Rocky Mountain Institute

Battery demand is growing exponentially, driven by a domino effect of adoption that cascades from country to country and from sector to sector. This battery domino effect is set to enable the rapid phaseout of half of global fossil fuel demand and be instrumental in abating transport and power emissions. This is the conclusion of RMI’s recently published report X-Change: Batteries. In this article, we highlight six of the key messages from the report.

1. Battery sales are growing exponentially up S-curves

Battery sales are growing exponentially up classic S-curves that characterize the growth of disruptive new technologies. For thirty years, sales have been doubling every two to three years, enjoying a 33 percent average growth rate. In the past decade, as electric cars have taken off, it has been closer to 40 percent.

Exhibit 1: Global battery sales by sector, GWh/y

Source: Ziegler and Trancik (2021), Placke et al. (2017) for 1991-2014; BNEF Long-Term Electric Vehicle Outlook (2023) for 2015-2022 and the latest outlook for 2023 (*) from the BNEF Lithium-Ion Battery Price Survey (2023).

2. Battery costs keep falling while quality rises

As volumes increased, battery costs plummeted and energy density — a key metric of a battery’s quality — rose steadily. Over the past 30 years, battery costs have fallen by a dramatic 99 percent; meanwhile, the density of top-tier cells has risen fivefold. As is the case for many modular technologies, the more batteries we deploy, the cheaper they get, which in turn fuels more deployment. For every doubling of deployment, battery costs have fallen by 19 percent. Couple these cost declines with density gains of 7 percent for every deployment doubling and batteries are the fastest-improving clean energy technology.

Exhibit 2: Battery cost and energy density since 1990

Source: Ziegler and Trancik (2021) before 2018 (end of data), BNEF Long-Term Electric Vehicle Outlook (2023) since 2018, BNEF Lithium-Ion Battery Price Survey (2023) for 2015-2023, RMI analysis.

3. Creating a battery domino effect

As battery costs fall and energy density improves, one application after another opens up. We call this the battery domino effect: the act of one market going battery-electric brings the scale and technological improvements to tip the next. Battery technology first tipped in consumer electronics, then two- and three-wheelers and cars. Now trucks and battery storage are set to follow. By 2030, batteries will likely be taking market share in shipping and aviation too.

Exhibit 3: The battery domino effect by sector

Source: BNEF, RMI analysis; Electronics share of addressable market percentage indicative, transport percentage based on 2022 EV sales share, stationary storage defined as sales volume today divided by peak sales in long term (2050). Trains, ships, and airplane total addressable market sizes illustrative.

4. Incumbent modelers remain behind the curve

How fast will batteries continue to grow and improve? The answer is a lot faster than today’s consensus view. When it comes to the growth of small modular technologies, there are two rules of thumb: the first is that superior technologies undergoing rapid cost decline tend to grow exponentially; the second is that most analysts miss the first. Batteries have been no exception to this rule, having been consistently underestimated by modelers.

Over the past years, many battery forecasts have effectively projected linear growth. As Exhibit 4 illustrates, actual sales keep outrunning such forecasts and as a result analysts keep revising their projections upward. The caution of such linear thinking may, on the surface, seem reasonable, but in reality, it is simply wrong.

Exhibit 4: Automotive lithium-ion battery demand, IEA forecast vs. actuals, GWh/y

Source: IEA Global EV Outlook (2018-2023) current policy scenarios and actuals; BNEF Long-Term Electric Vehicle Outlook (2023) for 2023 estimate.

5. The drivers of change will strengthen

If we look forward to the next seven years, we see the drivers of change strengthening. Notably, we see costs continuing to fall, policy support continuing to rise, and competition between economic blocs continuing to drive a race to the top. And while there are barriers to battery adoption on the horizon, humanity’s wit, will, and capital are scaling proportionally faster. Thus, we do not see a scenario of slow adoption as credible; instead, we model two futures: fast or faster. Reality is likely to lie somewhere between the two.

RMI forecasts that in 2030, top-tier density will be between 600 and 800 Wh/kg, costs will fall to $32–$54 per kWh, and battery sales will rise to between 5.5–8 TWh per year. To get a sense of this speed of change, the lower-bound (or the “fast” scenario) is running in line with BNEF’s Net Zero scenario. The faster S-curve scenario exceeds it.

Exhibit 5: A reinforcing feedback loop between battery quality, cost and market size

Source: Ziegler and Trancik (2021) before 2018 (end of data), BNEF Long-Term Electric Vehicle Outlook (2023) since 2018, BNEF Lithium-Ion Battery Price Survey (2023) for 2015-2023, RMI analysis.

6. Enabling the phase-out of fossil fuels

The best strategy to rapidly phase out fossil fuels is to accelerate the deployment of technologies that reduce fossil fuel demand. Batteries are on the path to displace 86 exajoules (EJ) of fossil fuels from road transport (emitting 6 GtCO2 per year) and to put at risk another 23 EJ (or 1.6 GtCO2/y) from shipping and aviation. In the electricity sector, as batteries synchronize the natural rhythms of the sun and the wind with the timing of electricity demand, they help enable the reduction of a further 175 EJ of fossil fuel demand (or almost 15 GtCO2/y).

Exhibit 6: CO2 emissions abatement enabled by batteries, GtCO2/y abatement versus emissions today

Source: IEA NZE scenario (other transport); RMI analysis (power and road transport)

Batteries are growing fast, but that’s no reason to rest on our laurels. Continued growth will require continued effort. Batteries got this far through tireless, concerted efforts of companies, governments, researchers, and climate advocates. And whether the motivation is lower prices, geopolitical advantage, or climate, it is essential to make this fast transition faster.

Download the full report here.

The post The Rise of Batteries in Six Charts and Not Too Many Numbers appeared first on RMI.

There is increasing urgency to immediately address the climate impacts of oil and gas, a major yet easy-to-abate source of methane worldwide. Following a year of mounting climate catastrophes, methane — and especially methane satellite data — took center stage in shaping COP28 negotiations.

Improved inventories and advances in emissions monitoring are playing a growing and important role in making emissions visible and actionable. Climate TRACE is a perfect example. At COP28, Climate TRACE unveiled updates to its open emissions database — an inventory that includes every country and territory in the world, every major sector of the economy, and nearly every major source of greenhouse gas emissions encompassing more than 352 million assets.

This data, which is free and publicly available, is designed to help enable action and accountability at a massive scale. One way Climate TRACE makes this possible is by providing data at different layers of granularity. This allows decision makers to gather the intelligence that they need to make more informed choices — from a statesman who can use emissions data to shape bilateral climate negotiations to a corporation that wants to reduce emissions across their entire supply chain.

As a member of the Climate TRACE coalition, RMI leads data and analysis in the oil and gas sector, utilizing direct observations and multiple sources of data plus advanced modeling to break down emissions across oil and gas production and transport, refining, and — new this year — petrochemicals to advance the visibility of emissions in this historically obtuse and currently expanding sector.

In this post, we’re covering some of our key takeaways from the Climate TRACE emissions inventory this year from the oil and gas industry, starting with a wide lens then zooming in closer to explore how different layers of data reveal useful and actionable insights.

Global: A small fraction of oil- and gas-producing countries have an outsized impact on emissions from oil and gas production.

According to the Climate TRACE inventory, just five countries are responsible for nearly 60 percent of total greenhouse gas (GHG) emissions from oil and gas production and transport.

Exhibit 1: Climate TRACE screenshot of GHG emissions by country.

Country: The United States and Russia have a particularly disproportionate methane impact.

In 2022, these two countries were responsible for 43 percent of the world’s emissions from oil and gas production and transport when looking at CO2e on a 20-year time horizon.

One reason for these countries’ high absolute emissions is the sheer volume of production. According to the U.S. Energy Information Administration (EIA), the United States and Russia account for 31 percent of the world’s oil and gas production, jointly producing on average over 30 million barrels per day. While these two countries couldn’t be more different in their political structure, political climate, operations, and global commitments to address oil and gas GHGs, digging into the data reveals some surprising similarities that underlie their emissions.

But that’s just half of the story. These two countries also have high gas leakage that results in excessive methane emissions from the oil and gas sector.

Exhibit 2: Methane emissions from the oil and gas sector, US and Russian emissions highlighted.

Source: Climate TRACE 2023, https://climatetrace.org/explore/oil-and-gas-production-and-transport-oil-and-gas-refining-other-e8b357e8266a1c48772a233d286ca1ed

The remainder of methane from oil and gas sources comes from sources around the globe as indicated in the map above. Thanks to advances in remote sensing technologies like satellites, emissions that were previously ‘out of sight and out of mind’ are more visible. This data can help shape policies and regulations to target super-emitters in these areas and hold producers more accountable for methane leaks.

Field: More granular data reveals near-term priorities

If you zoom into the United States where RMI has the most granular data, you’ll see that the oil and gas produced, processed, and transported from various fields from the Permian Basin in New Mexico and Texas to the San Joaquin Valley in California to the Marcellus Shale in Pennsylvania varies significantly in its climate impacts. The figure below shows that the industry’s share of methane intensity of US oil and gas assets can vary more than six-fold (excluding end uses). This can be due to a variety of factors including — but not limited to — equipment, technology, and operational and management practices.

Exhibit 3: The wide variation in the methane emissions intensity of U.S. oil and gas fields, sorted for industry methane emissions from production, processing, and transport.

Notes: The lightest bars represent methane leakage from appliances and other end uses; green bars represent majority oil assets and yellow-orange bars represent gas assets.

Source: RMI, OCI+, updated 2023, https://ociplus.rmi.org/supply-chain?metric=methane

In gas supply chains, recent RMI analysis has shown that methane leakage is far greater and more frequent than assumed in certain regions, and that super-emitter events like major pipeline leaks that release tons of methane per hour are not being accounted for in self-reporting on emissions. But many methane releases go unnoticed unless a methane-detecting satellite or sensor happens to make them visible. Once we know about them, interventions to cut methane in the gas supply chain are relatively simple and cost-effective, like prohibiting venting and routine flaring, and incorporating routine equipment fixes and upgrades into maintenance plans can significantly cut methane emissions from production sites.

Explore Climate TRACE

We encourage you to explore Climate TRACE and dig into the data to see what insights you can glean! In future posts, we’ll dig into further insights on oil and gas refining and petrochemicals.

The post From Global to Local: Climate TRACE Helps Prioritize Emissions Reductions from the Oil and Gas Industry appeared first on RMI.

This article was originally posted on The Energizing Agriculture Programme’s website on December 21, 2023.

One Acre Fund field officer Kabiru Adamu spends his days bumping his motorbike along the dirt roads surrounding his home in Gwam Village, Nigeria, stopping to inspect maize crops and advise farmers on how to make the most of their harvest. Since the removal of the federal government’s petrol subsidy, the fuel cost of reaching rural farmers with a fossil-fueled motorbike has risen threefold. Not only is fuel expensive in rural areas, it can also be hard to find: the nearest fueling station is an hour round trip from Gwam Village, and independent retailers closer to home add an additional margin on more convenient petrol. For One Acre Fund’s agriculture extension officers, daily petrol expenses have surged to NGN 1,600–2,000 today from NGN 400–600 in July 2022.

One Acre Fund field officer Kabiru Adamu on his electric motorbike after charging at the solar minigrid in Gwam Village, Niger state, Nigeria.

For decades, petrol motorbikes have been the tool of choice for plying Nigeria’s rutted and unforgiving rural roads, but the status quo is more costly to drivers in the post-subsidy era and emits more noise and pollution per mile than passenger cars. Although the rollback of the petrol subsidy and recent currency reforms could spur longer-term growth in Africa’s largest economy, Nigerians from Lagos to rural farms are feeling the effects of higher transportation costs. Data from the Nigerian Midstream and Downstream Petroleum Regulatory Authority suggests that petrol consumption has fallen by about 35 percent in the months since the subsidy removal.

Interest in electric mobility as a cheaper, greener alternative to fossil fuels is climbing with pump prices. Nigerian federal and state governments are looking to electric and compressed natural gas (CNG) vehicles to reduce fuel costs and greenhouse gas emissions. President Bola Tinubu announced a plan to deploy 100 electric buses at COP28. The Ogun State government has transitioned their bus fleet to CNG in the past year and is setting its sights on electrifying two- and three-wheeled vehicles next.

Renewably charged electric vehicles are saving drivers money and bolstering rural electricity system economics

Since May 2023, Adamu has reduced his fuel costs by 75 percent with a new electric motorbike charged by the solar minigrid powering his community. Adamu received his MAX M3 EV through a pilot project supported by the REA-RMI Energizing Agriculture Programme (EAP). It is an early proof point in the broader conversation Nigeria is having about how to solve the fuel price crisis crippling the economy.

The project is based on a collaborative business model forged in the EAP’s Agriculture-Energy Innovation Accelerator. The vehicles were developed and manufactured by MAX, a Nigerian mobility company. In Gwam Village, One Acre Fund offered two drivers the EVs on a lease-to-own basis, and Solmenz Engineering Limited provides pay-as-you-go charging via their preexisting minigrid system. A similar model is being tested in parallel with field officers employed by Babban Gona, who charge at minigrids operated by ACOB Lighting Ltd. and Konexa.

Adamu conveniently charges his electric two-wheeler (E2W) at a station near his home that is metered by the minigrid company. He saves time and money, and the electricity sales to the minigrid also support the energy system powering his community. The EAP Accelerator is piloting similar symbioses between energy providers and energy users in minigrid-connected communities across Nigeria.

EVs are charged at a secure charging station provided by minigrid operator Solmenz Engineering.

RMI analysis shows that minigrid-charged two- and three-wheeled electric vehicles can compete with fossil-fueled alternatives at a range of energy costs, provided that the EVs drive enough miles per day for their operating cost advantage to overcome their higher upfront price compared with conventional vehicles. Adamu and his peers are driving the vehicles about 40 kilometers per day on average, a significant increase over the roughly 10 kilometers per day observed in a previous pilot where the EVs were rented out daily to local taxi drivers. In addition, the availability of a daytime discount on minigrid electricity not only enables Adamu to save more, but also directs his charging activities to coincide with hours when the minigrid’s solar panels are at peak production. Daytime charging both enhances the utilization of the minigrid’s solar capacity and ensures that the electric vehicle is charged with carbon-free electricity.

In addition to lower costs and easier refueling, Adamu is enjoying a quieter ride, with significantly less noise than internal combustion engines (ICEs), along with the convenience of a digital dashboard and the absence of gear shifts. “I do not see myself riding petrol bikes anymore, the E2W is easy to ride and more affordable to maintain”, he says. “In fact, I spend about 30–40 percent of what my colleagues riding ICE bikes spend on maintenance.”

By charging his EV at the local solar minigrid, Adamu is supporting the electricity system that serves his community. This is just one example of how electric mobility can have broader economic impacts. The E2W components were partially assembled by MAX and One Acre Fund technicians, thus building their capacity and demonstrating the potential to assemble locally at a larger scale in the future. In the parallel pilot featuring Babban Gona extension officers, the EAP helped a local entrepreneur set up a battery charging station in his shop. Leveraging reliable minigrid electricity, the entrepreneur now generates additional income from battery swap services.

A 50 kWp solar array powers the Gwam Village minigrid. Scaling benefits of e-mobility requires collaboration between public and private stakeholders

The removal of petrol subsidies in Nigeria has had a profound impact on rural farming households and agribusinesses, leading to increased transportation costs and reduced income due to heavy reliance on costly fossil fuels. EAP pilots are providing one example of how electric mobility can address these challenges in rural areas, presenting lower operation costs and environmental benefits. Prioritizing e-mobility can directly improve rural economies while positioning Nigeria to achieve Sustainable Development Goals 1, 2, 7 and 13.  Deploying electric motorbikes in rural communities will empower field officers to deliver enhanced inputs and impart valuable agronomic practices to a larger number of farmers, thus improving livelihoods and contributing to increased food security in these areas (SDG 2).

