Introduction Many of the articles we published in 2023 show that, although there has been a strong increase in low-carbon technologies such as
hydrogen—can grow fast enough to meet net-zero targets and projected increasing electricity demand. Recent developments show that nuclear power is emerging as a key component of decarbonization plans. — The sustainable-fuel market is still mostly nascent, characterized by complex regulations and interdependencies across sectors. With such complex market fundamentals, sustainable-fuel traders are seeking to understand which markets will increase in liquidity, which arbitrage plays to explore across products, which storage hubs to invest in, and which offtakes to secure to gain access to supply. — Natural gas can play a critical role in decarbonizing the US power supply by providing a backup energy supply for renewables. In the following decades, a fully “dispatchable” backup energy supply will be required to ensure the reliability of the power grid for multiday swings. However, infrastructure upgrades and new market mechanisms will likely be required to position mainstream gas operators to provide the natural gas that consumers will need. We hope this compendium offers new insights that can help energy executives remain competitive as the transition continues apace.
This compendium includes a representative selection of articles with findings that help illustrate the evolving net-zero landscape, including the following: — The number and scale of capital projects crucial to the energy transition will not suffice. When the Inflation Reduction Act was signed in 2022, the US federal government released $370 billion in funding to provide tax credits for clean-energy projects. Today, the challenge is securing the right people, resources, and physical space while overcoming supply chain constraints and financing for nonestablished players. — More than $5 billion was invested in battery energy storage systems (BESS) in 2022—almost a threefold increase from the previous year. By 2030, the global BESS market could reach between $120 billion and $150 billion, more than double its size today. Yet the fragmented nature of the market means many providers are wondering where and how to compete.
solar, wind, and electric heat pumps, more-urgent global momentum and collaborationacross
the energy value chain is needed.
As the world strives to limit temperature increases to 1.5°C, in line with the Paris Agreement, investment in a broad and balanced portfolio of low-carbon solutions is one of the most critical levers for accelerating the transition. According to McKinsey’s Global Energy Perspective 2023, total annual investments in the energy sector overall are projected to grow by 2 to 4 percent per annum, roughly in line with global GDP growth, to reach between $2.0 trillion and $3.2 trillion by 2040. 1 Furthermore, decarbonization technologies demonstrate the highest levels of investment growth at 6 to 11 percent per annum, driven predominantly by the strong uptake of electric-vehicle charging infrastructure and carbon capture, utilization, and storage.
— Nuclear power is a proven
technology that can be called upon to play a bigger role in decarbonization. As rapidly as renewables have scaled up in recent years, it’s unclear whether wind and solar—along with other emerging solutions, such as carbon capture, long-duration energy storage, and
1 “Global Energy Perspective 2023,” McKinsey, October 18, 2023.
Accelerating the journey to net zero
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