The Sustainable Energy in America Factbook serves as a key reference for the state of renewables in the United States. To mark the release of the 12th edition, Gil Jenkins and Hilary Langer talked to the people behind the annual report: Lisa Jacobson, President of the Business Council for Sustainable Energy and Tom Rowlands-Rees, Head of Research for North America at BloombergNEF. Despite significant headwinds in 2023, including high interest rates and supply chain challenges, the factbook is full of record-shattering figures that reveal momentum toward a more sustainable energy future. Lisa and Tom discuss the importance of stable federal policies, the optimism they find in reduced emissions, and how America will need to accelerate sustainable energy development to meet carbon reduction targets.
The Sustainable Energy in America Factbook serves as a key reference for the state of renewables in the United States. To mark the release of the 12th edition, Gil Jenkins and Hilary Langer talked to the people behind the annual report: Lisa Jacobson, President of the Business Council for Sustainable Energy and Tom Rowlands-Rees, Head of Research for North America at BloombergNEF. Despite significant headwinds in 2023, including high interest rates and supply chain challenges, the factbook is full of record-shattering figures that reveal momentum toward a more sustainable energy future. Lisa and Tom discuss the importance of stable federal policies, the optimism they find in reduced emissions, and how America will need to accelerate sustainable energy development to meet carbon reduction targets.
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Episode recorded February 26, 2024
Chad Reed: I'm Chad Reed.
Hillary Langer: I'm Hillary Langer.
Gil Jenkins: I'm Gil Jenkins.
Chad: This is Climate Positive.
Tom: If you waved a magic wand and just eliminated all of the power sector emissions, perfect wind, and solar and storage, a little bit of CCF, everything is perfectly zero carbon and everything else stayed the same, the US would miss its 2030 targets. There has to be transport and industrial emissions progress and industry is very, very diverse.
Hilary: 2023 was a record shattering year for clean energy in America. Over the last 12 years, one of the key resources for tracking and understanding trends in renewables has been the Sustainable Energy in America Factbook. In this episode, Gil Jenkins and I spoke with the people behind the Factbook: Tom Rowlands-Rees, BloombergNEF’s Head of Research for North America and Lisa Jacobson, President of the Business Council for Sustainable Energy. Tom and Lisa share their insights on the biggest surprises from last year, the impact of long-term federal policies, and what they expect for 2024.
Hilary: Lisa and Tom, welcome to Climate Positive. Thanks so much for joining us today.
Lisa: It's a pleasure to be here. Thanks for having me and Tom.
Tom: Thank you for having me as well. I'm really glad I've been invited to do this.
Hilary: Great. Congratulations again on the release of your latest Factbook. This is the 12th annual edition of Sustainable Energy in America Factbook. It's remarkable to us how ingrained this has become in the conversation about renewables. Can you talk a bit about what goes into bringing this report to life every year?
Lisa: How about I start with just giving you a little background on how the Factbook was developed initially? I think in a lot of ways it's still just the same primary purpose. We were looking for factual information to help pull together what we knew was a transformational change in the US energy system and marketplace. When we started this way back when we did not have really a central resource that would track, things like renewable energy, energy efficiency, burgeoning areas like sustainable transportation, and we had resources that were out there that were largely one sector or another.
Sometimes they weren't even looking at things which now are quite large, but then were really nascent. We needed a resource that could adapt with the time that was based on facts and that would look at US energy holistically and now what we're seeing, it's really a chronicle for the energy transition.
Tom: As someone from BNEF, I think more about the process of what goes into creating it, and I've been at BNEF for 14 years, so I was there when we first did this Factbook. I remember at the time how it felt is that we had this challenge put in front of us. We had lots of different bits of data, different insights in all sorts of different reports. We have teams that look at wind, teams that look at solar.
Something we've never really done before is just let's put it all together in one place and not necessarily the forecast or things like that, which are maybe more speculative. Let's focus on the facts. Let's put all the facts together in one place. It was a really useful, in a way, stock-taking exercise for us to do that, the first time we did it. Then having it come back next year and the year after, it's then seeing that picture evolve is really valuable.