To catalyze a vibrant e-mobility sector, implementing innovative models for charging and deploying EVs is crucial. Scaling up the success of Kabiru’s experience and testing other use cases require resolving challenges in several areas:

• Import logistics and duties. EV suppliers interviewed by RMI have cited customs value added tax and sundry duties at up to 36 percent of the value of vehicle components. Imported vehicles or parts are routinely stuck in Nigerian ports for weeks.
• Charging infrastructure. EV rollout must be accompanied by reliable charging infrastructure despite unreliable or nonexistent grid supplies.
• Financing the higher upfront costs of EVs: Tailored financial products are required to alleviate the heavy burden of the initial upfront cost faced by customers.
• After-sales service. Common ICE models are readily fixed by local mechanics with access to spare parts. EVs will be more difficult to fix until spare parts are readily available.

If accompanied by supportive policy, federal funds saved by discontinuing the petrol subsidy could enable significant progress toward each of these challenges fostering both environmental sustainability and economic growth. For instance, the government can invest in charging stations and supporting infrastructure including power and roads to facilitate the local assembly of EVs. In addition, the government can invest in bulk procurement for government fleets and provide vehicle financing or subsidies, thereby improving the EV landscape.

This is a call to action for stakeholders to support and scale initiatives such as the EAP that improve the well-being of rural communities and help achieve important development goals.  The EAP team is actively tackling scaling challenges and testing novel models in rural and urban settings. Partners are invited to connect via email: eap@rmi.org.

This pilot is one of many that are testing energy-agriculture business models around Nigeria through the EAP’s Agriculture-Energy Innovation Accelerator. Read more at energizingagricultureprogramme.org/insights

The post As Petrol Prices Climb, Nigerian Agriculture Extension Officers Cut Fuel Costs with Electric Motorbikes appeared first on RMI.

Catherine Coleman Flowers has always been an activist. Her parents were leaders in their community in Lowndes County, Alabama, and activists during the civil rights movement of the 1960s. They taught their daughter that to be a good neighbor meant to be actively involved in making the community a better place to live for all. After serving in the military and teaching high school social studies, Flowers founded the Center for Rural Enterprise and Environmental Justice to help solve the intersecting challenges of water and sanitation infrastructure, public health, and economic development.

The environmental justice activist, White House Environmental Justice Advisory Council vice chair, author, and MacArthur Genius Grant recipient is one of RMI’s newest board members.

RMI Manager Moana McClellan and RMI’s Director of Energy Equity Carmelita Miller sat down with Flowers to learn about her work, her motivation, the challenges she faces, and what she hopes to bring to RMI.

The following is edited for brevity and clarity.

McClellan: Perhaps we can start the conversation by touching on what drives you and how you got into your environmental justice advocacy work.

Flowers: When I stopped teaching and began working in economic development, I started to understand the bridge between economic development and social activism. I learned that if we’re going to change anything about our environment and our infrastructure, we have to understand the economic components of that.

And I couldn’t do the work that I was doing without understanding what was happening with the environment. As I was dealing with the wastewater issue in my own county, I saw [Al Gore’s film] An Inconvenient Truth. The film really brought it all home for me — and made clear the connection between why climate change was happening, why we were having wastewater problems in Lowndes County, and how those problems were contributing to a rise in diseases that we thought we had gotten rid of. It was because it was getting warmer, and these tropical illnesses that we thought would happen in other places, in other climates, could actually manifest here in the United States. That’s how I got involved and what ultimately brought me to where I am now.

McClellan: What do you view as the most critical and significant changes in dialogue and advocacy currently taking place? Additionally, could you share your thoughts on what further developments or shifts you hope to see to further advance these goals?

Flowers: One of the biggest shifts in dialogue I’ve seen in recent years is that people now acknowledge that climate change is real. I think that’s a major shift, because initially people did not want to acknowledge that. And we’re starting to understand that this is not something that’s going to happen in another lifetime, but is happening in our lifetime.

Another shift I’m seeing is in the types of conversations happening on a federal level, and seeing the bipartisan support. Before, climate change was more of a left-wing thing. But now people understand that it is happening across the US. It is happening around the world, and it doesn’t matter what your political affiliation is. With weather getting more and more extreme, climate change is even more apparent, and it makes us realize that resiliency and rebuilding are part of our reality now.

Moving forward, I would like to see more changes to our infrastructure that reflect the reality we’re in now. I’d like to see the building codes change, and I think that we have to build infrastructure with climate justice in mind. We must have just design that takes into account not only our need to mitigate the effects of climate change when it happens, but plan for them before it happens.

Miller: We often talk about energy, climate, and environmental equity and justice as separate yet interconnected areas, each demanding fairness and justice. However, I’ve noticed tensions between these areas. For instance, certain energy policies may conflict with environmental justice principles, or climate policies might clash with energy equity. Have you observed or experienced similar tensions in your work?

Flowers: I think that tension can exist because the economic system in this country is based on the same systems that came up out of slavery, and we didn’t dismantle that. And one of the things that I like to keep reminding people of is that this is an opportunity for us to build new systems. And as we build those new systems, we must ensure they are equitable. Because right now, if we’re going to build on top of the same old systems, we’re going to have tension in our policies between the old and the new.

I think we need to be conscious of it first — because most people aren’t conscious of it. And then, we need to figure out how we change it. How do we make sure that there is a just transition? There has to be a whole systems approach that is resilient. Resilience must be top of mind. We have to make sure that we’re not just giving people access to the clean energy, but that the system and infrastructure that delivers the energy is resilient and sustainable for the home or community.

A good example is helping oil-rich countries make the just energy transition while maintaining their economies. How do you tell a country that, 60 years ago, was a desert and was poor, and then discovered oil and built their economy off of it that they can’t use oil anymore? You have to do that with an understanding that you’ve got to help them diversify their economy. And part of that is that we have to lead by example. We can’t tell other countries to make a change when we are here in this country escalating our drilling, selling more oil leases, and doing the same thing. We have to walk the walk and talk the talk. And I think, across the board, that’s part of my role.

At this point, as a wise old lady, my role is reminding people of the truth. Sometimes, there has to be somebody in the room to speak truth, trying to pull people’s coat tails and say, “Look, let’s be real now.”

McClellan: How do you approach reconciling the tensions in economic development and environmental justice, and what strategies might you suggest to advance both in tandem?

Flowers: One of the things we have to talk about is how to make sure that the people in the community also have some ownership. We usually don’t do that.

For example, I was in conversation with a company that was looking to locate itself in a specific area with a large African American population. But they didn’t know how to do community engagement. Companies often approach community engagement as an afterthought — they think it should happen after they have secured the land, after they have gotten all the plans approved and all the folks that normally profit from it have benefited from it. And then the community gets the crumbs — if they get anything at all.

There’s no real equity when that happens — it’s an unfair process and system. What I try to do is remind people that, because of the history of our economic system that is rooted in slavery, we are often building on top of inequities, and if we expect to get something equitable out of that, it’s not going to happen. We need to involve communities earlier on, really listen to what they need, and engage in good faith. I tell my students at Duke, just because you go to a privileged institution, doesn’t mean that you can go into a poor community and speak for the people. They can speak for themselves. They’re the experts.

The primary principle of environmental justice is do no harm.

The same thing is true when we talk about businesses and economic development projects going into communities. We don’t talk to the community until it’s too late, but if we talked to them earlier on in the process, we could mitigate some of the issues. Communities can advise project developers to build that plant “over there, not over here” because you’re building it on top of my ancestors’ graveyard. Or when we talk about mining, who benefits from that? I saw a report in a coal mining community, a young man in his thirties already has black lung disease and can’t qualify for disability. And we wonder why people are pushing back. We have to be a lot more humane. The primary principle of environmental justice is do no harm.

And sadly enough, the people that do harm in the EJ [environmental justice] communities don’t want to do harm in their own communities. So I think we must come from the premise of “if I wouldn’t put it in my own backyard, why would I put it somewhere else?” And we can start asking, “How do we build something together? Something that’s beneficial for everyone instead of finding the cheapest and dirtiest way to do it?”

Miller: What impact do you aim to drive in your leadership role within mainstream climate organizations such as RMI?

Flowers: I would like to see RMI join in with EJ and poor communities, and share the innovation with them to show them what is possible. I hope to be a bridge to help facilitate those relationships, because you know, a lot of it is trust, and I’m willing to loan my credibility to make that happen. I think RMI has a lot of information to share and lot of people that want that information. And we just have to figure out how to build those bridges, and remember that those bridges go in both directions.

McClellan: How do you leverage your expertise and experience to shift conversations, especially when you hold a contrary opinion to others at the table? For instance, when others think that the way to speed up the energy transition is by obviating community input or by overlooking communities’ pushback, how do you refocus the discussion and align those with contrasting opinions towards a more just approach?

Flowers: Whenever people don’t understand, I either take them on a trip so they can see the impact on communities for themselves, or I bring them the stories of people who can present another perspective. When we appeal to the human side, most people tend to respond in a positive way.

I also try to find common ground, and from there, we can deal with issues. I think the fact that they asked me to serve means they already know who I am. So, they also know I’m strong in my own opinion and that I’m going to speak up. If they were looking for someone else, they would appoint someone else.

I’m a disruptor. I’m there to change things. Because if we’re going to do the same thing the same old way, then I need to be spending my time somewhere else.

There still must be systemic changes within these organizations so that we can get to where we need to be. But I’m going to work with them if they’re willing to work with us, so let’s see what happens.

I do think that people are ready to hear this perspective, and sometimes they can’t say it themselves. They need somebody else to say it. That the energy transition can’t be all about profit. That should not be the driving force. It should be about saving the planet and making sure that everybody has access to clean and renewable energy. Because if we don’t do it that way, and it’s just solely about making money, we’re going to have the same problems we’ve always had — a lot of people will be left behind.

It doesn’t matter whether it’s in the United States, China, India, or the United Arab Emirates. The principles are the same — real people and communities need to be heard and need to be part of solutions. My role is to remind people that we still have to be humane as we as we look at this energy transformation, and it has to be done in such a way that it is just and doesn’t leave anybody behind.

On a lot of the boards and organizations I join, my voice and perspective has generally not been there. And sometimes people have been afraid to bring voices like mine into the room. Because I am a disrupter. I’m there to change things. Because if we’re going to do the same thing the same old way, then I need to be spending my time somewhere else.

The post Catherine Coleman Flowers: A Disruptor in the Best Sense appeared first on RMI.

Transition finance is critical to the net-zero transition, driving capital and investment towards reducing emissions in hard-to-abate sectors with credible transition plans. However, challenges to mobilizing transition finance remain, including concerns about greenwashing, lack of market standardization, and risk of carbon lock-in.

During COP28 in Dubai, RMI hosted a panel discussion on transition finance with several global banks to address these opportunities and pressing concerns. The panel, with senior sustainability representatives from Barclays, HSBC, JPMorgan Chase, NatWest, and SMBC, discussed the opportunities for and barriers to implementing transition finance, emerging strategies for mobilizing it credibly, and important next steps to overcome challenges. Here are three key takeaways from the discussion.

Working with clients to enable transition finance is critical to meet banks’ decarbonization targets.

In recent years, many banks have committed to reducing their financed emissions to net zero. Panelists highlighted the importance of a whole-portfolio approach to achieve their climate goals — with a focus on transition finance for those hard-to-abate sectors that require particular attention and investment to decarbonize, in addition to green finance for clean solutions and energy efficiency.

Enabling the transition of hard-to-abate sectors requires banks to work closely with clients to understand clients’ needs and progress on decarbonization, encourage ambitious transition plans, and help develop strategies and provide solutions for their transition, with approaches tailored by sector and region to address the unique challenges, opportunities, and context of each. This client-focused approach to transition finance is described in examples such as JP Morgan’s most recent climate report, SMBC’s Transition Finance Playbook, and NatWest’s Climate Transition Plan Engagement.

Financing new technologies is a challenge.

Many of the technologies for decarbonizing hard-to-abate sectors are new, such as green hydrogen or sustainable aviation fuel. These technologies are often seen as too risky for banks to finance on their balance sheets. There is also a need for banks to develop internal expertise on these technologies to assist with technical due diligence, better understand the technologies’ risks, and identify opportunities for clients. However, banks are exploring innovative approaches to address these challenges. Barclays has a Sustainable Impact Capital portfolio to support start-ups developing technologies to reduce emissions in hard-to-abate sectors, and HSBC recently launched Innovation Banking services and is exploring equity partnerships with asset managers to gain exposure to and support the growth of “new economy” clients. 

Policy is needed to accelerate the transition.

The need for enabling policy was highlighted as a key component of facilitating credible transition finance. While banks have a critical role to play in mobilizing transition finance, action from policymakers and regulators is needed to help develop technologies and accelerate finance deployment. One enabling action mentioned during the panel was the creation of regional or national transition roadmaps to provide clarity on future priorities and investment opportunities. Roadmaps and taxonomies for both green and transition technologies are complete or underway in regions around the world, such as the ASEAN Taxonomy for Sustainable Finance, but are not currently available in all countries.

While the event delivered a rich discussion on current approaches to transition finance, it also to deploying credible transition finance – such as developing stronger guidelines and KPIs for transition finance issuance, assessing transition plan credibility, scaling nascent technologies needed to decarbonize hard-to-abate sectors, and developing region- and sector-specific decarbonization pathways.

RMI recently published several calls to action in our recent open letter, A Global Call to Action on Transition Finance at COP28, supported by ten other leading NGOs.

Learn more by reading our blog, Defining Transition Finance: Exploring Its Purpose, Scope, and Credibility.

Watch the full event on YouTube.

The post How Global Banks See Transition Finance in 2024 appeared first on RMI.

The logistics sector is crucial in facilitating global trade and fostering economic growth, contributing to over a tenth of the global gross domestic product. With an increasingly interconnected world, growing urban population, and increasing consumer demand for goods, the sector is expected to grow from US$8.9 trillion today to US$18.2 trillion by the end of this decade. However, the logistics sector is responsible for 10 percent of global emissions and generates significant air pollution. As the world strives for a sustainable future, addressing the environmental impact of the logistics sector is crucial.

The G20, comprising 19 influential countries and the European Union, represents two-thirds of the global population, 80 percent of global economic output, and 80 percent of global CO2 emissions. The G20 nations hold substantial economic power and can play a pivotal role in facilitating the adoption of sustainable logistics practices.

RMI’s report The Green Logistics Playbook: Sustainable Supply Chain Best Practices for G20 Leaders outlines strategies for G20 stakeholders — policymakers, corporations, and financial institutions — to promote sustainable logistics practices by embracing four key strategies: (1) sustainable logistics operations, (2) effective policy frameworks, (3) improved infrastructure, and (4) financial investments.

1. Reimagining logistics operations: Logistics operations encompass coordinating goods transportation, warehousing, and various administrative tasks. To reduce carbon emissions in the transportation of goods, businesses must minimize vehicular movement and encourage the use of environmentally friendly transportation options. Improving warehouse efficiency and incorporating cutting-edge technologies can mitigate inventory loss. Furthermore, adopting innovative technologies can optimize administrative procedures associated with both transportation and warehousing.

Best practices to reduce carbon emissions from logistics operations include eco-driving programs, sustainable and efficient packaging techniques, efficient vehicle selection, and implementing environmentally conscious warehousing practices. More broadly, businesses can establish sustainability goals and invest in research and development to further advance efforts in reducing their environmental footprint.

