As we step into 2024, the global energy landscape is gearing up for a significant transformation, with hydrogen taking center stage as a driving force. Building upon the energy market focus of 2023, it’s imperative to delve into the emerging trends that will shape the sector, particularly highlighting hydrogen’s pivotal role as a catalyst for change in the coming year.

Renewables Soar, Global Workforce Surges

The renewable energy sector has witnessed a remarkable surge, not just in statistics but in its impact on the global energy workforce. Job creation and an impressive increase in installed capacity have set the stage for a dynamic energy scenario. With the global workforce in renewables reaching an astounding 13.7 million, almost 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 signifies a paradigm shift in global energy priorities, with a commitment at COP28 to triple renewables and double energy efficiency by 2030, indicating a collective effort to stay on the 1.5°C pathway.

Renewable Cost Competitiveness Amidst Fossil Fuel Challenges

The resilience of renewable energy’s cost competitiveness shines through amid the challenges posed by 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 toward IRENA’s climate financing platform, ETAF, have surpassed the $4 billion mark, showcasing the expanding role of financial tools in facilitating the energy transition. Francesco La Camera, IRENA Director-General, emphasized that securing financing for renewable energy projects is no longer a formidable barrier under the right conditions.

Hydrogen Takes the Spotlight in 2024

In the unfolding 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 poised for takeoff, with over $50 billion in announced investments awaiting realization. However, this anticipation is tempered by pending Treasury guidance on tax credits, 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 eagerly 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 Post-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 decarbonization and the security of supply, influencing investment decisions in gas and LNG.

The energy sector stands at a crossroads, with hydrogen taking center 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 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.

Source: Trade Finance Global