Typically what we do is have a different analyst work on it internally at BNEF every year. This year it was an analyst called [unintelligible 00:02:44]. She did a great job, but is a different person who plays the role of going to all the different teams and pulling together all the different strands to bring into one place. I think it's a great learning exercise. You get a 60,000-foot view on the energy transition in the US that actually we spend so much of our time focusing in our own little silos. This is a really refreshing change from that. It's a great learning opportunity for everyone who gets to work on it.
Gil: Lisa and Tom, I've been a powered user or a loyal consumer of the report for, I'm thinking like eight or nine years. It's another really great report. You alluded to this, and one of the things that I think is so great, you get that 60,000-view, and what's unique about it in the marketplace is it's really a broad audience. You talk about it for being deep energy professionals, policymakers, and it's approachable for students as well, and I think that's unique to a lot of the industry data we all consume.
I want to ask you, thinking about this year's report, but what's the biggest takeaway if you just had to choose one before we get into the specific sectors and the results? What's the biggest takeaway that jumped out to each of you?
Lisa: To me, it was the kind of armor that the clean energy transition had to pretty significant headwinds in terms of things like high interest rates or supply chain disruptions.
Gil: Tom?
Tom: I think for me, it kind of encapsulated by what we found on emissions, even though this is not the only example of this, but emissions went down the first time in the pandemic. Real progress that's meaningful and important and definitely the glass is half full, but also seeing the gap between how quickly emissions are coming down and how quickly they need to come down.
It was just that kind of sense of, we're really getting moving, but we need to do more. That was the thing that I took away. I know that so many reports around the energy transition say that and have said that for years, it's like the truism. I think that it really is true of this report, particularly maybe the optimistic part of it. We've always needed to do more, but I would actually say there's enough progress to say there's something that could be built on here.
Hilary: Thanks, Tom. I think that that's a beauty of a report like this where, to Lisa's point, there's so much in the news about the headwinds of the high interest rates and the supply chain challenges. Despite that, the report comes out and it is just the facts. We can see that despite challenges in the wind industry, solar more than compensated for that and actually set new records. I'm curious to what extent you think federal policies contributed to the overall increase in deployment of renewables.
Lisa: Well, I can start. We have a chart in the Factbook that looks at renewable build, the entire sector, say, over the last 10 years. Obviously, we have data that goes back longer than that. You can see very clearly when there is stable policy support at the federal level, and this is predominantly tax policy, the sectors grow. There was a period of time about 10 years ago when solar had what was then a historic five-year extension of the tax credit that they used.
At the same time, the wind industry was utilizing a tax credit that was still very much on and off, even on an annual basis, and then retroactively reinstated. It was a bumpy road and you can see that clearly in the data. There was at that period of time up and down or stagnation in the wind sector, but there was a path forward moving up for solar consistently over that five years.
I think having the 10-year extension of the tax credits for the renewable energy sector, though they will change and modernize in the next couple of years, is a tremendous wind under the sails for the renewable energy sector. Obviously, there's tax credits for many other policies too that complement the integration of renewable energy into the grid. There's a lot there to discuss. I mean, big picture, strong policy support definitely helped the renewable energy industry, and it's been helping other sectors.
Hilary: Agreed. I loved that chart in there. We'll link to it in the show notes. Anything you want to add, Tom?
Tom: I agree with everything Lisa's saying. I think the other thing to emphasize is that we talk about headwinds and tailwinds. You can create a set of assumptions and conditions that would say that wind and solar are the cheapest forms of energy in the US, and in those circumstances, you'd say well, why would you even need tax credits? The point is that these are long-term investments that are being made, and they're subject to a lot of short-term fluctuations in market conditions, those markets as a whole. Even if the tax credits at times seem on paper to be less materially important than other times, they create that stability.
In the last couple of years, we had all of these supply chain disruptions. Would that mean the people who actually work, the boots on the ground that are involved in the wind industry, do we all want them to quit their jobs and go and find another job somewhere else? Then when those supply chains clear up, suddenly there's no one skilled enough to install wind, so it provides that stability.
The reason I say this is because often there's this criticism of, well, if renewables are so great, why do they need tax credits? It's because of that stability. It's necessary for an industry to scale, and this is an industry that needs to scale.
Hilary: Great. Thinking about some of those incentives that are in place in terms of the storage market in the US. the US is now the second largest energy storage market in the world with continuing expansion, I believe that there are 34 battery plants that are coming online across the country. To what do you attribute this growth?