2. Introducing policy, regulatory, and awareness measures: Effective policies and government initiatives — such as regulations, incentives, subsidies, standards, and awareness campaigns — are critical for advancing sustainable logistics. Logistics policy development requires collaboration among diverse entities at various levels of government. The national government plays a crucial role in establishing overarching regulatory guidelines, defining standards and objectives, and conducting public awareness initiatives. Both national and state governments can offer financial and non-financial incentives, while municipal authorities can focus on creating local policies related to land utilization and infrastructure expansion. The government can also collaborate with private sector and civil society stakeholders to launch large-scale consumer awareness campaigns for sustainable logistics.

3. Redefining logistics infrastructure development: Efficient logistics infrastructure enables the efficient movement and storage of goods, and is essential for streamlined operations. This involves a network of physical assets like logistics parks, warehouses, consolidation centers, and transportation networks such as roads, railways, ports, and airports. Logistics parks can serve as a centralized hub for warehousing, distribution, and transportation, reducing inefficiencies in the dispersed logistics sector. Long-term industrial and land-use plans that demarcate zones for factories and warehouses can effectively segregate industrial areas from residential areas.

Additionally, the government can focus on upgrading road infrastructure, which includes constructing bypasses and ring roads to redirect commercial traffic away from urban cores and enhancing connectivity between warehouses and urban centers. Furthermore, governments can establish dedicated zero-emissions trucking corridors equipped with necessary charging infrastructure to promote the adoption of zero-emissions vehicles.

4. Unlocking investments by mobilizing finance: To address the high capital requirements and risks inherent in logistics projects, public-private partnerships are crucial. Under a public-private partnership, the government and the private sector jointly share the financial and technical risks of large-scale projects. Additionally, multilateral development organizations can provide favorable financing options for logistics infrastructure initiatives in developing nations. This entails below-market interest rates, extended repayment horizons, and flexible terms, such as grace periods for loan repayment, until sustainable logistics projects generate profit.

As the logistics sector charts a path toward sustainable practices, the G20’s pivotal role cannot be overstated. Positioned as a global collaborative forum, the G20 can drive sustainability by establishing a dedicated sustainability task force. This task force can serve as a guiding beacon for emissions reduction initiatives in the logistics sector, and open the doors of cross-border collaboration, fostering a spirit of shared knowledge and collective progress. Adopting these practices can ensure efficient movement, storage, and distribution of goods, and minimize air pollution, CO2 emissions, adverse public health impacts, energy consumption, and costs associated with the logistics sector.

By championing sustainable logistics and supply chain practices, the G20 nations can embark on a transformative journey, carving a path toward a more equitable, resilient, and environmentally conscious global economy. Together, G20 nations can be advocates and architects of a future that inspires positive change for future generations.

Download the report here.

The post Spearheading Efficiency and Sustainability in Global Supply Chains appeared first on RMI.

Utilities, regulators, and advocates alike are grappling with the evolving needs of a 21st-century grid: renewables face prolonged delays in coming online, jeopardizing state, community and corporate climate goals and escalating costs. The increasing frequency of extreme weather events on the grid risks compromising system reliability and resilience. And simultaneously, the energy affordability crisis — with its attendant increase in shutoffs — is placing growing pressure on utilities and regulators alike to deliver on equity and affordability at a time when mounting investment to facilitate decarbonization is needed. But utility business models are frequently misaligned with the most affordable, rapid paths to a managed and just transition.

In response to these challenges, state regulators are adopting performance incentive mechanisms (PIMs) — regulatory tools that tie a portion of utilities’ earnings to the utilities’ performance on desired regulatory outcomes. PIMs are designed to motivate improved utility performance in specific areas that may not be adequately encouraged by traditional cost-of-service regulatory frameworks. To help people learn about emergent PIMs across the country, RMI has launched a new PIMs Database.

The Importance of PIMs

Because the traditional business model biases utilities to invest in large capital projects such as power plants, more cost-effective solutions such as virtual power plants and energy efficiency are frequently overlooked. This bias can work at cross purposes to the objectives and goals of states, customers, and communities. Additionally, utilities are compensated for spending on what is “needed” to provide service to customers rather than the quality of service and their performance on policy goals. PIMs offer an opportunity to address both issues by tying utility earnings to performance and focusing utility attention on outcomes that require innovation and guidance from regulators on what success looks like.

Emergent PIMs include those that incentivize accelerated renewable deployment, faster interconnection times, and distributed energy resource utilization to provide grid services during times of stress. They can also incentivize equity-focused outcomes such as reduced shutoff rates and improved reliability for low-income and underserved communities. RMI’s new database is a convenient source of information on emergent PIMs across the country that are intended to align utility behavior with the public interest.

What’s in the PIMs Database?

Despite the growing importance of PIMs, information about these mechanisms has been sparse and challenging to track down. Until now, PIM information has been buried within the relatively inaccessible document management systems of regulatory commissions nationwide. Furthermore, there is relatively little existing research on the efficacy of PIMs on emergent topics. Together, this makes it difficult for decision makers and stakeholders to develop and assess emergent PIM designs for their jurisdictions.

RMI’s new PIMs Database aggregates information on PIMs across the country to support the design and proliferation of effective PIMs. Absent such information, states looking to design PIMs are forced to repeat the same investigations without the benefit of each other’s experience.

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While the PIMs Database currently features information on PIM designs, the resource will expand over time to include information on utility performance as well. This will include information to help discern whether utilities are meeting their PIM performance targets, and the financial incentive they receive. By compiling information on both PIM design and performance, the database will support stakeholders in understanding not only the scope of potential PIM designs, but also their relative success in influencing utility behavior toward improved outcomes.

What can you do with the PIMs Database?

The PIMs Database can support regulators, utilities, and advocates in referencing and analyzing PIM designs for their jurisdictions in a variety of venues. Here are a few examples of questions the database is designed to answer:

Question How the PIMs Database Can Help Are there any active PIMs in place elsewhere that incentivize [insert topic or outcome of interest]? How are the metrics and targets structured? The PIMs database categorizes each PIM by emergent outcome, such as grid modernization, equity, resilience, etc. It also provides detail on the focus (e.g., specific outcomes, programs, or actions that the PIM is intended to encourage) and design of the PIM. Another state’s PIM could provide a useful model to substantiate PIM development in your own jurisdiction. How are incentives structured? The PIMs database contains information on whether a PIM is upside-only (reward), downside-only (penalty), or symmetrical (both). This information could be useful when developing a new PIM with a specific incentive structure or assessing the design of a proposed PIM in your own jurisdiction. What PIMs have had long runs and why? Why have others been sunset prematurely? The PIMs database contains a narrative history intended to help users understand the broader context in which the PIM exists. It delves into the reasoning behind regulatory decisions to modify or discontinue a PIM. This history might help you assess when a PIM of your own design should be updated or retired. The PIMs Database is a Work in Constant Progress — Sign Up for Updates and Insights

This isn’t the end of the road. The database will be updated annually for each state as new PIMs are adopted and utility performance data becomes available. RMI will use the database to support insights that can inform the uptake and effective design of PIMs that align utility behaviors with emergent outcomes in the public interest. We also look forward to input from users to make the database most helpful.

For those interested in staying up to date on ongoing PIMs Database developments and insights, consider signing up to receive RMI’s Policy Newsletter on the PIMs Database webpage. PIMs updates will feature developments in the field and insights from the database, such as:

• What’s New: PIMs and performance data that have been added to the database since the last quarter
• PIM of the Month: spotlighting one notable PIM in the database
• How I Built This PIM: bite-sized insights and lessons learned from PIM design, evaluation and implementation

RMI’s PIMs Database will be an evolving and expanding source of information on PIMs design, utility performance, and overall efficacy. We hope you find it to be a convenient source of information and inspiration as you consider the design and implementation of PIMs in your own jurisdictions.

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As demand for electric vehicles (EVs) grows, so does demand for the batteries that power them. Many are concerned that today’s EV battery (EVB) supply chain will be unable to meet this increased demand, and for good reason: today, the supply chain is vulnerable to disruption due to geopolitics, changing trade alliances, extreme weather, and a host of other factors. It is also too geographically concentrated; the upstream (mineral extraction), midstream (refining materials into battery cells), and downstream (battery assembly) portions take place in just a few countries. If the upstream or midstream in just one of these countries is disrupted, the effects reverberate globally, hindering EV production.

Of specific concern is the supply chain’s ability to provide enough of the minerals that go into EVBs. And then there’s the question of the domestic midstream capacity: does the United States have the facilities needed to process and refine these minerals into battery-grade materials?

RMI’s Battery Circular Economy Initiative’s (BCEI) Dashboard can help answer these questions and more. The dashboard helps stakeholders understand by how much electric vehicle battery demand will grow and to what extent the domestic supply chain is capable of meeting demand. It reveals what quantities of end-of-life EVB materials will be recoverable, how these materials can meet anticipated supply gaps, and the potential environmental and economic benefits of EVB recycling. The dashboard also provides a Circularity Index (CI), which shows how circular the EVB supply can realistically be, based on the user’s understanding of a region’s recycling ecosystem. Using the dashboard’s comprehensive and detailed data, stakeholders can be more confident in their planning.

The Need for a Circular Battery Economy

In a circular battery economy, end-of-life batteries are reused, repurposed, or recycled. Reused batteries can be refurbished and then placed in an EV; repurposed batteries serve a new, non-EV purpose (e.g., stationary storage). Recycling involves extracting raw minerals from end-of-life batteries and using them in another product.

By recirculating the minerals from end-of-life EVBs, we can reduce our reliance on virgin materials, decrease emissions associated with their extraction, save money, and avoid some of the environmental and social harms associated with mining.

An increasing number of policymakers, private sector actors, and other EV stakeholders recognize the benefits of a circular battery economy and understand the need for significant investment and robust policy to make it a reality. RMI’s BCEI Dashboard helps them get the information they need to make sound, effective investment and policy decisions.

Filling the Data Gap

Existing data and tools have, by and large, provided only piecemeal glimpses of the EVB supply chain and have been unable to give both the big-picture and the granular insights needed to plan strategically. BCEI’s public dashboard fills this data gap by organizing disparate sources of information, databases, forecasts, and perspectives into a central repository that provides a level of insight and analysis unavailable elsewhere.

The dashboard helps stakeholders understand:

• How much EVB demand will grow through 2030
• Predicted EVB supply gaps in 2030 based on current corporate commitments, planned investments, and policies
• To what extent different end-of-life EVB materials will be recoverable
• To what degree these materials can meet projected gaps in supply and demand
• Emissions reductions and economic benefits of recycling all end-of-life EVBs
• How circular the EV battery supply can realistically be, based on the user’s understanding of a region’s recycling ecosystem

Users can reference default scenarios or insert their own inputs to create their own scenario.

Some questions the BCEI Dashboard can answer

The following examples are just a few of many questions the dashboard can help users answer.

In these examples, the following scenario is assumed:

Battery demand:

We will need 911 GWh of battery storage in 2030 for private passenger EVs, based on RMI’s projection of the Inflation Reduction Act’s (IRA) level of impact (referred to as “IRA level” in the dashboard) on EV adoption. A “high” level assumes that all EVs sold in the US are IRA compliant and therefore eligible for both available tax credits, totaling $7,500. A “low” level assumes that a minimal number of EVs sold are eligible for half tax credit as it may be difficult to comply with the foreign entity of concern (FEOC) guidance for the sourcing of battery minerals. The “medium” level is an average of the two bookends. In this scenario, a medium IRA level of impact translates to 56 percent EV sales penetration in 2030.

Recycling levels:

• Battery life: 12 years
• Collection efficiency: 99%
• Recycling capacity: 95%
• Lithium recovery rate: 80%
• Cobalt recovery rate: 95%
• Nickel recovery rate: 95%

For battery recycling, the defaults are based on an optimistic outlook. Collection efficiency and recycling capacity defaults assume a reverse supply chain structure similar to that of lead-acid automotive battery recycling. Strictly enforced regulations played an important part in increasing the recycling rate of lead-acid batteries; today, in the United States, nearly all of these batteries are recycled. The recovery rates are in line with that of the most efficient commercial lithium-ion battery recycling facilities.

Where is investment most needed?

Both public and private investment in battery supply chains have increased in recent years. While the passage of legislation like the IRA and a slate of announced private investments are encouraging, our research indicates they won’t be enough to meet EV demand. EVB stakeholders know that the supply chain needs significantly more investment, as well as more policies, to be fully prepared to meet EV demand.

The BCEI Dashboard can give users an idea of how announced investments will affect different stages of the supply chain. It uses EVB demand projections for private passenger vehicles through 2030, then breaks this demand down into product demand along the supply chain. It then compares existing and announced capacity for 2030, as well as current import levels, to estimate the gap between supply and demand of the minerals and components that go into EVBs.

With the dashboard’s default settings for 2030 (which are based on modeled private passenger segment EVB demand in the United States that take into account the impact of the IRA), it’s clear that the supply gap is smallest in the supply chain’s downstream and most pronounced in its midstream and upstream stages.

For example, we can see that anode and electrolyte solvent production will have supply gaps of nearly 80 percent. Cobalt extraction will have a supply gap of nearly 75 percent.

The United States must increase investment in the upstream in other countries to ensure there are enough minerals to adequately supply domestic production.

Given that no one country has all of the minerals needed for EVBs, the domestic EVB supply chain will always rely, to some extent, on foreign imports. That being said, the United States can reduce this reliance on other parts of the supply chain — especially the midstream — by investing in the expansion of domestic manufacturing capacity.

What happens if we recover 100 percent of lithium, cobalt, and nickel from end-of-life EVBs? To what extent will these recycled materials be able to alleviate mineral supply gaps?

Many recognize that recycling will help meet mineral demand; there’s less clarity as to what extent and when these recycled materials will be able to fill these gaps. Given that strengthening recycling infrastructure will require time, effort, and funding, stakeholders need actionable information to ensure that their policies and investments will be as impactful as possible.

The dashboard gives them the critical data they need to understand how recovering end-of-life EVB minerals can meet mineral supply gaps in a variety of different scenarios. For instance, assuming all material used in EVBs is recovered after 12 years, we can supplement the cobalt supply by 4 percent in 2030 and by more than 50 percent in 2040. While 100 percent recovery will not be possible, this hypothetical scenario allows us to understand the scale of potential impact.

The dashboard also shows the economic and environmental benefits of recycling through the year 2040. If all the lithium, cobalt, and nickel from end-of-life EVBs were recovered, economic savings could be as high as $25 billion a year by 2040, and we could avoid approximately 16 megatons of CO2 emissions annually.

Decisions based on the dashboard’s insights can bolster the business case for recycling and encourage much-needed policies. Users can also evaluate the emissions reductions and cost savings potential.

Realistically, what level of battery circularity can we expect to achieve? To what extent will the supply chain be circular for critical minerals like lithium, nickel, and cobalt?

Battery circularity is difficult to measure, as it encompasses many discrete and interdependent variables.

That’s why the dashboard provides a circularity index (CI), which — in the absence of comprehensive data — simulates the cumulative effects of end-of-life EVB collection, recycling, and individual mineral recovery rates; the results indicate the fraction of available critical mineral content that will be recovered in the assumed system. Subsequently, one can understand the fraction of environmental and economic benefits that can be realized.

Under the default assumptions, the CI for lithium is 75 percent; nickel and cobalt both have a CI of 90 percent. These results mean that 75 percent of the lithium and 90 percent of the nickel and cobalt content of end-of-life EVBs will be recovered. But if one moves away from the optimistic default scenarios and assumes that collection efficiency drops to 5 percent — as is the case for lithium-ion batteries used in consumer electronics in the United States — only about 4–5 percent of the lithium, nickel, and cobalt will be recovered.

