumulative value of EV sales across all segments hits $8.8 trillion dollars by 2030 and $57 trillion by 2050 in BNEF’s base-case Economic Transition Scenario, which assumes no new policies are implemented. EVs and batteries are now a central part of many countries’ industrial policy and competition to attract investment will increase in the coming years.

Despite the rapid progress, urgent action is required from policymakers and industry participants to keep road transport on track for long-term emission targets countries have set. “Direct electrification via batteries is the most efficient, cost-effective and commercially available route to fully decarbonizing road transport. Still, a stronger push is needed on areas like heavy trucking, charging infrastructure and raw material supply” said Aleksandra O'Donovan , head of electric vehicles at BloombergNEF.

Read Full Press Release here

How EVs Will Drive Peak Oil This Decade, in Five Charts

It’s yet to be determined if climate change has played a direct role in the latest wildfires raging across Canada and the haze still lingering in North America. But global warming is exacerbating the extreme conditions like drought and heatwaves that help fuel such infernos.?

With California’s fire season due to get underway, a?study ?published this week in the Proceedings of the National Academy of Sciences concludes that the increase in forest area burned in the state over the past 50 years is almost entirely due to human-caused climate change. The scorched territory could expand by more than 50% in the coming decades, adding to the growing list of warnings about the need to drastically curtail our greenhouse gas emissions.

It’s good news then, that the world’s demand for oil is set to peak this decade. As more people switch from gasoline and diesel guzzlers to electric vehicles, oil consumption for road transport is on track to crest in 2027, according to a?report ?from BloombergNEF.

But while the ceiling will be reached, the thirst for oil won’t be disappearing anytime soon. Based on the current trajectory, the amount of oil needed to power cars, vans and trucks will roughly halve between now and 2050, leaving close to 20 million barrels a day of demand in play. That’s about as much oil produced by the US last year (when counting crude, all other petroleum liquids and biofuels).

Read Full Article

Cost of Clean Energy Technologies Drop as Expensive Debt Offset by Cooling Commodity Prices

The costs of wind power and battery energy storage projects have come down from levels seen in 2022, at the height of global supply chain constraints and the impacts of the Ukraine war. The industry still faces challenges as central banks continue to raise rates and some clean energy manufacturers are not yet passing cost savings on to buyers, but the last few years of turmoil have been an exception to otherwise consistent project cost declines over a longer time period according to the latest analysis by research company BloombergNEF (BNEF).

Over the last six months, the costs of new-build offshore wind and storage projects have fallen by a respective 2% and 12% and the global benchmark costs for onshore wind are down 6% over the last 12 months, but remain unchanged since the second half of 2022. BNEF’s analysis shows that the global benchmark levelized cost of electricity, or LCOE, for offshore wind is now on par with coal, the cheapest since BNEF started capturing project data in 2009, driven by a strong China market. Despite a 5% reduction in the cost of fossil fuel-fired projects over the last six months, onshore wind and PV remain the cheapest new-build technologies to produce electricity in countries covering 82% of global electricity generation.

BloombergNEF’s global benchmark costs for solar have risen over the last six months. The average fixed-axis solar project is estimated to be a modest 2% more costly. The typical solar project with trackers has risen by a more substantial 12%. These projects are common in the US, and developers here have faced rising labor, balance of plant and financing costs.

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New Outlooks for Regional Energy Futures

By Nat Bullard ,?Senior Contributor,?BloombergNEF

BloombergNEF’s?New Energy Outlook ?is our company-wide effort to describe future pathways for the global energy economy. Its two scenarios describe a world that is likely to happen, given current policies and technologies, and a world that could be, with concerted and sustained effort to reach net zero carbon emissions by the year 2050.

That first scenario is BloombergNEF’s Economic Transition Scenario, a baseline assessment with cost-based technology improvement as the prime mover of change. It is the likely world, and it is a world with 2.6 degrees C of warming. The second is the Net Zero Scenario, which includes the same technology attributes, but it also posits a world that does much more. It is a world that deploys more renewables, but also more nuclear and other dispatchable low-carbon technologies in the power sector. It scales up clean fuels in end use applications, in particular hydrogen and bio-energy. It is a sector-by-sector approach to meeting the goals of the Paris Agreement. And, while this scenario reaches net zero emissions by mid-century, it still results in 1.77 degrees of warming.

That sector-by-sector approach is important, and this year, for the first time, BNEF is producing a set of separate reports which examine particular sectors and their decarbonization possibilities. These include reports on the global industrial sector, electrical grids, and coal, which BNEF clients can access?here . But just as important as what each sector can do to decarbonize, is what each country can do. That is why BNEF is also publishing a series of New Energy Outlooks on a half-dozen critical countries and markets: China, Europe and Australia so far, and soon Japan, the US, and India.

The world’s biggest energy economies share some universal attributes for decarbonization. All benefit from the same technology cost curves for wind power, solar modules, lithium-ion batteries, and hydrogen electrolyzers. These economies have large, liquid, and generally robust capital markets that can finance the trillions of dollars needed to decarbonize their economies. They also have the technical capability to integrate new power generation resources, and new molecular energy carriers like hydrogen.

But each of these energy economies are also distinctly different in meaningful ways. Clearly, they have different scales. China, which generated only about a third as much electricity as Europe as recently as 2000, now generates more than twice as much. In recent years, China’s year-on-year increase in power generation has been much more than Australia’s total power generation. In a net zero scenario by mid-century, China will generate as much electricity every six months as Europe does every year; it will generate as much electricity in two weeks as Australia does in 12 months.

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Cobalt Suppliers Up Their Game to Cash In on EV Rush

By Kwasi Ampofo , Analyst, BloombergNEF

Indonesia overtook Australia to become the second-largest producer of mined cobalt last year, behind the Democratic Republic of Congo.

As demand for cobalt increases, propelled by the need for batteries for electric vehicles, the Southeast Asian nation is expected to increase its output and maintain its number two position this decade. BloombergNEF estimates Indonesia’s share of global mined cobalt will reach 19% by 2030, from 3% in 2022.

Cobalt from Indonesia is a by-product of nickel production. A flood of plans and announcements in recent years is starting to result in material cobalt supply additions in the country. Projects such as Lygend’s Obi Island HPAL and Huayou’s joint venture in Morowali, as well as additional capacity from Tsingshan and other nickel matte producers, have come on stream sooner than expected compared to typical time frames, despite some delays.

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Green Steel Demand is Rising Faster Than Production Can Ramp Up

By Dr. Julia Attwood , Head of Sustainable Materials, BloombergNEF

Automakers, consumer goods and equipment providers all have targets to decarbonize their supply chain. This puts pressure on their materials suppliers to send them more low-carbon, recycled, or sustainable materials: in particular, steel. But many of the technologies that can produce green materials at scale are not yet at commercial scale. Demand for green steel from sectors that can absorb the green premium – such as transportation – should help to de-risk the financing of commercial-scale low-carbon steel plants. For the next few years at least, while industrial decarbonization policy finds its feet, it will be private sector demand that drives the decarbonization of steel.

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For more BNEF public content, don't hesitate to check-out our Blog?here ?or if you prefer to watch videos, there are plenty of videos in our Vimeo Channel?here , you can also check-out our Podcast:?Switched-On.

I hope you enjoyed the content and as always don't hesitate to comment and/or provide feedback to improve this newsletter.

I will be soon on paternity leave to welcome my 1ts daughter to this world but I hope to be able to keep reading and sharing this great work put together by our analysts. Stay tuned!

Best Regards, Saludos, Cordialement

Guillaume