Gil: Standalone energy storage tax credit, Lisa, the manufacturing credit, is it that, falling cost?
Lisa: I would love to hear Tom's response. I can do it more as a general review of what I hear from my members in the industry. As you know, there was a 62% rise year-on-year in battery storage. That is just a really astonishing amount of activity, nearly 19.6 gigawatts. This is really big, but this has not been only happening in the last year. We've been building over the last seven or eight years to have growth.
Again, with the enactment of the Inflation Reduction Act and finally getting a standalone energy storage credit, we just have a huge press forward in the marketplace to signal the value of making that kind of an economic investment. Also, we know that in terms of integrating renewable energy into the grid and the fact that energy storage has had the ability to pair with solar through the investment tax credit over the last several years, many projects are envisioning storage as part of their renewable energy deployment. There's a lot of market appetite here. I think the Inflation Reduction Act certainly helped, but a 62% increase year-on-year is really strong.
Tom: I agree with everything Lisa said. I think the thing I would really emphasize is just leaving subsidies to the side and just think about power market operation. Storage supports renewables, but it particularly supports solar. That is the dream matchup. For there to be an opportunity for storage to scale in any given market beyond say things like ancillary services, there has to be a certain volume of solar in the market, a certain penetration.
If you look at where the storage is being built in the US, it's mostly California and Texas, and those are the markets where solar has reached that critical penetration. I think that's also a factor here is that solar is creating also the right market conditions and where you get solar storage surely follows. That's the pattern that you see.
Lisa: Good point.
Gil: Tom, I want to ask a little bit about broader Bloomberg NEF because we're a loyal subscriber to the great BNEF product as well, and you have led the research team in North America since March 2020. Interesting day to start as the leader. Tell me about how BNEF has evolved. You've been there 14 years, but maybe in the last three years.
Obviously this theme of energy transition, I'm seeing that in some of the reports, the broadening of that definition, the sectors, but tell me more about your great team of research analysts, and how has [unintelligible 00:12:54] head the last three years, four years now, you're thinking about BNEF's growth?
Tom: Oh, there's a few things. If I give you a very concise view of how things have evolved at BNEF, when I joined in 2014, there was a wind team, there was a solar team, there was a biofuels team, and a lot of the analysis-- there were other teams. I don't remember all the teams that happened because there were some that came and went. I initially joined as an intern in the CCF team. I think there was some conclusion that maybe it was 10, 15 years too soon to have a CCF team, so that team was scraped, and 12 years later, I think we restarted the CCF team.
It was a lot more I would say, thinking about the supply chains, these products, and the question is what are the subsidies available for them because it was all a nascent market, and that was really the question, and then what are the financing structures? Over time, the viewpoint has become so much more holistic. The team that I joined full-time was looking at things like smart grids and integration, and we were the first team to start thinking about electric vehicles.
That now is broken out as a team on its own. Lastly, we've looked at more sectors in industrial decarbonization as well, and we have teams looking at things dedicated to things like sustainable finance and looking at green bonds. I think there are a couple of really key in particular recent developments that really has reshaped some of our thinking and maybe really given everything I just spoke about an extra impetus.
I think a big one was, in the couple of years before the pandemic, there was this wave of countries around the world declaring net-zero targets. That I think materially changed both how we think about the energy transition, but also how our clients think about the energy transition because I think up till that point, everything that we were looking at and thinking about related to reducing carbon emissions, so if we're thinking about wind and solar, you add a wind turbine to the grid, then yes, there's an associated carbon emissions reduction over the lifetime of that wind turbine.
Whereas once there's net zero targets in place, we are not thinking about reducing emissions. We're thinking about eliminating emissions completely, which you have to have a completely different mindset. It impacts, let's say, the role of gas, how you think about gas. Gas displaces coal, that reduces emission. If in the long run, you're saying you're going to reduce emissions completely, then you still have the same problem of, a gigawatt of coal if replaced by a gigawatt of gas, you still got a gigawatts to replace, whereas I think before that was maybe-- we wouldn't be thinking in those terms.