Effective supply chain management requires measurement. All circularity planning strategies need an easy-to-understand, overarching goal to work toward. With this goal in mind, stakeholders can then consider approaches that can help reach that goal. If we want to get as close to a 100 percent collection rate as possible, what policy measures could help? If we want to ensure the announced recycling infrastructure is realized, what market and policy interventions could help de-risk investments? With the current state of circularity, what are reasonable recovery rate targets? Considering these questions will help stakeholders make decisions that maximize impact.

Alternatively, stakeholders can see what their circularity goal should be based on what can realistically be done. An organization may determine that a 50 percent end-of-life EVB collection rate is feasible. The dashboard then takes this rate, along with the user’s other inputs, and produces a CI. Decision makers can then share the CI with their stakeholders to ensure that all involved understand the end goal of their efforts.

How can policymakers use the tool’s insights to write effective legislation?

Policy has been and will continue to be a powerful instrument in advancing a circular battery economy. Recovery rate mandates, domestic content mandates, and extended producer responsibility have all been used as levers to encourage the growth of the nascent recycling industry; however, while we’re on the right track, we’ll need to carefully craft policies that can address the identified gaps to create a circular battery economy without stifling growth. The insights provided by the dashboard can help stakeholders understand the EVB supply chain, recognize its current and future gaps, and set realistic targets.

Given the burgeoning rate of EV adoption, there’s an urgent need for informed action. Armed with insights like those provided by the BCEI Dashboard, we know we can make a circular battery economy a reality and reap its economic, environmental, and social benefits.

The post Understanding How EV Battery Recycling Can Address Future Mineral Supply Gaps appeared first on RMI.

For the first time in its history, the International Energy Agency (IEA) has projected a decline in global coal demand over its forecast period.

This promising outlook builds on a slew of actions from last year, ranging from the release of coal transition-enabling investment plans in Indonesia, Vietnam, and the Philippines to the implementation of said transition in Southeast Asia, Oceania, North America, South America, and Europe (see Exhibit 1 below).

Exhibit 1 – Snapshot of progress on global coal transition in 2023

And while last year saw a shift toward early implementation of the transition, a few notable commitments were also made. There was an announcement to transition away from fossil fuels at COP28 and pledges from several countries (including the United States and Morocco) to develop no new coal and phase out existing unabated coal power.

Despite real momentum in this transition, however, coal power emissions reached an all-time high of 9.5 GtCO2 last year (see Exhibit 2). The rise in emissions can, to an extent, be seen as an overhang from a surge in coal demand in 2022 — driven by extraordinarily high gas prices, energy security concerns (particularly in China), post-pandemic economic recovery, and high interest rates that slowed clean energy financing.

Exhibit 2 – Coal power emissions in 2023 reached an all-time high even as plant buildout reached a near stop

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Exhibit 2 also shows that the buildout of new coal power has slowed to a near stop — with over 1,900 GW canceled in the past decade, equivalent to 90 percent of today’s fleet.

These seemingly contradictory trends reflect the complexity of the coal-to-clean transition — how effective it ends up being hinges on ensuring ambitious climate action integrates priorities around energy security, affordability, reliability, and meeting growth in electricity demand. Below, we share five insights to help accelerate this transition, informed by RMI’s deep engagement in Southeast Asia and from partners working around the globe.

1. A rethink is needed on power sector planning and compensation practices

Ambitious climate action and robust economic development are both imperatives for the modern world, and, fortunately, they are increasingly intertwined. However, jointly achieving them requires a paradigm shift in the power sector. We need a multifaceted approach to transition planning that enables not just emissions reductions, but also lower costs, more economic opportunity, and greater stability in key institutions (see Exhibit 3).

Exhibit 3 - Multi-faceted approach needed for power sector transition planning

This requires revisiting how power plants are planned for, compensated and operated:

• Incorporating finance into resource planning: Transition finance is critical to decarbonizing the power sector, particularly in emerging economies. Successful grid planning that improves affordability and reduces emissions must incorporate financing needs from the get-go and expand traditional modeling approaches.
• Rewarding new ways to decarbonize the grid: New regulatory and contractual structures are needed to enable a wider array of power sector transition pathways. The value that storage and virtual power plants add to the grid, for example, needs to be recognized and compensated. This should be coupled with greater access to technology and cheaper financing, both of which would unlock their use in the Global South. As a last resort, flexible use of coal power for a limited period could be considered when no cheaper and cleaner alternatives exist.

2. Country platforms will continue playing a role — future efforts must focus on political buy-in and good process

Just Energy Transition Partnerships (JETPs) are a recent and innovative approach to country-led transition efforts with $48 billion committed to support efforts in South Africa, Indonesia, Vietnam, and Senegal.

Through involvement in multiple JETP planning processes, RMI has identified key lessons to consider for future country platforms:

• Upfront planning is crucial. It is important for analysis and stakeholder alignment to occur prior to commitments and announcements. Such planning creates a shared understanding around 1) financing needs, 2) financing availability and, 3) the shape of the power sector transition, given the grid’s physical limits. Upfront planning also enables buy-in across institutions (e.g., utilities, government agencies) that are key to successful implementation.
• An integrative process strengthens ambition. Policy changes and financing needs are interrelated, and grid reliability informs and constrains all transition efforts. This requires carefully interconnecting and sequencing various stakeholder discussions.
• Sustained political momentum is central to success. Country platforms like JETPs are susceptible to shifting geopolitics and continuing to build consensus and sustain political momentum in recipient countries is necessary for success. This could be achieved by:
  • Centering the developmental priorities of recipient countries and involving local stakeholders early and often in planning.
  • Implementing local projects, in tandem with planning processes, that improve affordability and grow the local economy.

Given country platforms can spur a country’s transition, their successful implementation matters — they can bring in more just transition funding, raise ambition to slash emissions, lower costs for end-users, and kick-start a virtuous cycle of investments.

3. Meaningful coal transition progress occurred through more channels than ever before — this should continue

Last year saw significant diversification in coal transition efforts globally. This helps sustain momentum for the transition and must continue because:

• Each funding model brings its own risks. JETPs, for example, carry significant geopolitical risk. Moreover, other funding avenues for country-level efforts exist — the Philippines, for example, worked with Climate Investment Funds to release a $2.7 billion investment plan for power sector transition. Such efforts could be complemented by plant-level initiatives that also leverage philanthropy and the private sector, like ACEN’s coal plant pilot.
• Each country will have a unique transition. Various factors — economics of clean power, access to capital markets, climate legislation, geopolitics — inform a country’s approach to transition, and concessional, multilateral financing may not be suitable for all.
  • The Polish Treasury, for example, had sufficient fiscal space and appetite to establish a state-owned entity and begin purchasing coal plants from the largest owners in the country. With the new government this plan might evolve, but it is still on the political agenda.

• Diverse and innovative efforts can accelerate grid transformation. Tackling the transition across geographies, at the plant and system level, and in different power sector paradigms, allows practitioners to understand and address the challenges of implementing such a multi-faceted transition more effectively.
  • In Chile, Engie is exploring the use of a sustainability-linked loan to decommission and replace coal power with solar and storage.
  • In the United States and Australia, efforts are underway to leverage legacy grid infrastructure at coal plant sites for clean power replacement.

4. Ambitious policymaking and transition financing are both needed and can reinforce each other if designed well

The question of what comes first — the right enabling environment or the necessary financing — is not new, especially for emerging economies. Ultimately, both are needed and can reinforce each other in a virtuous cycle.

To do so, it is important to start by identifying the specific barriers to coal plant transition (e.g., decline in plant owner earnings, or high costs for taxpayers). Then, as RMI’s framework in Exhibit 4 shows, one must assess the viability of policy changes and financial mechanisms (coal transition mechanisms [CTMs]) in addressing those barriers — either individually, or together.

Exhibit 4 - Decision framework to integrate policy and finance for a rapid and effective coal transition

Through analyzing replacing Indonesian coal power contracts with clean ones, RMI found that policy changes alone could result in 60 percent emissions reductions versus business as usual, even with commercial financing. If one thoughtfully combined these changes with CTMs, that figure goes up to 90 percent.

Indonesian decision makers recognize this — the country’s JETP document has proposed changes to clean energy procurement processes, potentially improving the viability and speed of the country’s transition.

5. Credibility of and access to coal transition financing is essential — it requires reorienting sustainable finance metrics and standards to encourage investor participation

Growing the scale of the coal transition requires a surge of investments — considering transition finance as part of a broader power sector portfolio can strengthen the financial case for investment.

However, another reason transition finance has been insufficiently capitalized is reputational risk. Financers are uncertain about these deals achieving real emissions reductions and are wary of the ensuing blowback if they don’t deliver. This risk can be mitigated through:

• Robust methodologies and standardization approaches. Transition finance has, until recently, been missing from investment taxonomies. As it is increasingly included, developing robust underlying methodologies and aligning on standardization approaches will be critical to avoid emissions “leakage” — wherein emissions decline at the plant level but remain unabated at the system level.
• Engagement-focused finance policies. Active engagement — not divestment — is needed from shareholders and investors to transition existing coal power. The prevalence of coal exclusion policies and financed emissions targets, in particular, disincentivize financial institutions from doing so.

Looking to the future

The global energy transition and strong economic development can and should go hand in hand. In partnership with others, RMI will incorporate both priorities in its on-the-ground support this year, which will focus on a coal-to-clean transition in Southeast Asia, South America, and beyond.

The post Changing the Climate Forecast in 2024 — Five Ways Power Sectors Worldwide Can Drive Down Emissions appeared first on RMI.

The clean energy transition in the United States is currently experiencing some turbulence. On the one hand, the passage of the Inflation Reduction Act and historic levels of funding available for clean energy projects are creating strong tailwinds that are building the clean energy project pipeline; on the other hand, interconnection timelines and costs have risen dramatically in recent years, becoming headwinds that are slowing the pace of clean energy deployment onto the grid. Navigating through the turbulence will take time and dedicated effort. Fortunately, there is a near-term opportunity to capitalize on the tailwinds and circumvent the headwinds in order to bring more clean energy online quickly and more economically.

Siting new clean generation or storage at the same point of interconnection as existing or retiring fossil generators allows these projects to take advantage of specific IRA incentives and to potentially pursue a streamlined interconnection process. We refer to this opportunity as clean repowering, and have conducted a research and analysis effort to better understand the scale and scope of this clean energy development pathway.

Our analysis revealed 250 GW of potential for clean repowering projects across the country, representing a significant accelerant that could be used in pursuit of a rapid and reliable energy transition (Exhibit 1).

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Uptake of clean repowering is influenced by two primary considerations: IRA incentives that make additions of clean energy at existing generation sites an even more financially attractive proposition, and the regional interconnection rules that dictate the process that new clean energy generators must follow to connect to the grid.

IRA Incentives

Given that clean repowering projects are located in close proximity to existing energy infrastructure, they are likely eligible for IRA incentives and funding that is specifically targeted toward energy communities.

• The energy community tax credit bonus provides 10 percent adders on the Investment Tax Credit and Production Tax Credit for projects on a brownfield site, in an MSA or non-MSA meeting fossil employment and unemployment criteria, or located in or adjoining a coal closure community.
• The DOE-administered Energy Infrastructure Reinvestment (EIR) program offers up to $250 billion in loan guarantees for projects that replace energy infrastructure or enable existing energy infrastructure to reduce emissions. Funds for the EIR program must be committed by 2026, so the time to start developing eligible projects is now.

Regional Interconnection Rules

The streamlined interconnection processes that may apply to clean repowering projects are “Surplus Interconnection Service” requests and “Generator Replacement” requests. Both processes have less onerous study requirements due to the reduced grid impact of adding generation where interconnection infrastructure and rights already exist. This means that interconnection studies for these new resources could happen in a matter of months, rather than the multi-year process that interconnection has become in much of the country. The geographic scope of these processes varies, limiting in some cases where faster interconnection might actually be pursued.

• Surplus interconnection service requests: This refers to adding new generation at the site of an existing plant, which would continue to operate. The capacity of the new generator would be sized to reflect the “spare” interconnection rights that the existing generator might not be fully utilizing in its current dispatch. For example, a gas peaker plant that does not generate often could choose to add a new solar-plus-storage resource on-site that could inject capacity when the gas generator is not running. The surplus interconnection service process is regulated by a FERC Order and is thus present in most parts of the country—absent ERCOT, which is not FERC-jurisdictional, and NYISO, which obtained a waiver from the FERC rule (Exhibit 2).

Exhibit 2: Regions where the surplus interconnection service process is available

Source: Claire Wayner, RMI

• Generator replacement requests: This refers to adding new generation at the site of a retiring plant. The capacity of the new generator would not be able to exceed the interconnection rights of the retiring generator, and certain requirements around ownership and the timeline for replacement must be followed. This process exists in some regions of the country (MISO, SPP, and some utility territories) but not others, as there is no FERC order standardizing the practice (Exhibit 3).

Exhibit 3: Regions where a generator replacement process is available

Source: Claire Wayner, RMI
At a time when energy stakeholders are grappling with a lot of tough questions about the pace of the energy transition and associated impacts on economics, policy, and reliability, clean repowering offers a multi-faceted solution: by reusing existing grid infrastructure and harnessing available federal funding, these projects support affordable energy costs for consumers, and what’s more, they retain jobs and investment in communities where energy has historically served as a meaningful economic driver. By allowing for faster interconnection of carbon-free resources, especially at the site of policy-driven retirements, these projects can be a vital tool for realizing state and federal clean energy policy goals on time. And by minimizing the grid impact of new resource entry and resource retirements, these projects can help ensure reliability amid the energy transition.

Clean repowering projects are planes capable of weathering turbulence, and they should be deployed wherever feasible to help the energy transition stay on course.

The post Clean Repowering: A Near-Term, IRA-Powered Energy Transition Accelerant appeared first on RMI.

India, the third-largest global electricity consumer, witnessed a record peak electricity demand of 240 GW in September 2023, driven by rapid economic growth. Coupled with this demand, India has made commendable progress in renewable energy growth, boasting over 150 GW of installed capacity and an ambitious goal to achieve 50 percent non-fossil generation capacity by 2030. Nevertheless, the reliability of the power grid and ensuring the availability of adequate resources for 24×7 power supply remains a challenge. Despite a surge of recent solar additions — 275 percent cumulative growth over the past five years — which have mitigated the risk of power outages during the daytime, India faces an increased risk of power shortfalls during the nighttime. To prepare for the risk of summer power supply shortfalls, the Indian Ministry of Power invoked emergency rules the past two summers to keep coal plants operating at full capacity on imported coal, despite the unfavorable economics of them doing so.

Amid these challenges, the Indian power sector has seen market reforms to cater to growing demands, ensure energy security, maintain reliability, and integrate renewable sources. One notable initiative is the Resource Adequacy Planning Framework (RA Framework) by the Ministry of Power, released in June 2023. Resource adequacy (RA) and its close relationship with the capacity market has been an essential tool across the United States and European grid operators to maintain system reliability and ensure adequate resource availability. However, understanding RA planning and its implementation is still in the early stages for Indian power sector stakeholders.

What is resource adequacy?

Resource adequacy is a power system planning concept that minimizes the risk of blackouts or brownouts while balancing the costs of maintaining a reliable power system. Resource adequacy is just one of the pillars of power sector reliability, which also includes transmission stability, distribution reliability, operational reliability, and resilience.

In planning for a resource adequate system, planners must be able to answer the following questions: How reliable do I want my system to be? How should I build and operate a system to achieve resource adequacy, as well as other reliability or policy objectives at the lowest cost? Answering these questions is not easy, but fortunately, decades of resource adequacy planning in other regions has equipped grid planners with the tools they need to answer them.

How reliable does the system need to be?

Grid planners or oversight entities typically establish resource adequacy criteria to balance cost and reliability objectives. If a system “meets” these criteria, then the system is considered resource adequate. The RA Framework by the Ministry of Power focuses on two criteria for resource adequacy: the frequency of outages and the magnitude of outages. It does this through two components: loss of load probability (LOLP) and normalized energy not served (NENS).

