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High interest rates and volatile global supply chains didn't stop the US green-energy transition from reaching new heights in 2023.
A record amount of renewable energy, led by solar, was added to the grid. Customers bought nearly 1.5 million electric vehicles, a 50% jump over the previous year. Investments in getting the power and transportation sectors, among others, off fossil fuels hit a record $303 billion, an analysis by BloombergNEF found.
The US was the second-largest investor in the energy transition in 2023, after China, Tom Rowlands-Rees, BloombergNEF's head of North America research, told reporters during a briefing. The race to clean up the global economy is becoming competitive because other countries also hit record levels of investment. Japan was a notable exception.
"We really can't afford to not be having a record year, just to keep pace with this rapid transformation," Rowlands-Rees said.
Yet the global investment of $1.8 trillion still isn't enough to cut greenhouse-gas emissions to nearly zero by 2050 — a goal countries agreed to in order to curb the climate crisis. Financing needs to more than double to $4.8 trillion a year, BloombergNEF found in a separate report earlier this year.
Here are three main takeaways from the US:
BloombergNEF found that large-scale solar farms and rooftop panels were built at a record clip in 2023. A flood of solar panels imported from Southeast Asia helped meet demand, in part because the Biden administration waived tariffs on those imports.
It was the opposite story for wind power. Companies either canceled or are trying to renegotiate more than half of all the new offshore-wind capacity that was planned in 2023. Developers cited high interest rates and supply-chain delays. These challenges remain this year, but East Coast states, including New York and Massachusetts, are still awarding new contracts.
Solar, wind, and nuclear — which don't produce emissions — are taking a larger share of the energy pie. They generated a record 41% of US power in 2023. But natural gas is still the largest source and set its own record last year. Rowlands-Rees said that falling gas prices made it the cheapest form of energy in 2023.
"This is why things like the tax credits in the Inflation Reduction Act are important, because you see that otherwise, wind and solar are on a real roller coaster of economic competitiveness," he said.
In 2023, for the first time, the US industrial sector that refines oil and makes materials such as cement, iron, steel, chemicals, and paper became a larger polluter than the power sector, according to BloombergNEF.
The power sector, as recently as 2016, was the top emitter. Its emissions dropped by 40% in less than two decades, largely by switching from coal to natural gas. That means transportation and industry are now the top two polluters. A lot of money is pouring into electrifying cars and transit — industry, not so much.
"We have our own equation, which is electrification, plus digitization, plus automation equals sustainability," Jeannie Salo, the vice president of government relations at Schneider Electric, told reporters. "Those are the fundamental things that get you there for industrial decarbonization."
The Inflation Reduction Act aimed to reshore renewable energy manufacturing to the US through big tax breaks. Companies have responded with 104 new projects totaling $123 billion in investment. EV-battery and solar plants are dominating the planned growth, with 34 projects announced in each sector, according to BloombergNEF's tally.
Georgia and North Carolina are the top sites for new plants. North Carolina got $15.4 billion just from Toyota, which is building up its battery manufacturing in the state.
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