To be clear, I don't think that a gigawatt of gas replacing a gigawatt coal is a bad thing. I'm just saying that it means we just had to be a lot more ambitious in our thinking. I think that gave real empathy to us thinking about some of these sectors that were maybe less seriously considered at the time. Things like carbon dioxide-- sorry, carbon capture and storage, hydrogen, even advanced nuclear, some of these things that are currently not commercial, but get you across the line.
I think that you've then seen that reflected in policies both in countries like the EU, you can see that reflecting on what China is doing. Although the US doesn't have a net zero target that it's committed to, I think the Inflation Reduction Act reflects that as well. The fact that all of these, what I would call-- I would no longer call them next stage because they're now starting to scale, thanks to this legislation. I think that that was a worldwide change in perspective that happened maybe 2018, 2019, is that this idea of net zero started become mainstream.
I know that various activists have called net zero, blah, blah, blah. I would say that in my professional life, I have seen a shift in mind state that has occurred because of that reframing of the challenge.
Hilary: Excellent. Thanks, Tom. Then, Lisa, I'm curious, from your position as the president of the Business Council for Sustainable Energy. Can you tell us a little bit about what brings your members together and then what they hope to get out of collaborating?
Lisa: I'll just build on what Tom said. I think it's very much about decarbonization and achieving the net-zero objectives they've set for themselves or their customers are setting. We as a coalition started in 1992, right at the time of the Rio Earth Summit, where a lot of very prominent global environmental treaties were created, including the Framework Convention on Climate Change, which is the one that we work on most as a coalition.
What brought our members together then were companies and trade associations, predominantly in three sectors, industries related to renewable energy, to natural gas, and to supply-side and demand-side energy efficiency. That package, when you think back over this 30-year period, really has been the decarbonization recipe for US greenhouse gas emissions reductions.
As Tom said, we're no longer thinking about incremental shifts in emissions reductions. We're thinking about decarbonization on a much more significant scale to follow what the scientific community is saying we need to do to address climate change. We also know that that portfolio of technologies at its core can reduce costs for families and businesses so that our economy can thrive and be more competitive.
We know that the technologies in that portfolio are demanded worldwide and the US has a leadership in current technology, but also in the innovative technologies that we are going to need for a net-zero world. There's a lot that brings us together in terms of low and zero-emissions technologies.
I think the overlay on all of that now that's a little different is that many of our industries are very focused on the digitalization and the systems approach of our energy economy, and they also are increasingly involved in multiple industries. Companies that might have only been involved in one set of renewable technologies now is looking at battery storage. Maybe they're thinking of partnering in new ways.
Again, I look at things like virtual power plants or microgrids. There's a lot of activity here because we know when we bring a lot of different technologies together, and we don't just think about it only as just the power sector, but we think maybe about power and transport together, maybe we bring in industrial customers in that mini economy. There's so much opportunity for efficiency and emissions reductions.
I think that's really the wave. It's the systems approach with integrated technologies, bringing in new technologies that we are working on now, like Tom mentioned, like hydrogen or carbon capture, utilization, and storage, matching those with what we know performs well and is affordable today, like energy efficiency or renewable energy or natural gas, then we're going to have a recipe for success as we move down the pathway for net zero.
Hilary: In this last report, we were getting glimpses of that success already and continuing the trend of greater efficiency and gains from some of the systems thinking. One thing that struck us is how we had an increase in the energy productivity of the US economy while we also experienced a simultaneous decline in emissions. Can you expand on that a bit?
Lisa: Going back to the emissions discussion, our emissions goals both as a country, but again going back to this net zero 2050 objective, we are making progress, but we are not going fast enough and we need to do much more. What we can tell from the last 20 years is, again, efficiency, low and zero carbon generation together-- for the power sector, for example, we're down 40% off of 2005 levels when we ended the year. Economy-wide, we're at about 16%.
This is progress made because of a lot of investment and public-private partnership. Now we're ready to grow at a much faster pace and we have some other challenges that hopefully we'll get a chance to discuss. The long-term trend on energy productivity is how are emissions or energy use tracks or economic growth shows you clearly, and this is not just in the United States, this is in all major industrialized countries, a strong multi-decade trend towards using less energy to grow our economies.
There really is nobody who can say really factually that the only way that we can grow is to use more energy because the data just doesn't support it. Now we were curious in this whole COVID occurrence and then rebound what was really happening to the structural trend that we saw on energy productivity. We were happy to see both the emissions go down this year and our energy productivity rise because we want to see our energy productivity rise, we want to see our emissions fall.