• LOLP represents the likelihood that a system will experience a “loss of load,” or outage, event each year.
• NENS represents the expected total energy shortfall during outage events divided (or “normalized”) by the total annual load.

Using multiple resource adequacy criteria is an emerging practice among planners, allowing them to design a system while controlling for the expected frequency, duration, and magnitude of outages. The target 0.2 percent LOLP and 0.05 percent NENS values are considered by the Central Electricity Authority (CEA) in creating the National Electricity Plan.

Exhibit 1: Resource Adequacy Planning using Loss of Load Probability (LOLP) and Normalized Energy Not Served (NENS) metrics.

How do you build and operate a system to achieve resource adequacy?

Grid planning has the objective of meeting the resource adequacy criteria in the most economically efficient way possible while achieving other policy considerations such as clean energy targets. To achieve this, grid planners rely on generation planning models, also known as capacity expansion models. These models use optimization software to select the least-cost generation mix that can reliably meet demand while considering resource investment and operational costs; performance characteristics such as a power plant’s efficiency, ramping capabilities, and fuel costs; availability profiles for variable resources such as wind, solar, and hydro; and additional constraints based on policy and reliability considerations. This modeling exercise is a key component of integrated resource planning (IRP) or long-term planning, which evaluates electric system investment and retirement needs from a few years to 10–15 years in the future.

One important resource performance characteristic relevant to resource adequacy is capacity credit. Capacity credits reflect what percentage of a resource’s installed capacity can be depended on during periods at high risk of outages. For thermal resources such as coal and natural gas, a plant’s forced outage rate is typically an important factor in determining its capacity credit; for variable renewable energy resources such as wind and solar, expected weather conditions during periods of high demand or netload play a central role.

A resource’s capacity credit multiplied by its nameplate capacity is called its accredited capacity. Accredited capacity enforces a key reliability constraint commonly included in generation planning models — the planning reserve margin (PRM). The PRM constraint, represented as a percentage of peak load, requires that the system has enough existing or new accredited capacity to meet or exceed peak load times one plus the PRM value.

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Exhibit 2: Illustrative Example of Capacity Accreditation for Different Resources 

How is resource adequacy planning currently proposed to be implemented in India?

The RA Framework places significant responsibilities on the CEA, which builds upon its traditional role of publishing the National Electricity Plan every five years. Under the RA Framework, the CEA must annually develop a 10-year look ahead under the Long-term National Resource Adequacy Plan (LT-NRAP). The LT-NRAP will include the optimal PRM at the national level, a projected optimal generation mix for the coming decade, regional capacity credits for various resources, and the required contribution of each state and union territory to the national peak capacity. Simultaneously, the National Load Dispatch Center (NLDC) is expected to issue an annual Short-term National Resource Adequacy Plan (ST-NRAP), focusing on the upcoming year's hourly demand forecasts, resource availability, maintenance schedules, outage rates, and decommissioning plans. This information is vital for creating RA plans at both national and distribution utility (Discom) levels.

The state load dispatch centers (SLDCs) are expected to allocate the state-level peak shares from the LT-NRAP to respective Discoms in a state, which formulates their resource adequacy requirement (RAR). Discoms are then required to demonstrate the RAR compliance to their respective state energy regulatory commissions (SERCs), by contracting enough accredited capacity to meet their allocated share of the national-peak (for example, 100 percent contracting of the RAR in the first year and at least 90 percent in the second). In addition, Discoms are expected to undertake a 10-year horizon long-term Distribution Licensee Resource Adequacy Plan (LT-DRAP). These LT-DRAPs are to be vetted by the CEA and submitted to the respective SERC for their approval.

Exhibit 3: Implementation of the RA Framework — central, state, and Discom’s roles and responsibilities

What does the Resource Adequacy Framework mean for India’s Discoms?

The RA Framework guidelines from the Ministry of Power are expected to provide appropriate procurement signals at the national, state, and Discom level for contracting resources to meet national and state-level peak demands and ensuring grid reliability. Moreover, the long-term planning studies proposed under the framework present an opportunity for Discoms to achieve benefits beyond resource adequacy. The RA Framework calls these assessments LT-DRAPs, and each LT-DRAP is a 10-year horizon look ahead plan intended to ensure Discoms meet their own peak and electrical energy requirements. These studies are reminiscent of the IRP processes common in the United States, where grid planners prepare forward-looking plans to anticipate grid needs over the next 10–20 years. The IRP or LT-DRAP exercise could provide Discoms foresight into key planning topics, such as:

• Understanding tradeoffs between in-state generation versus electricity imports over time with increasing state demand, load peakiness, and growth of renewable resources
• Preventing investments in new generators that could become stranded assets due to underutilization or poor cost competitiveness
• Planning and executing large projects that require a long development lead time before the anticipated need becomes critical

Although IRP best practices continue to evolve, decades of resource planning in the United States and EU regions have led to the development of a robust community of practice and a range of software tools to support this process. Complying with the new RA Framework presents an opportunity for India’s Discoms to leap ahead and adopt IRP best practices:

• Incorporate advanced planning tools to meet their obligations under the new RA regulations, including a growing number of free and open-source planning tools that are available at zero financial cost.
• Identify and leverage opportunities for training and support. Discoms need more than just access to planning software, which often has steep learning curves; they also need access to training and support to build internal expertise for these tools.
• Develop robust data pipelines. Generation planning models are only as good as the inputs and assumptions used in them, so it is especially important that Discoms have access to accurate data. The RA Framework lays out specific requirements for future scenario planning that considers demand variation, hydro conditions, outages, renewable energy resource availability, and more, and Discoms must be able to access and effectively utilize the necessary data to develop these assumptions and perform robust scenario analysis. Central entities such as CEA and NLDC could consider creating a central data portal that enables and streamlines the Discoms RA planning studies.
• Think beyond resource adequacy. The processes outlined in the RA Frameworks provide insights beyond resource adequacy. The same generation planning tools and scenario analysis proscribed in the regulations can help Discoms identify cost-effective investment pathways that are robust to a range of future uncertainties.

Complying with the RA Framework guidelines will require new processes, new skills, new tools, new data, and a new understanding of sophisticated resource planning concepts. But this hard work will pay off in the form of a more reliable, robust, clean, and lower-cost Indian grid.

The post Ensuring Grid Reliability in India appeared first on RMI.

This week, climate research groups confirmed 2023 as the hottest year in recorded history — with global temperatures showing around 1.5°C of industrial-era climate change. That level may be temporary, but it would quickly become permanent if we fail to cut climate pollution — and every year of heat raises the risk of irreversible impacts.

Yet there are also positive feedbacks on the solution side — with exponential growth in clean energy along with promising cross-sector opportunities. As this race between tipping points accelerates, it’s an urgent reminder that later is too late to protect our planet for future generations.

The Risks of Climate Impact Tipping Points

If 2023 was a warning bell, it was a deafening one. Every month from June shattered records across air and sea temperatures — with nearly every day above 1.5°C of warming since pre-industrial times (1850–1900). Unprecedented warming led to unprecedented extreme weather, from turbo-charged storms in the Mediterranean and Pacific (fueled by warm waters) to devastating wildfires in Canada and Hawaii (fueled by dry heat). We can now attribute many of these events to human-caused climate change — including daily temperatures as well as annual costs of more than $100 billion in recent years.

The more years above 1.5oC and other planetary boundaries, the higher the risk of irreversible damage to key climate systems. According to hundreds of scientists in the Global Tipping Points report, several systems are already at risk under current temperatures — from coral reefs and boreal forests to the Greenland ice sheet and Arctic permafrost.

Potential impacts include harmful weather and warming as well as coastal flooding, food insecurity, and ecosystem disruption. Though none would lead to runaway warming, their impacts could cascade if some tipping points start tipping others. Rapid climate action is critical to reduce this risk.

To inform the action needed, it’s helpful to look where the warming is coming from. About 1°C comes from carbon dioxide (CO2), which causes the most long-term impacts due to its lifetime of centuries. Another ~1°C comes from methane and other pollutants, most of which would be gone in a day or a decade if we halt their emissions. That would make ~2°C of human-caused warming — but the net effect is lower due to other human-caused cooling (from air pollutants that reflect solar radiation). As these are reduced to avoid millions of annual air pollution deaths, it is crucial to limit the extra warming by curbing climate pollution as well.

As greenhouse gas emissions and concentrations continue to rise, researchers have found that the 1.5°C carbon budget could be exhausted in just five to seven years of current emissions. Previous scenarios that focused on net-zero CO2 by 2050 have been undercut by growing emissions — leading some to conclude that 1.5°C would require net-zero CO2 well before 2050.

But there still are scenarios that keep us within reach. The International Energy Agency highlights key steps by 2030 such as tripling clean energy deployment, doubling the rate of annual energy efficiency progress (starting now), and cutting energy-related methane by 75 percent. Meeting the efficiency target could bring half of this decade’s emissions cuts — while the extent of action on pollutants like methane could triple or squander our chances to meet climate goals.

The Power of Positive Tipping Points

Though climate impacts may be accelerating, so too is the clean energy revolution. As RMI research has found, 2023 was a record year for clean energy as well — with renewables exceeding 80 percent of new power capacity, EVs approaching one in five car sales, and grid battery storage deployments likely tripling. Methane action is also advancing, while Amazonian forest loss declined by half. Emissions may finally fall in 2024, as clean energy outpaces fossil fuels in key areas like China.

When solutions scale, they can spark positive feedback loops that accelerate adoption across the world. Researchers have found opportunities across emissions sources — including “super-leverage points” that can help multiple sectors by accelerating key technologies such as batteries and green hydrogen. Once key enabling conditions are unlocked via policy, finance, and infrastructure, these solutions can reach reinforcing feedback loops that improve with implementation. Then, they proceed to enable what few thought possible — like 600-mile EV ranges in China and six days of all-renewable power in Portugal.

When solutions scale, they can spark positive feedback loops that accelerate adoption across the world.

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The transition will require many efforts across energy, land use, and resilience — but by leading with modular solutions that have powerful network effects and proven S-curves, we can quickly curb climate pollution while preparing for the impacts that are already upon us. The faster we go, the faster we all benefit for health, safety, and more.

As people from island nations have been saying for years, “Our lived experience tells us we are running out of time.” It will take all of us to win that race and preserve the planet for our future.

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Top image: This image was designed by Ed Hawkins (University of Reading) to show global temperature change since 1850. For more information, visit https://showyourstripes.info/

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Last year, San Antonio set a new record of 75 days at or above 100°F. An innovative solar project approved by the City in November will not only provide a solution for beating the heat in the form of shaded solar canopies on parking lots, but also highlights how cities of all shapes and sizes can harness a new federal mechanism to cost-effectively invest in more clean energy.

The City of San Antonio has made history by approving a major deal with local solar developer Big Sun Solar to put an estimated 13 megawatts (MW) of solar on 42 city-owned facilities and parking lots. Most significantly, these projects will offset about 11 percent of the electricity consumption for City operations, accruing a net savings of $7–$11 million over the 25-year lifetime of the panels. These benefits and more show that clean energy is not only good for reducing pollution, but can also result in healthier, safer, and more financially resilient cities.

Rendering of the proposed solar canopies at San Antonio’s Brook Hollow Library. Image courtesy of Big Sun Solar, 2023.

An Innovative Deal with Game-Changing New Incentives

Not only is this one of the largest multi-site on-site solar deals in the country, but San Antonio will also be one of the first cities to take advantage of the direct pay mechanism (also called Elective Pay) made possible by the Inflation Reduction Act (IRA). Direct pay allows cities like San Antonio and other tax-exempt entities to take advantage of tax credits to reduce upfront project costs, something that was not possible before the IRA passed in August 2022.

In 2019, San Antonio adopted its SA Climate Ready plan with goals of net-zero energy for municipal buildings by 2040 and carbon neutrality by 2050. Prior to the IRA, the City was exploring complicated third-party structures because it could not purchase the solar panels and claim the clean energy tax credits as a tax-exempt entity. However, direct pay opened up a new pathway of funding for projects like this, allowing the City to own these solar projects, rather than contract with a third party. This ultimately enables the City to capture more of the financial benefits of the project while meeting its climate and energy goals.

Four Lessons for Cities Looking to Learn from San Antonio

1. Make small projects into a bigger deal: First, the beauty of this solar deal is that it will be made up of multiple small projects, spread out across the city and in multiple districts. Rather than one large solar farm on a field, this distributed approach demonstrates how renewable energy can productively use already developed rooftops and parking lots — all while capturing greater economies of scale with a far more streamlined procurement than pursuing sites one-by-one.
2. Carefully consider which requirements are relevant: Having multiple smaller sites gives San Antonio another advantage: because the projects are all individually under 1 MW, they’re not required to meet new domestic content requirements to receive the full Investment Tax Credit. In addition, some of the city’s facilities will be able to take advantage of tax credit bonuses — additional credits projects can receive for being located in a qualifying energy community or low-income community. Overall, IRA tax credits are expected to cover 30–40 percent of the upfront cost.
3. Mind the gap (and plan for it): Cities considering using direct pay to capture IRA tax credits should anticipate that the “refund” equivalent to the tax credits may not arrive for more than a year after the project is placed in service. In this way, direct pay functions more like a reimbursable grant — where the initial costs are still paid by the city. Accordingly, cities should ensure that they can finance all the upfront capital costs initially, even if they pay back a substantial portion of that debt upon receiving the direct pay credit. Similar to how San Antonio finances other infrastructure projects, the city is financing the capital costs with a combination of taxable bonds and a low-interest loan specifically for energy saving projects from the Texas State Energy Conservation Office.
4. Allow for strategic flexibility in procurement: In particular, cities and other local governments may consider issuing requests for proposals, like San Antonio did, that allow for flexibility in the number of sites and contract type. While this can add more complexity upfront to the procurement process, this approach may result in more cost-effective proposals and further insight into the financial impact direct pay. For instance, in San Antonio’s case, allowing developers to propose multiple scenarios allowed the City to evaluate the economics of adding solar at different facilities and whether it would prefer to directly own the solar facilities or leverage a third-party model (i.e., a power purchase agreement or lease). To consistently compare across a range of financial structures, the City assessed the net present value of each proposal’s costs and benefits. This helped San Antonio identify which project would result in the best value over 25 years, not just the lowest cost upfront.

Charting Uncharted Territory

Despite the justifiable enthusiasm for the clean energy tax credits and direct pay, they are still uncharted territory. While it is a game-changing mechanism, direct pay is no panacea. For projects greater than 1 MW in capacity, domestic content will be required to capture the tax credit after 2025. And the rules of your energy market may impact how you can buy or sell electricity.

Early examples like San Antonio’s 13 MW deal can highlight how local governments and other tax-exempt organizations can pragmatically factor the IRA directly into its planning, procurement, and evaluation. And such innovative local solar deals tangibly demonstrate how transformative federal clean energy incentives can be in daily life and inspire additional projects in San Antonio, in Texas, and across the United States.

Top image: Solar canopies installed at Cuisine Solutions in San Antonio by Big Sun Solar, the company contracted by the City to deploy solar at 42 city facilities. Image courtesy of Big Sun Solar, 2023.

The post How Cities Can Scale On-Site Solar with New Federal Incentives appeared first on RMI.

Introduction

The Inflation Reduction Act (IRA) is on track to turbocharge hundreds of millions of investment dollars into clean transportation projects.

One such “vehicle” to unlock IRA funding for clean transportation projects is the Climate Pollution Reduction Grants Program, or CPRG. CPRG provides $5 billion to the Environmental Protection Agency (EPA) to help states, air pollution control agencies, Tribes, and local governments develop strong climate pollution reduction strategies. This program is structured in two phases: formula planning grants funded with $250 million; and competitive implementation grants, funded with approximately $4.6 billion.

