A self-driving car ride
The future car is likely electric, shared and selfdriving. You may have heard this statement before, but the truth is, it is not a car of the future; it is here today.
Earlier this month, I rode in a Waymo cab in San Francisco. The self-driving vehicle whizzed through the streets of the city, changed lanes, manoeuvred tricky turns and brought us to our destination without much fuss. Invisible hands turned the steering wheel — a contraption that will probably not be a part of self-driving cars for long. Waymo’s fleet is made up entirely of fully electric Jaguar I-pace models, and the service is expanding to other cities. The cost of the service is in the same bracket as Uber and Lyft.
Bloombergnef still views these so-called autonomous vehicles as a “wildcard” that could either upend the way we commute or remain limited to select pockets in a few cities.
The outlook is clearer on electric vehicles, though it is changing. Global sales of electric passenger cars could rise 20 per cent this year, with some 16.7 million vehicles being shipped. Accompanying this rise is frenetic activity in the batteries and metals space. “What is certain is long-term demand growth,” said Allan Ray Restauro, BNEF’S metals and mining analyst. However, prices have been under pressure as additional capacity led to surplus volumes. Nickel prices were down about 47 per cent in 2023. Despite the price slump in lithium, Exxon Mobil Corp said last week that it would proceed with its project in Arkansas.
Canada topped BNEF’S Global Lithium-ion Battery Supply Chain Ranking of 30 countries based on their potential to build a secure, reliable and sustainable lithium-ion battery supply chain. It was followed by China, US, Germany, Finland and South Korea. India jumped five spots to 13th this year.
Liveable planet
The World Bank Group — the biggest provider of climate finance to developing countries — is aiming to raise annual financing to $40 billion next year. The interesting thing is that this will be split equally between mitigation (actions to reduce or avoid emissions) and adaptation (to adjust to climate change).
“There is no science to that number, and I don’t know if it is right,” World Bank President Ajay Banga told BNEF in an interview. The equal split is to make sure that the concerns of the global South as well as the global North are addressed.
This is in line with the World Bank’s new vision to create a world free of poverty on a liveable planet. The latter would mean more climatelinked investments. Climate projects received $38.5 billion last year. Mr Banga’s priority projects include a $15 billion plan to provide renewable energy to 100 million people in Africa, a multi-country effort to monetise carbon credits at premium pricing, a scheme to limit methane emissions and to support green hydrogen infrastructure in India.
Solar shine
Solar power will hit another record in 2024, with over 520 gigawatts expected to be installed this year — almost a 30 per cent growth from last year. As many as 37 markets will add more than a gigawatt of capacity. The current state of the market is best summed up by BNEF’S most recent outlook: “Prices of solar modules are at record lows, and supply of components is plentiful. End-user markets are booming while manufacturers struggle to make a profit.”
India is expected to be the third-largest market for solar installations in the world, with the US and China ahead of it, and Brazil and Germany trailing it.
Meanwhile, the ambitions to localise solar supply chains will collide with the reality of low prices, and low or non-existent margins. This would mean many proposed factories in Europe, the US and other countries will never be built. India auctioned almost 23 gigawatts of solar last year in alternating current terms, which reflects the capacity of the inverters or grid connection — setting a new record that was more than the total capacity auctioned in the preceding two years.
Money flow
There are two key highlights from BNEF’S review of investments in the low-carbon energy transition in 2023: For the first time, electrified transport was a bigger chunk of investment ($634 billion) than renewable energy ($623 billion).
Total investment jumped 17 per cent to reach $1.8 trillion — a number which remains distant from what is needed to meet global decarbonisation targets.
India was among the top 10 economies leading investment in the energy transition, investing more than $30 billion.
The outlook for 2024 depends on how the interest rate cycle turns. Since investment is frontloaded for renewable energy projects, a softening of rates is typically positive for the sector.