That means that our economy's growing, but we are not increasing our emissions, and we are not having to match every percentage of GDP growth with energy consumption increases. This is all very good for our economic competitiveness and good for families and businesses. Was this a structural change? We thought the answer was yes before COVID, and we were concerned when we saw the volatile trends during the last several years, but as BNEF has said if there was a COVID impact, that impact is now ended.
Gil: Climate Positive is produced by HASI, a leading climate investment firm that actively partners with clients to deploy real assets that facilitate the energy transition. To learn more please visit HASI.com
Gil: Coming back to the policy, it's not all happy talk. You work on federal policy on the Hill all the time, Lisa. We have these tailwinds from the falling costs from the corporate demand, utility demand for clean generation, the savings that have always been there from energy efficiency. Let's talk about the new policies we need to fully maximize the benefits of the IRA and the IIJA, the bipartisan infrastructure law.
I think I know the answer here. I have an opinion and it has to do with permitting reform on some of these projects, but I want to know how are you thinking about this from what the data tells you because to this point emissions drop 1.9%, 16% economy-wide reduction, but our 2030 goals are, what, close to 50% reductions economy-wide? Power sector is really going to have to drive that deep decarbonization the rest seven years while the other harder debate sectors come along. Policy, what is next to continue this trajectory beyond preserving and extending the tax credits at their full value after 10 years?
Lisa: I can share a little bit and then let Tom speak, but first and foremost, we got to keep the stable policy frameworks that we enacted. These were historic. They were 10 years, they finally are matching the investment decision-making. They don't match the life of the project, but they get us far down the road in terms of making a rate of return and project work in many, many industries. Not just the ones that had credits before, but many new areas that didn't have them prior. That's really important.
Second, we got to get them implemented well and in an approach that is investment-ready and investment-attractive. A lot of areas we're providing that private sector perspective to government agencies. Just this week as we're recording this, later today I'm going to file our comments on our clean hydrogen production tax credit response to the proposal that's out there from Treasury and the IRS. There are a lot of issues in there that can make this much more potent and powerful, and we're hoping that we get that final guidance in the next several months. It's maintaining what we have and also making sure it's implemented efficiently.
Third, it's moving on to some new challenges. Now we have the opportunity to consider investments in these areas because of their proportional economic attractiveness, but then we still have a lot of local, state, and federal issues that need to be resolved on the regulatory front, whether that be things like market structures at the state level that recognize the value of clean energy resources and services on the grid, or it's things like permitting and citing rules, and those are not just at the federal level, but hopefully, we can get some of that federal policy done. A lot of them are state and local, so there's a lot that needs to be done.
Gil: Yes. It's at the PUCs, it's everywhere, everything all at once. Quickly you mentioned hydrogen. It is timely, everyone's polishing their comments on I think probably the most hotly contested tax credit in terms of the divergent views. I won't ask you to get into all that, but I do want to ask both of you, your report certainly does point to that growing interest in clean hydrogen in the US and tends to grow further with the clarity on guidance. Are you both bullish on that as a sector?
Tom, I actually know that BNEF has been made less so based on the research, but correct me if I'm wrong, I'm just interested in your broad strokes on hydrogen in the climate solutions toolkit and how you're thinking about that.
Tom: I would say that hydrogen has a role to play. Whichever way you look at it, that probably involves significantly more hydrogen being used than it's currently used for today in its current applications.
One of the things I was going to just pick up on what you said before about how the power sector needs to decarbonize, do the heavy lifting to get to the 2030 target, one of the points I make, and I've got a nice chart that I use to make this point, unfortunately, I can't show it right now, but actually, if you waved a magic wand and just eliminated all of the power sector emissions, perfect wind, and solar and storage, a little bit of CCF, everything is perfectly zero carbon and everything else stayed the same, the US would miss its 2030 targets. There has to be transport and industrial emissions progress and industry is very, very diverse.
Gil: Yes, they have thermal load needs and so forth, they can't always--
Tom: Exactly. Also, in some cases, you need chemical processes, you need something, and that something can be hydrogen. Although I can't necessarily prescribe exactly where hydrogen is definitely going to win, is definitely going to get beaten by something else, although I'm sure there are BNEF analysts that can, what I would say is that those are all applications that hydrogen isn't used today. Anyone where hydrogen fits in and fulfill the purpose is an opportunity on hydrogen.