With key implementation grant deliverables coming due in the next few months, it’s important now more than ever for local decision makers to consider what transportation strategies will be most competitive for this EPA funding. Only strategies referenced in a state’s Priority Climate Action Plan (PCAP) will be eligible for implementation awards.

Key Dates for the General Competition

1. March 1, 2024: Priority Climate Action Plan (PCAP) due to EPA
2. April 1, 2024: Implementation Grant applications due
3. July 1, 2024: Award decisions made by EPA (anticipated)
4. October 1, 2024: Awards made (anticipated)
5. Mid-2025: Comprehensive Climate Action Plan (CCAP) due to EPA

There are excellent resources out there to help decision makers craft the most competitive CPRG application, including detailed guidance on competing for CPRG grants that we released with Evergreen Action. Many states, like Minnesota, recently released Carbon Reduction Strategies that are rich with formulas to calculate the local emissions reduction potential of a range of transportation projects, as required by the EPA.

An example from MnDOT’s Carbon Reduction Strategy of how to forecast emissions reductions from a protected bike lane project.

While each state’s PCAP should involve a full suite of strategies tailored to local needs and the EPA’s scoring metrics, there are two high-impact transport approaches — e-bikes and superuser incentives —worth highlighting that may be underserved in current dialogues.

Uniquely, both approaches may unlock extra points in the EPA’s scoring metrics as they, 1) have clear equity advantages; 2) offer straightforward emissions reductions calculations; and 3) represent incentive gaps that are not otherwise served by federal legislation.

CPRG Evaluation Criteria according to the US EPA.

#1 E-Bikes: A Game-Changer in Clean Transportation

 

Background

An e-bike, or electric bicycle, is a bicycle with a built-in motor and battery that assists the rider’s pedaling. E-bikes are gaining traction as an affordable and convenient mode of transportation, with national sales doubling since last year and global market size expected to balloon to $92 billion by 2029.

E-bikes produce no tailpipe emissions and use a fraction of the materials needed to make traditional vehicles. In terms of convenience, they are considered an especially promising alternative to car trips for completing short journeys of around 5 miles or less. According to national data, the majority of automobile trips in the United States are shorter than 5 miles.

Recommended Action

Decision makers should consider how e-bike subsidies or ride-share programs fit into a full suite of clean transportation strategies to be submitted in initial PCAP’s to US EPA on March 1, 2024.

For ideas on how to implement such programs, decision makers should consider model policies from Colorado, Minnesota, and hundreds of local communities around the United States. For example, Colorado’s extremely popular statewide rebate program distributed over 4,500 rebates across 54 counties, and 92% of the low-income standard rebates were redeemed.

Why this strategy may boost your CPRG priority plan:

E-Bikes have not yet been addressed in federal legislation, creating a powerful narrative and opportunity to wield CPRG dollars to uniquely accelerate clean transportation adoption.

Using new tools like RMI’s e-bike calculator, it’s easy to forecast the impacts of a specific e-bike subsidy on climate pollution reductions in your state. The calculator is loaded with real-world data from a pilot project in Denver, which demonstrated that subsidies for e-bikes were not only wildly popular, but also led to verifiable greenhouse gas emissions savings due to mode shift from single-occupancy vehicles.

While transit, rail, and EV projects are essential to a clean transportation strategy, all may require large capital expenditures and lengthy approval processes. Meanwhile, e-bike solutions are ready to reduce climate pollution “out of the box” and don’t require expensive associated infrastructure. Bike racks, protected lanes, and flex posts are both affordable and easy to deploy.

Beyond capital and planning advantages, e-bikes can improve mobility equity in ways that are easy to align with CPRG scoring metrics. Pueblo, CO’s, “e-Cycle-to-Own” program for low-income essential workers demonstrates how targeted policy interventions can effectively prioritize e-bike adoption among disadvantaged communities.

CPRG gives bonus points to solutions that reduce “criteria air pollutants,” such as particulate matter, nitrogen dioxide, and carbon monoxide. RMI’s e-bike calculator can forecast how a subsidy program would reduce all three of these criteria pollutants, improving public health in your community while bolstering the competitiveness of your CPRG application. For a full list of CPRG competition metrics, see this slide deck from US EPA.

#2 Superusers: Steering EV incentives to those who need it most

 

Background

When designing and distributing incentives for electric vehicles, not every recipient has equal impact. Research has shown that most EV incentives flow to upper- and middle-class buyers that likely would have electrified even without the financial incentive. In addition to the economic inefficiency, many of these drivers are purchasing a second vehicle or live in a city and only drive their EV short distances. In both cases, the greenhouse gas emissions and air pollution that are abated through the EV purchase are negligible.

At the other end of the spectrum, a new report from Coltura finds that the top 10% of passenger vehicle drivers in the United States use more gasoline than the bottom 72% of drivers in the country, and nearly as much as all of China combined. The majority of those in this top decile, known as “superusers,” have household incomes of less than $100,000 and spend nearly three times as much of their household income on gasoline when compared to non-superusers. Crucially, the carbon reduction from an average superuser switching to an EV achieves roughly five times as much impact as electrification for an average non-superuser. In this way, dollars spent on superuser incentives can be more efficient and effective than traditional blanket incentives.

Recommended Action

In addition to a full suite of clean transportation strategies, decision makers should consider using CPRG money for programs that specifically identify and financially support superusers to switch to EVs and other clean modes of transportation. To maximize the positive impacts for low-income and disadvantaged communities, a superuser program could have additional eligibility requirements or adders for buyers that fall within these categories.

States like Vermont, Maryland, and California are already enacting or exploring incentives tied to past gasoline usage, directing greater benefits to low-income individuals. To determine eligibility, Coltura recommends using the odometer reading on the certificate of title for the buyer’s gas-powered vehicle and subtracting the odometer reading from a photo or sworn statement of the current reading to derive the average miles driven per year. When divided by the MPG rating of the vehicle, implementers can easily calculate the average annual gallons of gasoline used.

How this strategy may boost your CPRG priority plan:

Superuser incentives hit on several priorities that the EPA has identified in strong CPRG implementation plans. First, a targeted program would specifically benefit the economic resilience and health of low-income individuals and those living in disadvantaged communities. Superusers, the majority of whom live in rural communities or small towns and make under $100,000, are more vulnerable to fluctuating gas prices and the additional repairs required by fossil-fuel cars. Electrification could save superusers thousands of dollars a year in gasoline costs alone. In addition to driving more miles and therefore emitting more air pollution overall, superusers are also more likely to drive older vehicles, which emit more pollution per mile. Electrifying these drivers will create an outsized benefit in low-income neighborhoods that tend to be more vulnerable to air pollution.

Regarding the CPRG’s cost-effectiveness criteria, superuser programs guarantee that states get the most “bang for their buck” when investing in EV incentives, as mentioned above. In spite of the savings potential, these largely rural drivers tend to be some of the most difficult drivers to convert to electric vehicles, which means that they will likely require sizeable per-vehicle incentives. Most existing funding streams simply can’t meet this demand, which is why CPRG is uniquely qualified to serve as a funding source.

In addition to the equity and emissions impact, superuser programs excel in the CPRG’s performance measures criteria. Because program officers will need to calculate the average annual gallons of gasoline used by each applicant during the eligibility assessment, reporting on abated emissions will be incredibly straightforward.

Conclusion

RMI’s recent State Scorecard analysis found that most states have a big gap to fill if they hope to achieve at least a 50% reduction in greenhouse gas emissions by 2030, and transportation emissions make up the largest share of emissions in most of these states. E-bike and superuser incentive programs can rapidly and equitably decarbonize this sector and are also likely to be uniquely competitive for CPRG Implementation grants, based on EPA’s guidance. Decision makers should act quickly to ensure that these two programs are included in their state’s CPRG Priority Climate Action Plans and eligible for the $4.6 billion of Implementation Grant funding.

The post How to Unlock IRA CPRG Funding for the Drivers and Cyclists Most in Need appeared first on RMI.

The global on-demand last-mile delivery service, which includes companies such as Uber Eats, Door Dash, JustEat, and Deliveroo, has a value of more than $150 billion and continues to grow. But what are the climate impacts of these deliveries? And how can we decrease the climate impacts by helping the sector encourage modal shift and transitioning to zero-emissions vehicles?

RMI tackled those questions by engaging directly with the delivery couriers themselves. Talking with couriers, city officials, and community-based organizations in London, Mexico City, and Seattle helped us understand the barriers to zero-emissions last-mile delivery and develop recommendations to accelerate the shift to zero-emissions last-mile deliveries.

The insights we gained are detailed in our latest report, Decarbonizing Last Mile Delivery: A Courier-Centered Modal Shift Study, which provides city officials, app-based delivery platforms, community-based organizations, and other stakeholders with a framework to electrify and reduce emissions from on-demand last-mile deliveries globally. The report was commissioned and created in partnership with Uber to inform their efforts to reduce delivery emissions worldwide.

Challenges

Electrifying the cars, motorcycles, mopeds, and scooters couriers use to make last-mile deliveries can significantly reduce emissions while at the same time improving air quality and public health outcomes. However, many couriers are reluctant to make the shift to electric. Many cited the higher up-front costs of electric modes and limited access to conveniently located, fast, and reliable charging infrastructure as challenges to transitioning. They also noted a lack of used zero-emissions vehicles and maintenance options and a lack of investment in separate, safe road infrastructure for two- and three-wheeled vehicles as barriers.

Ultimately, couriers are worried about the impact to their net earnings and how the challenges outlined above could affect their bottom line. However, an active approach to promoting the shift to zero-emissions delivery modes from a multisector group of stakeholders — including local governments, app-based delivery platforms, and community-based organizations — could reduce purchase and operating costs for couriers, while improving local air quality, mitigating emissions-related public health concerns, and promoting an industry-wide change for public good.

Solutions

This multi-stakeholder approach means that all stakeholders must work together in pursuing safety and infrastructure best practices, investing in zero-emissions last-mile delivery, and designing policy mechanisms to drive change.

City officials can implement key policies and financial tools to incentivize the shift to electric, while private stakeholders, including app-based delivery platforms, can complement these efforts by investing in infrastructure and developing partnerships to make zero-emissions delivery modes more accessible to couriers. Public-private partnerships can also be created between stakeholder groups to increase the reach and impact of programs and investments, capitalizing on local context, engagement expertise, and communication channels that community-based organizations have to offer.

The main findings in our analysis suggest that to drive the shift to zero-emissions last-mile delivery modes, stakeholders should focus solution efforts on:

Reducing upfront cost

• Local governments can provide financial incentives directly to couriers that can be used for transport mode, associated gear, and charging.
• App-based delivery platforms can partner with local vendors and dealers to offer couriers discounted prices or leases on low- and zero-emissions transport modes.

Increasing access to charging and battery swapping

• Local governments can develop infrastructure plans with charging (including fast charging) and battery swapping stations placed along convenient delivery routes and high-volume corridors to maintain delivery efficiency and courier earnings.
• Public- and private-sectors can invest in charging infrastructure through partnerships between cities, app-based delivery platforms, and charging infrastructure providers to create accessible, convenient charging for a variety of modes.

Addressing road safety concerns

• Local governments can develop dedicated, protected, and connected lanes and paths for e-bikes and e-motorcycles/mopeds.
• App-based delivery platforms can partner with local governments and CBOs to provide couriers with safety education and equipment.

Zero-Emissions Last-Mile Deliveries Are Possible

Although significant challenges still exist, particularly because of charging accessibility issues and high up-front vehicle costs, many solutions are available to decrease the barriers couriers face in adopting zero-emissions modes. By centering this report on courier perspectives, RMI has created a unique frame for presenting on-the-ground experiences and concerns that need to help inform policy and incentive structures, infrastructure investments, safety programs, and partnerships to best address barriers to transportation electrification.

The courier voice should continue to be centered in the discussion of last-mile and zero-emissions delivery to ensure the whole of their experience is considered when designing incentives, safety programs, infrastructure, and the other recommendations in our report.

Zero-emissions transportation will continue to expand globally as local, state, and national governments and other stakeholders make aggressive commitments to cut transportation sector emissions and invest in necessary infrastructure. On-demand last-mile delivery may be a small segment of the transportation sector, but its potential impact is big when it comes to broader transport policies and consumer zero-emissions adoption decisions, as well as helping cities achieve their emissions reduction goals.

Download the report

We would like to thank Uber for commissioning this report and acting as a key adviser and partner.

The post Can Your On-Demand Deliveries Be Emissions Free? appeared first on RMI.

While we at RMI try to write in an accessible way, many of us are scientists and engineers, and occasionally (or more often “frequently”) a technical term may slip into our writing without an explanation. For all of you who regularly read about energy and climate change issues, we are providing a list of technical terms and their definitions, along with an example sentence in which it was used. Some of the terms include a link for more information if we have written extensively on that topic.

This list is by no means exhaustive, and we will be updating it regularly, so feel free to bookmark and share this page.

Anthropogenic — Resulting from the influence of human beings on nature.

• Example: The waste sector is currently the third-largest source of anthropogenic methane emissions.

Behind the meter — Energy systems located on the customer’s side of the utility meter.

• Example: Thanks to behind-the-meter solar, which typically includes residential rooftop solar panels, New England’s grid operator was able to keep the lights on and reduce peak demand during the height of summer.

Carbon capture and sequestration (or storage) (CCS) — Capturing carbon dioxide emissions from power plants and other industrial sources and storing it underground.

• Example: For engineered solutions such as direct air carbon capture and storage (DACCS), there is a growing tension between support for it and a realistic skepticism about a costly and energy-intensive technology that is yet unproven at scale.

Carbon capture, utilization, and storage (CCUS) — Capturing carbon dioxide emissions from power plants and other industrial sources, reusing them for beneficial applications, and storing the remaining emissions underground.

• US steel production can reach near-zero emissions in 2050 with aggressive adoption of energy efficiency; industrial decarbonization; carbon capture, utilization, and storage (CCUS); and low-carbon fuels such as hydrogen.

Carbon dioxide removal (CDR) — Extracting carbon dioxide from the atmosphere.

• Example: Carbon dioxide removal (CDR) is not a substitute for emissions reduction, but science says we’ll need it too, to protect a livable planet.
• For more: From Trees to Tech and Beyond: Carbon Dioxide Removal (CDR) in All Its Variations

Circular economy — An economic system designed to minimize waste by reusing, repurposing, and recycling materials to create a closed loop.

• Example: A circular battery economy, one in which used batteries are repurposed or recycled, can help mitigate the risks associated with battery production while at the same time strengthening the EV battery supply chain.
• For more: Clean Energy 101: EV Battery Recycling

CO2e — Carbon dioxide equivalent, or the amount of CO2 that would have the equivalent global warming impact as the same amount of a different greenhouse gas.

• Example: For simpler decision-making, emissions are often reported in carbon dioxide equivalent (CO2e) — where each pollutant is related to CO2 based on its global warming potential (GWP) factor.
• For more: A Matter of Time: Three Ways to Clarify Emissions Data

COP — The United Nations yearly climate change conference (officially Conference of the Parties).

• Example: RMI heads to COP28 in Dubai guided by a deep legacy of “applied hope” — as much a vision of inspiration as a pragmatic playbook for success.

Demand-side management — Energy efficiency measures designed to encourage consumers to decrease their electricity usage.

• Example: We’re seeing a number of states adopt metrics and scorecards to track GHG emissions avoided by [energy efficiency], demand-side management, and electrification.

Global stocktake — The United Nation’s inventory of the world’s progress on reducing greenhouse gas emissions.

• Example: The “global stocktake”…concluded that we are well off track to limit global warming to 1.5°C by 2100, as agreed to in Paris.