The other thing that I would just add to this, and this is just something one of our industry analysts pointed out to me is, in a lot of our thinking and certainly in our new energy outlook forecast last year, we looked at, what does the ™ as this bounded system? How do you decarbonize all of that? Certainly, in that analysis, there was applications for hydrogen, but it wasn't spectacularly different. The industry analyst made this point to me that potentially with the IRA tax credits, the US could be making the cheapest green hydrogen in the world, and therefore, could be making the cheapest green steel in the world.
If, say, in our future scenario where everyone's trying to decarbonize and there's a market for exported green steel that has the right credentials and the right policies backing that up, and the US is very well positioned, in that scenario, hydrogen has a much bigger role to play in the US. If that market doesn't exist for some reason, then it doesn't have as big a role to play.
It's very difficult to predict without getting into a scenario thinking exactly how much the market for hydrogen will be. I would say that it's important to have it though as an option. How big it will actually go is really difficult to predict, but it will definitely be more hydrogen consumed than is today. That is my very non-quantitative take on that.
Gil: Lisa, how are you and your members thinking about the hydrogen opportunity and the hydrogen challenge as it relates to the important guidance from Treasury to be finalized soon?
Lisa: I think there's a lot of market demand for all the reasons Tom said. I also think it's interesting to look at one of the slides that we have which break down the different needs of industrial producers, what their fuel needs are, and which sectors they are. It gives you a little roadmap to the potential of where hydrogen can play a role, where maybe other solutions can play a role. It's really meant to just be some baseline data on the industrial sector in the US.
I would also point you in the Factbook to the map of the different hydrogen hubs. These are very significant opportunities to overcome a number of barriers to a hydrogen economy both in these hub jurisdictions, but also in the US and North America as a whole. They're all very different in terms of their approaches. I think that gives me a lot of hope.
Now, the specific guidance as it relates to the hydrogen production tax credit is going to be very helpful because that was envisioned in many cases as a building block to aspects of putting those hubs together. I also feel that there's such demand and they're such interest in hydrogen that the market will absorb whatever we see coming in this guidance and try to continue to propel all those hubs.
I think there still is, today, the day that we're submitting comments, some real concern and a concern that we could miss that opportunity. We're so well poised for it right now. Depending on how this guidance finalizes itself, we don't want to lose this really strong competitive position that we have right now to other countries in different parts of the world. We got to get this right, the details matter, and a lot of it deals with flexibility.
Gil: I want to jump around to a few more sectors. Tom, you mentioned BNEF's long track record of tracking electric vehicle uptake across light duty, medium heavy duty. As a longtime backer and proponent of electric vehicles, fan of the actual experience, I was thrilled to see despite many tough headlines for that sector, vehicle sales surged 50% to nearly 1.46 million vehicles in the US.
We did get the incentive restored with the IRA. There's been some price cuts more manufacturers finally coming out with EVs to fit various Americans' desires. Tell me either in this report, and maybe looking ahead from how you're thinking about, where are we on US EV growth.
Tom: Firstly, I was also really heartened to see the market for EVs in the US grow. I still haven't quite reconciled where these negative headlines are coming from. As one of my colleagues said to me, "What other major industries grew 50% last year and then had all these headlines about how the industry was stalling?" Maybe they know something that we don't. Maybe when we do the Factbook next year, "Oh, that's what they were referring to."
Gil: Tom, I have some theories and I don't think it's people that travel in facts on the reasons for those headlines. [laughter]
Tom: Fair enough. I think in absolute volume of sales, the US is further behind Europe and China. Because these things grow exponentially, I think it's better not think of it as, "Oh, they have X amount of sales ahead." It's more like how many years ahead were they in terms of when the ball really started to roll. Ultimately in terms of sales, that doesn't really matter too much. The fact is the ball is rolling in the US and it's rolling with momentum. I think the race is not to be the biggest market for EVs. It's to have the biggest industry for EVs, to be manufacturing them.