Global warming potential (GWP) — A measure of how a gas contributes to heating the earth’s atmosphere, compared to CO2 over a specific time period.

• Example: As more regions across the globe require greater access to air conditioning, many of today’s units contribute to climate change due to their high electricity consumption and use of refrigerants with high global warming potential, creating a vicious cycle.
• For more: A Matter of Time: Three Ways to Clarify Emissions Data

Greenhouse gases — Gases in the atmosphere that trap heat.

• Example: Where regulating ozone-depleting substances was a success, agreement and action on greenhouse gases (which trap heat in the lower atmosphere as opposed to ODS that deplete the ozone layer itself) has been a slower process.

Green hydrogen — Hydrogen produced using renewable electricity.

• Example: Even at high rates of leakage, green hydrogen has an undeniably positive climate benefit in the short- and long-term, especially compared to the demonstrably large climate harm from the fossil fuels it replaces across the supply chain.
• For more: Clean Energy 101: The Colors of Hydrogen

Grid parity — When an alternative energy source produces electricity at a similar or lower cost to that produced by the electricity grid.

• Example: Grid parity is all about the relative cost of renewable energy compared to conventional energy sources — and if you know anything about renewable energy, it’s that costs have been falling fast.

Just transition — Greening the economy in a way that is as fair and inclusive as possible to everyone concerned.

• Example: The Indonesian government established a just transition working group to ensure the energy transition does not negatively affect coal communities.
• For more: Spotlight: A Just Energy Transition

Nationally determined contribution (NDC) — A country’s climate action plan to cut greenhouse gas emissions.

• Example: RMI’s updated State Climate Scorecards provide two main indicators of climate progress: (1) how far current policy gets to 2030 climate targets that achieve the US Nationally Determined Contribution under the Paris Agreement and (2) how close current emissions are to these 2030 NDC-aligned levels.

Nature-based solutions — Using natural features (e.g., gardens, parks, trees, bodies of water, and others) to improve a community’s health, environment, and other societal challenges.

• Example: [CFAN advisor Phonesavanh Latmany] is now working on a project proposal focused on nature-based solutions for building the climate resilience of coastal communities in [Papua New Guinea].
• For more: Growing to Its Potential: The Value of Urban Nature for Communities, Investors, and the Climate

Levelized cost of energy (or electricity) (LCOE) — The average cost of energy (electricity) generation over the lifetime of the power plant including upfront costs to finance and build a facility along with its estimated lifetime costs for fuel.

• Example: The levelized cost of energy (LCOE) of solar and wind in H1 2023 was just over $40 per MWh, about half that of coal and gas.

Loss and damage — The damage occurred from negative consequences of climate change, usually arising from extreme weather events such as rising sea levels, hurricanes, wildfires, and others.

• Example: On the first day of the annual UN climate conference, COP28, leaders made a historic decision, agreeing to launch and capitalize a loss and damage

Negawatt — A unit in watts of electrical power saved (a term coined by Amory Lovins).

• Example: A negawatt that displaces a kilowatt of coal power does more good to the planet than a negawatt that displaces a kilowatt of natural gas, wind, or hydropower.

Net metering — An electricity billing method that credits solar energy system owners for the electricity they produce and send to the grid.

• Example: While net metering policies are designed to compensate electricity consumers who install solar photovoltaics (PV) on their rooftops, virtual net metering and community solar policies allow businesses and residents to capture these same benefits even if the solar installation is not on their property.
• For more: What is net metering? And other solar terms explained.

Offtakers — The people or companies that will purchase the product that a new project is creating.

• Example: H2 Green Steel successfully presold over 60 percent of the planned initial yearly production volume to a network of partners and investors, including automakers and manufacturers, such as Mercedes and Scania. These offtakers gain access to a pipeline of low-carbon steel.

Performance-based regulation (PBR) — Regulatory mechanisms aimed at overcoming the incentives in traditional “cost of service” regulation that can deter utilities from investing in the resources and technologies needed to support the clean energy transition.

• Example: The [new webpage] is intended to increase transparency and hold Hawaiian Electric accountable to delivering on a number of prioritized social and policy objectives under a regulatory approach known as performance-based regulation (PBR).

Performance incentive mechanisms (PIMs) — A regulatory tool to align utility investments and actions with desired policy outcomes.

• Example: Performance incentive mechanisms (PIMs) are one tool (alongside revenue decoupling and carbon pricing) to shift utilities’ incentives and get them stoked about climate-forward efficiency.

Power purchase agreement (PPA) — A contract in which a developer installs, owns, and operates an energy system on a customer’s property, and the customer buys the energy at a pre-negotiated price.

• Example: Coal contracts — specifically power purchase agreements (PPAs) — are also everywhere today, and their replacement by cheaper and cleaner alternatives is coming.

S-curve — A trajectory of growth that shows that the adoption rate of innovations is non-linear — slow at first, then rapidly rising before flattening out again as it reaches market saturation.

• Example: The rapid growth of new energy technologies is the primary driver of system change. Falling costs and superior performance lie behind their S-curves of change.
• For more: Harnessing the Power of S-Curves

The post Stuck on a Climate Change Term? Help Is Here. appeared first on RMI.

State departments of transportation (DOTs) are uniquely positioned to accelerate the shift to clean transportation. While many have made heartening progress in areas like vehicle electrification, most have neglected other necessary solutions — namely, equitably expanding access to mobility choices and reducing the miles we have to drive (referred to as vehicle miles traveled or VMT).

These solutions go hand-in-hand. Expanding and enhancing mobility choices — that is, offering alternatives to personal automobiles — would vastly improve Americans’ access to low- and no-carbon transportation while improving their lives in nearly every dimension. RMI has already demonstrated these benefits in the state of Minnesota, and in forthcoming analysis finds that, by 2050, a 20 percent decrease in national VMT per capita could avoid up to 6,000 annual fatalities, $259 billion in annual vehicle fuel and maintenance costs, and 2.3 gigatons of carbon dioxide equivalent — the same as shutting off all US emissions for roughly four months.

But VMT is on the rise, and even the most ambitious states are misusing unprecedented federal funds on projects — mostly roadway expansions — which fail to relieve congestion and will make pollution worse.

To decrease VMT on the necessary scale, state DOTs must change course immediately, investing in cleaner, safer, more affordable, and more enjoyable mobility options.

Cars’ special status costs pollution, money, and lives

The US has long considered “car culture” an immutable fact of life rather than a predictable consequence of its laws, urban development patterns, and investment priorities. Decades of this thinking have made it difficult to provide alternatives; the United States has tried to solve its car problem with more and better cars — cars with more efficient engines and, increasingly, electric cars. For their part, state DOTs have tried to combat congestion with new and larger roads, such that today, cars enjoy more living space than people.

This has not worked. Over the past fifty years, transportation pollution has only meaningfully declined in response to recessions and the COVID-19 pandemic. In 2019, cars and trucks contributed 23 percent of US climate pollution — the largest single category — at per-capita volumes well beyond those of other developed countries. When we include fuel production and embodied carbon, cars and trucks pollute almost 40 percent of the US total.

While cars have become more efficient, these gains are partially offset by their increasing size and weight: research shows pollution could have been 30 percent less between 2010–2022 if cars had stayed the same size. Additionally, large trucks, SUVs, and crossovers remain markedly more lethal to pedestrians and cyclists, with US fatalities far exceeding those in similar countries. Given the risks, many people wouldn’t consider walking or cycling even for short routes, further reinforcing our auto-dependence.

This bloat is the direct result of policy. For example, a loophole in US auto efficiency standards gives more leniency to so-called “light” trucks, which have grown 32 percent heavier in just the last thirty years. Even in the Inflation Reduction Act — the signature US climate law — electric SUVs can receive tax credits if they cost under $80,000, while other vehicles must cost under $55,000 to qualify. This perversely incentivizes larger and more expensive electric vehicles.

The high price of car ownership is personal to many Americans. With stagnant real incomes and no choice but to drive, gas money can come at the expense of rent, healthcare, nutrition, education, and recreation. The US transportation system wasn’t built with these tradeoffs in mind. From relentless road expansions to zoning and land use policies that encourage sprawling, car-dependent communities, policymakers have long viewed car ownership as a benefit in-and-of itself, rather than the burden many Americans know it to be.

With historic federal funding, states have the chance to pivot

Most federal highway dollars go to states and local governments, which states can then supplement using their own revenues. State transportation spending has flatlined since 2000, however, and has historically underfunded car alternatives. And despite the orthodoxy that drivers should pay for their own infrastructure needs, Bloomberg notes that “gas taxes, tolls, and registration fees have covered only about 60 or 70 percent of roadway expenditures across all levels of U.S. government.” The remainder comes as a federal subsidy which everyone pays, regardless of whether they drive.

The 2021 Infrastructure Investment and Jobs Act (“Bipartisan Infrastructure Law” or “BIL”) commits even more federal highway funding, 90 percent of which will be disbursed as formula funds that states can spend with wide discretion. Their choices will make all the difference in meeting US climate targets: the Georgetown Climate Center and RMI have found that BIL can either help or harm pollution reduction efforts based on how state DOTs invest their funding.

Already, states have devoted most of their BIL funds to highway expansions and other projects that reliably induce more traffic than they relieve and are unpopular with even the driving public. They could instead use these funds to expand transit access and create benefit-rich “complete streets” tailored to cyclists and pedestrians. They could subsidize mini-cars, golf carts, and other forms of micro-mobility that go overlooked as serious electric alternatives. They could pilot congestion pricing and other strategies to alter transportation demand. Any of these solutions would do more to aggressively slash VMT.

There are examples across the country and the world. Parisians drive 45 percent less than they did in 1990 thanks to a kitchen sink of policy changes — many of which, like installing protective bollards, were hardly radical. Around this time, Seattle began to incentivize remote work and carpools while requiring larger employers to begin workdays before 9 a.m., reducing rush hour congestion. These relatively unobtrusive interventions helped lower per-capita VMT by about 17 percent from 2005-2018 (while total VMT increased as Seattle’s population grew).

States would be wise to follow these cities’ leads, implementing incremental reforms while capitalizing on exogenous events and market shifts that can arise suddenly. For instance, the COVID-19 pandemic helped drive a 269 percent uptick in e-bike sales from 2019-2022. Despite being a relative frivolity just a decade before, e-bikes now outsell electric cars in the United States, due in large part to their lower price tags. E-bikes’ active transportation and air quality benefits offer even more reason to promote them on a wider scale.

These examples show that federal funding investments could do more if paired with policy reform. At the moment, twenty-three states are constitutionally banned from spending their gas tax revenues on transit while others prohibit local option taxes — additional sales taxes, fuel taxes, and registration fees that could support transit and other climate-sustaining infrastructure. By rethinking these policies and embracing a “fix-it-first” approach — prioritizing backlog repairs over expensive new projects that only add to future maintenance obligations — states can make the most of fleeting federal funding.

By reducing VMT, states help more than just the climate

Even with an impressive 70 million electric vehicles on the road by 2030, RMI finds the United States would still need a 20 percent reduction in per-capita VMT in order to meet climate targets. Read in reverse: the more we reduce VMT, the fewer vehicles we need to electrify. This is especially important with automotive stock turnover at record lows and even the most EV-friendly states struggling to reduce transportation pollution. By abating more than the minimum necessary VMT, states create breathing room to achieve EV goals and reduce pressure on tenuous battery supply chains — a win-win for governments and consumers alike.

The wins don’t end at sustainability: RMI and many other organizations have found that communities see the most wide-ranging benefits when they welcome cycling, walking, and electric micro-mobility that reduce the need for driving. Our analysis finds that by 2050, a 20 percent reduction in per-capita VMT could avoid over 6,000 annual fatalities from car crashes. Meanwhile, shifting to walking, cycling, and other modes of active transportation could prevent an additional 45,000 deaths by improving public health and reducing physical inactivity.

If enough Americans could trade their car for a bicycle or comfortable pair of walking shoes, RMI estimates that the average US household would save up to $2,000 in automotive costs and 55 hours of driving every year. What’s more, the investments in greenways, sidewalks, and bicycle facilities create more jobs-per-dollar than status quo projects, and according to a report by the Southern California Association of Governments (SCAG), for every dollar spent on pedestrian and biking infrastructure, another $5.20 in value is added to the regional economy.

A moment like this won’t come again

You can’t manage what you don’t measure, and most state DOTs have yet to begin measuring the impacts of driving. A new rule from the US Department of Transportation will change that by requiring state DOTs to set pollution reduction targets for their shares of the National Highway System — and with initial targets due in February 2024, there’s no time to lose.

These targets are flexible, and there will be no penalty for missing them. But perhaps if states understand the intensity of the problem, and if advocates and the general public can observe states’ lack of progress, then state DOTs will feel some pressure to act. This bright spotlight and the historic funding provided by BIL have opened the window for critical reforms. Will state DOTs respond with the same old projects that increase driving, lock-in emissions, drive up costs, and threaten lives? Or will they instead increase mobility choice and invest not in cars, but in people?

By choosing the latter, everyone — drivers included — will be better off.

The post Drive Less, Live More: How States Can Lead the Way in Climate-Smart Transportation appeared first on RMI.

COP28 closed as it opened: with an unprecedented focus on agriculture and food. On day two of the conference, 134 countries representing 70 percent of global productivity endorsed the UAE Declaration on Sustainable Agriculture, Resilient Food Systems, and Climate Action. Clearly stating the importance of the agri-food system (i.e. from farm to table to waste bin) for achieving the Paris Agreement goals, the signatories pledged to incorporate the agri-food system into key policy plans such as Nationally Determined Contributions by 2025.

A series of breakthroughs then followed, including multibillion-dollar designated donations from some major states and foundations, a global roadmap for sustainable food systems by FAO, and a record number of over 600 related side events during the two-week long assembly. Attention reached its high on the last thematic day — the first time that food and agriculture was featured as a daily theme at any COP. By the end of the conference, the number of signatories to the UAE Declaration increased to 159, making it the most widely endorsed declaration of this COP, and food made into the final decisions of the parties.

This is a historic movement as the food system cannot endure further oversight for the sake of people and the climate. The latest UN figures shows a 20 percent increase in the population suffering from hunger around the world between 2019 and 2022; while over the past two years farmers suffered from an average estimated income loss of nearly 16 percent due to changes in weather. And global yields could decline by up to 30 percent by 2050 in the absence of effective climate change adaptation. At the same time, the already-stretched food systems are responsible for one-third of global anthropogenic greenhouse gas emissions and therefore could potentially “fill gaps to 2030” as we just saw the global average temperature rise by 1.4°C over pre-industrial levels according to the World Meteorological Organization in their warning on day one of COP28.

Those understandings formed the basis of the UAE Declaration (Fig 1), which also indicates two emerging mindset shifts in the international climate community when it comes to agriculture and food. First, while adaptation and resilience remain as the top priority for the sector, its profound potential to drive powerful and innovative responses to climate change is explicitly acknowledged at beginning of the Declaration (albeit absent from the final official decisions of COP28). Second, while reiterating the need to safeguard the basic interests of vulnerable populations, the Declaration also recognizes the potential of climate actions to unlock shared prosperity for all, such as enabling farmers to increase and diversify incomes. In the end, the Declaration listed maximizing climate and environmental benefits associated with agri-food systems as one of the transition goals.

Figure 1: Core Elements of the COP28 UAE Declaration on Sustainable Agriculture, Resilient Food Systems, and Climate Action

Source: RMI

Such positive mindset shifts may bring positive outcomes by unlocking synergies to mobilize more resources and participation. It also marks gradual improvement in the understanding of a just and equitable transition, which has been a cornerstone of the Declaration and indeed the whole conference. RMI’s recent report The Rural Equitable Climate Transition toward Carbon Neutrality and Shared Prosperity illustrates a “people-centered and development-oriented” rural equitable climate transition framework, which also emphasizes maximizing the benefits of climate action in agriculture and rural areas to improve the livelihoods of farmers and rural communities (Fig. 2). It highlights the systemic and tailored implementation of a sectoral approach to climate change, such as reducing food loss and waste, optimizing agricultural production patterns and technologies, green circular agriculture, and vertical agriculture, not only to reduce emissions, but also to help increase yields and incomes, and maximize social and environmental benefits.