In that sense, we all know that the industry in China is more established at this point in time than elsewhere in the world. Even there, it's still a market that is still growing and establishing itself, so there's still plenty to play for, particularly when we consider things like the foreign entity of concern rules that the federal government has put into place. There's a certain amount of, you could say, defensive policymaking that is in part carving an opportunity for the US and its allies you could say to develop EV supply chains.
I still think that there is plenty to play for there. It's certainly not all over, and China is the winner in the world of electric vehicles. If there ever will be a winner-- I mean, there is not a winner in the world of conventional vehicles. Those are made in Japan, South Korea, all sorts of different European countries, the US, all have substantial internal combustion engine vehicles. It is not necessary even the case that there is going to be this eventual winner, like there maybe has been for solar because there is a lot more that goes into an electric vehicle than a solar panel.
Hilary: That is a good point. Transportation has been a consistently tricky area to decarbonize. Does the growth in EVs make you more optimistic about what we can see across the transportation sector at large?
Tom: I can go first, but I would be interested to get Lisa's take. Yes is my initial response. Electric vehicles do not solve all the problems. I know that there are a number of advocates out there who say that just cars generally are the problem and that we should be moving to public transport. Probably when you run the numbers, their arguments make a lot of sense. The fact of the matter is that we live in a world where people drive cars and their lives are built around those cars. We do not really have the infrastructure in place to make that transition that quickly.
Electric vehicles are solving the problem right now. A couple of points when we look at our new energy outlook. Even in our economic transition scenario, which is maybe the more conservative scenario where we model the future and we think about things without too much policy support, electric vehicle sales are responsible for a decline in global oil demand after 2030. That is not really very far away that global oil demand will peak. Global oil demand has never peaked. Our entire lives every year global oil demand [unintelligible 00:36:51], it's highly dynamic. That definitely means something.
Although electric vehicles, they're not going to do everything, I think that's just in terms of our ambition, if they are the easier part of transport to decarbonize, it creates just more momentum and incentive to do the hardest stuff as well.
Hilary: Good point. Lisa, anything you'd add?
Lisa: What I've seen when we look at the change, obviously, I too was reading the same headlines, and was very happy to see this record-shattering, I think we use the word record-shattering for this figure, growth in the sales of electric vehicles in the United States. As I see the different colors in our chart expand, as well as the overall year-to-year change exponentially grow, just gives me a lot of hope because there's more models out there offered to consumers. As those models are offered, we will just see a socialization of the use of sustainable transportation overall, in addition to electric vehicles.
On a personal note, I was one of the individuals who bought an electric vehicle in 2023, so I'm glad that I contributed to the growth, but to be honest, they just perform well and so do other fuel cell vehicles. Hydrogen has opportunities. Obviously, people are looking at other forms of sustainable transportation, but you have to break people out of their shell of thinking about what is available and how they should think about transportation. Whether you're an electric vehicle enthusiast or interested in natural gas or hydrogen fuel vehicles or whatever may come in the future, this breaks you out of the mode that you can only have one kind of vehicle to use.
To me, that's very helpful. For all of these industries, some of our biggest challenges are just consumer uptake and the belief that we are practical, deployable, and affordable. I think the transportation sector as a whole has to break down that mindset. Seeing more adoption of electric vehicles, seeing more electric vehicles on the road, seeing the charging at your supermarket or on the highways is just going to continue to reinforce to consumers that this is a practical choice. This could work for me.
Hilary: Excellent. As we start to wrap up, there's so much good information in the Factbook. We could talk all day about it. What are your plans in the coming weeks and months for rolling out this year's report?
Lisa: Well, we have a lot of plans and it's really terrific to be on this podcast and have the opportunity to share this Factbook with your audience. We're going to be talking with a lot of different policymakers. We're going to be talking with other industry and environmental and community-based stakeholders. We have all this information available for free on our website, plus videos, shareables, and other opportunities to engage.
It's an open call. Anyone who would like to get information on the Factbook should reach out, please, to the Business Council for Sustainable Energy and even me personally, I'm happy to assist. Also, we're recording it in a couple of days, a webinar-based presentation, a long-form presentation from BNEF. That's going to be a really great resource for people that may not be able to have a one-on-one briefing but still want to have that real deep dive on the data.
Gil: Last question thinking about these years' findings, I want you to do a little crystal ball, which may not be the right form because I know it's the year. Let's try this. What's the headline in the 2025 Factbook report for what we did in '24 and what's one in 2034? What do we see based on the trajectory in this year's report? There's no way that you'll be caught up on this, maybe next year.
Lisa: All right, I'll just be out there. I'll say what I want our headline to be. It's record-shattering across all sectors for the energy transition. We just continue to have the strong pace of growth.
Gil: Another year of that, yes.
Lisa: It's in many different areas, that's the key. It's not just in one or two areas, it has to be widespread. Then maybe for your longer-term one, historic reductions in industrial emissions spurred by massive technology deployment.
Hilary: I'd go for that. What about you, Tom?
Tom: Firstly, I'll echo what Lisa says on records. Part of the reason I say that, and we said this at the press launch, is selling records every year at the moment is a bare minimum, A, for meeting emissions, and B, for staying competitive. I'll be really sad if it's not records galore. I hope that in the next year's Factbook, we'll have seen an acceleration in emissions reductions. I think it's going to be really tough to hit the 2025 Paris target. I was also not completely clear as to whether anyone is expecting the US to because I know Biden took the US back into the Paris Agreement, then set a new target.
I don't know if that means that the 2025 target doesn't count, but I still am keeping an eye on that. Even take the 2031, we need to see some more progress there. For the 2034 Factbook, I would expect and I would hope to see that we're not talking about records for wind and solar because those technologies over the next 10 years will have done what they needed to do in terms of their additions to the grid.
They will still be getting added, but it will be that the emissions of the power sector are so much lower than elsewhere that it's almost like that's a sideshow. At the moment, when we talk about the energy transition, I think we and all of our equivalent [unintelligible 00:42:51] we always start talking about the power grid. I hope that by then, it'll be like, "Oh yes, and remember that thing we used to talk about the power grid," and we'll be talking about industry and transport. That's what I hope for 2034.
Lisa: One thing we didn't talk about at all was buildings. There's a lot going on in the building sector from a federal, state, and local policy perspective. We touch on that in the a number of areas. It obviously is very related to our energy efficiency and energy productivity story because 40% of emissions are related to building sector.
Gil: Built environment.
Lisa: Economy-wide emissions are related to buildings. Energy efficiency is one of the opportunities to reduce those emissions. Obviously, there are other ways as well. There's one of the slides that we put in that's new, where we're talking about building code adoption, and we're talking about building performance standards. It's just a lot of activity at the local level in terms of just basic adopting new building codes, which can have a really big impact, but then this movement to focus on performance-based policies for buildings that's both for new and existing buildings.
It's really important to be looking at, again, integrated technologies, what digital technologies can offer, and making sure that any intervention we make in a building is really getting the overall benefit we want. In many cases, that's decarbonization.
Gil: Thank you for saying that and thank you for always rolling hard for energy efficiency, the first fuel. It's super important, but we have to be continuing to double down on energy efficiency always and everywhere. So, thank you for saying that.
Tom: My first role at BNEF as the energy efficiency analyst, and I will tell you it's not as easy to make a nice chart about energy efficiency. It doesn't just add all together. It's not like, "Here's all the wind turbines." Energy efficiency is so diverse and sometimes there's a lot of gray areas. I can see why it's harder to talk about, but I agree. We shouldn't forget about it just because it's harder to make a nice visualization, much as I tried in my early career at BNEF.
Gil: And it's hard to get stock photography that looks good of a really super-efficient HVAC system-
Tom: [laughs] It's so true. This is the other thing, the challenge with energy efficiency, if you're covering it, is that by definition, anything that is a successful energy efficiency innovation becomes mainstream, at which point it is no longer energy efficiency. It's almost like as an energy efficiency advocate, you lose all your best children. That's not the right word.
Gil: That's why we have Lisa always pushing the next breakthrough on energy efficiency, whatever technological solution. There's stuff coming up, right?
Lisa: Well, just at the most basic level, every investment you make on energy efficiency is going to deliver year and year on. I'm glad we spoke about it a little bit, and definitely, it's a big focus for BCSE.
Gil: We'll keep the faith. Thank you both for another great year of the Sustainable Energy in America Factbook.
Hilary: Thank you both for joining today.
Lisa: All right. Take care.
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I'm Gil Jenkins.
And this is Climate Positive.