Figure 2. Elements of Carbon-Neutral and Equitable Transition in Rural Areas

Source: The Rural Equitable Climate Transition toward Carbon Neutrality and Shared Prosperity, RMI

To accelerate the transition, the Declaration emphasized the essential role of policy and financial instruments and the resolution to accelerate innovation. This complements the findings from RMI’s report in the case of China. By establishing a Rural Equitable Climate Transition Index, which cross-examined the current state and the potential for climate actions and socioeconomic development of the rural areas in each province of China, the report affirms the critical role of sound policy guidance and financial support in accelerating low-carbon agricultural development. Improving the overall environment for innovation and investment in rural areas, and fostering innovation on market mechanisms, business models, and technical solutions for agri-food systems and rural livelihood is key to attracting social capital and securing a long-term sustainable transition. Examples include green premiums for agricultural products, sectoral policy coordination, piloting and scaling of climate-smart agriculture technologies, and more.

In addition, RMI’s report zooms in on rural energy transition and natural carbon sinks, which can also help improve the well-being of the agricultural population. For example, the index shows that the potential for renewable energy generation in rural areas of most Chinese provinces is tens or even hundreds of times that of the local energy consumption, and this is particularly the case for relatively less-developed regions. If properly developed, renewable energy generated in rural areas could not only secure clean energy demand in both rural and urban areas, but also potentially benefit rural communities by bringing investment opportunities of up to multi-trillion RMB. This may in turn boost local businesses, provide diversified jobs, create additional income for farmers, and improve the infrastructure, social services, and environment of rural communities. It could also narrow regional development gaps.

The index further shows that many of the relatively less well-off rural areas in China tend to feature richer wind, solar, and agricultural biomass resources along with higher food output, higher agricultural energy consumption, and higher emissions intensity (Fig. 3). Therefore, it is worth exploring the coupling of agricultural energy efficiency, electrification, and clean energy technologies with local renewable energy development, which could help facilitate the transition of both agri-food systems and energy systems while also improving agricultural modernization and production efficiency. Admittedly, special attention should be paid to the cost affordability and overall economics, particularly for those less well-off areas. Solutions must be tailored to local agricultural structure and other specific conditions.

Figure 3: Energy Consumption Per Unit of GDP of Primary Industries and Its Emission Intensity by Province, China, 2020.

Source: The Rural Equitable Climate Transition toward Carbon Neutrality and Shared Prosperity, RMI

In fact, the transition of agri-food and energy systems are closely intertwined. Latest calculations suggest that agri-food systems account for at least 15 percent of global fossil fuel use, while energy consumption accounts for at least 25 percent of the emissions from agri-food systems. Energy transition could play a key role in the agri-food system transition, and has the potential to advance equity through productivity improvement and rural community empowerment. RMI has been endeavoring to accelerate energy transition and climate actions in agri-food systems through efforts in rural renewable deployment; agricultural electrification; decarbonization of petrochemical, transport, and logistic industries; clean heating and cooling initiatives; bioenergy utilization from agriculture and other organic wastes; and other approaches throughout the agri-food supply chain.

“Despite challenges in the implementation, the UAE Declaration highlights the key role of agri-food systems in climate action, and presents new opportunities for the global climate actions and equitable transition,” says Ting Li, the managing director of RMI and chief representative of RMI China. “In response to the Declaration’s call for actions from non-state actors, we will continue to support the relevant goals and actions, particularly around enabling and enhancing synergies, links, and collaborations between agri-food and energy systems, in a bid to advance an equitable global transition towards climate neutrality and shared prosperity.”

The post Will the Long Over-Due Inclusion of Food Systems Come to Our Climate Rescue? appeared first on RMI.

The Empowering Rural America (New ERA) program, which was established by the Inflation Reduction Act (IRA), is the federal government’s largest investment in rural electric systems since the New Deal. In 1936, the New Deal’s Rural Electrification Act funded the creation of rural electric cooperatives (co-ops), and expanded access to electricity for rural America. Fast forward to the present day, and the $9.7 billion New ERA program aims to improve access to clean energy for rural America in order to reduce electricity rates for co-op members, improve health outcomes, reduce greenhouse gas emissions, and promote reliability by modernizing the grid.

Interest from rural America and co-ops for the New ERA program has been overwhelming, with 157 proposals from nearly every state and Puerto Rico, Guam, and the US Virgin Islands. If every proposed project were to be built, they would represent $93 billion in combined public and private investments in rural America. More than 50 percent of projects intend to benefit distressed, disadvantaged, energy, or Tribal communities. One applicant estimated their project, if funded, would create potential annual savings of $700 per household through clean energy investments.

While New ERA is an unprecedented opportunity to reshape the energy landscape of rural America, the demand from co-ops exceeds the size of the program. $9.7 billion can likely fund half of the projects included in initial applications. The strong demand from co-ops illustrates the value of federal funding that is designed to meet the energy needs of rural America. Before the IRA, co-ops were largely unable to access clean energy incentives. New ERA, in contrast, is structured to ensure that co-ops can use the funding to benefit their members.

Demand for the program also illustrates that rural communities are long overdue for support to strengthen their electric systems. Over the coming months and years, the federal government and co-ops will use the program to fund clean energy systems. These stakeholders must ensure the program funds are maximized to serve rural communities across the country.

How we got here: Before the IRA, co-ops faced barriers to access clean energy incentives for rural Americans

In the mid-1930s, only 10 percent of rural households were connected to the electric grid. Building a grid to connect low-density areas is more difficult and expensive than in cities, and investor-owned utilities provided only limited service. Today, co-ops provide electric service, and in some cases broadband access, to 42 million Americans within nearly every state. Co-ops still serve primarily rural areas, and while fewer than 15 percent of Americans are co-op members, 56 percent of the nation’s landmass is served by co-ops. And of the counties that co-op’s serve, 92 percent of them experience persistent poverty.

Exhibit 1. Area of the United States served by co-ops.

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Co-ops are non-profits, and the households and businesses within their service territories are members. This means that they own the utility and participate in governance decisions including board member elections. These characteristics — non-profit status, member ownership, and a rural and relatively low-income membership — are important context for understanding the benefits that rural America can unlock with New ERA.

Over the past decade, many energy companies have used clean energy tax credits and other financial incentives to invest in wind, solar, and battery storage — technologies that are now the some of the most cost-effective ways to generate electricity. Before the IRA, co-ops were not able to directly take advantage of these incentives to finance and own clean energy themselves. Instead, they had to rely on buying clean energy from other energy companies — and sharing the benefits of federal tax incentives with investors in those companies. As a result, while many Americans are enjoying the benefits of inexpensive wind and solar, members of rural electric co-ops had only limited access.

Exhibit 2. Comparing renewables uptake from selected power providers.

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The challenges that co-ops have faced in making use of federal incentives for clean energy are related to their non-profit status and member ownership structure. Most co-ops do not have a federal tax liability that they can offset with a clean energy tax credit and thereby lower the cost of clean energy relative to continued operation of their fossil plants. And unlike their investor-owned counterparts, co-ops are unable to rely on capital markets to raise equity for capital intensive wind, solar, or battery projects. These characteristics made clean energy investments more expensive for co-op members. New ERA is structured with these challenges in mind.

How New ERA resolves key financial challenges

New ERA and direct pay tax credits empower co-ops to invest in commercially proven technologies, ensuring a healthy balance sheet for future investments in a reliable and affordable electric system for members. Eligible investments include projects that immediately reduce or avoid greenhouse gas (GHG) emissions, such as constructing new renewable systems, procuring clean power, upgrading transmission and energy storage systems, and implementing carbon capture systems.

The New ERA program provides grants and/or loans with a maximum individual award of $970 million. The financing structure of these projects will look different depending on the type of award (i.e. grant or loan). Grants have the unique characteristic that they can be booked as an equity infusion but are limited in that they can only account for up to 25 percent of the total project costs.

In addition to New ERA awards, co-ops can use an important change to clean energy tax credits from the IRA to maximize support for clean energy acquisitions. Prior to the IRA, non-profits and other tax-exempt entities were unable to directly use tax credits for clean energy projects. The “direct pay” provisions in the IRA means these entities can now receive the full value of the Production Tax Credit and the Investment Tax Credit. Co-ops can maximize the use of these direct pay tax credits to pay for new investments in wind, solar, and storage, considering bonus adders for projects in energy communities and that use domestic content that can further boost tax credits.

New ERA, along with other IRA programs, addresses key challenges that previously impeded the transition to clean energy for co-ops:

Exhibit 3. Key challenges for co-ops to join the energy transition.

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New ERA funding unlocks substantial economic benefits for rural America

New ERA paves the way for investments in renewable energy that can bring significant economic advantages to co-ops and their members in rural communities across the country.

Co-ops have an important economic role in rural communities. An analysis from the National Rural Electric Cooperative Association (NRECA) found that co-ops currently support nearly 623,000 jobs with $51 billion in pay and benefits each year, generating approximately $135 billion in federal, state, and local tax revenue in the period between 2018 and 2022. And with the injection of new federal funds into clean energy deployment, they are poised to deliver even greater benefits.

A recent RMI analysis found that IRA programs have the potential to unlock more than $1 billion in investments in every state by 2030, if consumers and businesses adopt clean technologies at the pace and scale needed to meet national climate targets. The two states with the largest distribution co-ops, Texas and Georgia, could see $131 billion and $16 billion of investments respectively.

According to another RMI analysis, a $10 billion investment in wind and solar projects for co-ops can yield just over $50 billion in wind and solar-induced economic development revenues and position co-ops to be renewable energy leaders. By 2030, a primarily carbon-free grid could deliver nearly $11 billion per year in direct benefits to rural communities where these projects are sited, which includes $2.7 billion in annual local taxes, $2.2 billion in annual lease payments to rural landowners, $2.3 billion in construction job wages, and $3.7 billion in wages for operation and maintenance workers.

Exhibit 4. Economic benefits of clean energy development in rural America.

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A third RMI analysis found that clean electricity tax credits will create meaningful economic benefits, saving American households more than $5 billion annually by 2024, leading to immediate benefits for co-ops and their members.

Co-ops and their members have shown a strong demand for the New ERA program. By maximizing the use of the New ERA funds, the federal government can demonstrate its commitment to strong, reliable, and affordable rural electricity systems by empowering co-ops to invest in and foster the long-term sustainability and prosperity of rural America.

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As we begin the new year, climate finance is riding a wave of momentum resulting from COP28 and a host of announcements, initiatives, and high-profile transactions. Here we outline four key trends to watch in 2024. Transition topics will dominate and proliferate across existing and new areas of the financial system, but there is potential for bumps in the road as the realities of re-wiring the global economy (literally and figuratively) during a period of high interest rates and political uncertainty start to set in.

1. “Transition” everything, everywhere, all at once

Transition plans. Transition finance. Transition metrics. Transition pathways. The list goes on. Transition is the word of the moment. As the financial system shifts towards, and contributes to, a net zero future we need progress across each of these transition topics. However, it will be important to align on definitions and understand how different activities interact with and reinforce progress elsewhere. For example, credible transition planning will be a key enabler of transition finance, which will inevitably require robust transition metrics and pathways. Furthermore, 2024 is likely to be the year where transition narratives accelerate in diverse geographic markets — with Japan, for example, planning to release transition finance bonds, and efforts to scale transition planning and just transition financing opportunities also gaining traction in developed and developing markets alike. We cannot wait for perfection in any of these pieces or places, but delayed progress in one part of the system could hinder the whole. So, we need to transition everything, everywhere, all at once.

2. Public funding commitments increase — but blended finance at scale remains elusive

Blended finance was arguably the star of COP28 in Dubai, but the implementation of the numerous updated pledges and new mechanisms outlined could still be messy.

A group of ten Multi-lateral Development Banks (MDBs) released a joint statement outlining their next steps to accelerate climate finance, and the World Bank committed to spending at least 45 percent of its financing on climate projects, with an additional $9 billion in funding mobilized at COP28. However, these public finance institutions have been historically poor at getting money out of the door, and private markets are still waiting for the public sector to step in and help de-risk critical infrastructure and technologies, so this remains a key space to watch in 2024. The major announcement at COP28 was the United Arab Emirates’ new $30 billion Altérra climate fund. This includes a $5 billion ‘Altérra Transformation Fund’ which could represent an unprecedented infusion of catalytic capital, providing risk-mitigation capital, such as first-loss reserves, to incentivize private climate investment in least-developed countries and small island nations.

3. Policy and regulation dominated by industrial policies and disclosure rules — with deadlines for rule-making and implementation approaching

The long-awaited disclosure rules from the Securities and Exchange Commission (SEC) have once again been delayed until mid-2024. Final rules are expected to improve the quality and quantity of climate reporting, but investors are running out of patience with the highly politicized regulatory process and increasingly demanding this information directly from clients before the final ruling. Elsewhere, we will see disclosure requirements come into force — including transition plan publication requirements in the Philippines, the UK, and potentially via the European Sustainability Reporting Standards (ESRS). While the United States may be lagging Europe in terms of disclosure regulations, the Inflation Reduction Act (IRA) has already begun to show the power of industrial policy to supercharge the energy transition. 2024 will see several IRA grant programs — such as the Greenhouse Gas Reduction Fund — begin distributing ear-marked money to different decarbonization activities and stakeholders, and we expect this to catalyze market actions, particularly in key decarbonization technologies and among local beneficiary communities and hubs.

4. Economic and geopolitical headwinds could slow capital deployment and increase the cost of transition.

The days of cheap money are over. Innovation necessary to spur the energy transition is more expensive because of persistent high interest rates and inflation in many parts of the world. Incumbent firms with strong cash flows, such as fossil fuel companies, are likely to be relatively better off than start-ups and those with high up-front costs such as renewable energy and clean technology companies. One way in which governments could repurpose the end of free money narratives in favor of the energy transition is through redesigning subsidy programs. During COP28, the Netherlands launched an international coalition to phase out fossil fuel subsidies, and this — if successfully implemented on a broad scale — could accelerate and lower the cost of the energy transition, particularly if those subsidies were redirected to support renewable alternatives. Macroeconomic policies are tied to multiple realities — from the post-pandemic recovery, extreme weather and disrupted supply chains, to geopolitical instability in Europe and the Middle East and the upcoming US elections — each of which has an impact on the economic and political expediency of the energy transition. While we appear to be reaching positive tipping points in the deployment of many key technologies for the energy transition, financial institutions pursuing net zero targets will need to navigate some economic and political headwinds in 2024.

Conclusion: The energy transition is happening, but so is climate change. Finance must adapt to these realities.

2023 was the warmest year on record. It is likely that 2024 will be too. The cost of economic disruption from extreme weather is rising. Yet, at RMI we practice “applied hope” because we also see that the energy transition is well underway. By 2030 renewable technology solutions will dominate new sales in electricity, light transport, and low-temperature heat, sectors that make up 70 percent of fossil fuel demand. More than 80 percent of the largest financial institutions in the world have set net zero targets, and green finance flows topped $1 trillion for the first time in 2023. It is our hope and expectation that 2024 can be a catalytic year for transition-related activity in the finance sector, with financial institutions, governments, and corporations all stepping up to contribute to real-economy transition despite potential macroeconomic and geopolitical headwinds.

The post Financing the Transition: Four Trends to Watch in 2024 appeared first on RMI.