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Driven by the passage of the Infrastructure Investment and Jobs Act and the Inflation Reduction Act (IRA), the clean energy transition saw a record-shattering year in 2023, according to the Business Council for Sustainable Energy (BCSE) and BloombergNEF in the Sustainable Energy in America Factbook, released Wednesday. The report focuses on clean energy technologies, including renewables, electric vehicles, power grid investments, energy efficiency, and other sectors, and details the more than $303.3 billion in financing deployed in the U.S. last year on clean energy investments.
Top Findings
Among the significant findings of the report are:
Manufacturing Soared – In response to the IRA, the number of manufacturing facilities planned rose to 104 as of December 2023, which represents $123 billion in announced investments, dominated primarily by battery and solar facilities (34 planned in each sector).
New Sectors Interested in Carbon Capture and Storage – The IRA provided the most generous incentives in the world to capture carbon dioxide, and the U.S. is the global leader in carbon capture and storage (CCS), with 23 million metric tons per annum (MTPA) of operational capacity. Natural gas processing facilities represented the overwhelming majority of carbon capture currently installed in the U.S., but a revival of the 45Q tax credit led to an increase in facilities planning CCS.
Supply and Demand for Renewables and Biofuels Grew – U.S. renewable natural gas (RNG) production capacity grew by 13 percent year-over-year from 2022 to 2023, driven by tax credits included in the IRA that can offset the cost of newly built RNG facilities by 6-30 percent of eligible costs. As of 2023, 17 natural gas utility companies have regulatory approval to sell RNG to customers using a special tariff mechanism. RNG also saw more adoption in transport, reaching 55 percent of total natural gas consumed in vehicles in 2023, the first time it has surpassed conventional natural gas.
IRA incentives also drove increased production of sustainable aviation fuel, another name for renewable jet fuel. Demand increased among some airlines’ corporate customers, particularly those looking to reduce emissions associated with aircraft combustion. Renewable jet fuel supply rose 81.2 percent year-over-year. Renewable diesel saw a 53 percent increase from 2022 to 2023.
Energy Efficiency Spending Stabilized – Investments in energy efficiency experienced a steep decline from 2019 to 2020 due to the pandemic, but spending stabilized in 2021, rising 1 percent year-over-year from 2020 to 2021 to reach $7.7billion, according to data provided by the American Council for an Energy-Efficient Economy (ACEEE). Spending on electricity efficiency improvements was flat in 2021 while spending on improvements in the delivery of natural gas grew from $1.5 billion to $1.7 billion. The total impact of all ratepayer-funded electric energy efficiency programs in place in 2021 resulted in savings of about 290 million MWh or approximately 7.63 percent of 2021 electricity consumption, according to ACEEE.
U.S. Emissions Fell, Ending Post-Covid Rebound – In 2023, U.S. carbon dioxide emissions dropped 1.8 percent lower than in 2022, with emissions falling in every sector except transport. Last year was the first year since 2020 that U.S. emissions fell. Progress on emissions reductions was led by the power sector, where annual emissions fell
-95MMtCO2e, or an 83 percent net drop.
U.S. Energy Production Rose to Record Levels – In 2023, the U.S. economy grew by 2.4 percent, and primary energy consumption slowed down by 1.4 percent versus 2022. Taken together, the U.S. “energy productivity” (the ratio of U.S. GDP to total U.S. consumption) increased by 3.8 percent year-over-year. This resulted in the highest economic output achieved per unit of energy consumed: on average, $240 billion of GDP was generated per quadrillion British thermal units (BTUs) of energy consumed. With the pandemic firmly past, U.S. primary energy consumption dipped, returning to the declining energy consumption trajectory since the peak of 2007. Energy consumption in 2023 was 5.8 percent lower than the 2007 peak.
U.S. Liquid Natural Gas Demand Reaches Record – Demand for liquid natural gas (LNG) rose 4.3 percent in 2023 versus the prior year. A warmer-than-normal winter in early 2023 meant lower consumption for heating, which in turn led to higher levels of gas reserves in underground storage. The resulting price decline improved gas power plant economics when compared to coal, which also retreated from the market as plants retired, resulting in more gas being burnt to produce power in 2023. About 20 percent of U.S. gas demand is for exports, whether through pipelines to neighboring countries or shipped as LNG. LNG feed gas demand from exports was 31 percent higher in 2023 versus 2022.
Electric Vehicle Sales Surged – Sales of electric vehicles (EVs) in the U.S. surged nearly 50 percent to 1.46 million. Sales increases were driven largely by more models being released and price cuts on Tesla vehicles.
Conclusion
We’ve chosen to highlight just a few of the high-level findings from the Factbook, but it is chock full of information on the trends that shaped a year of substantial progress on sustainable energy in America. It’s worth a deep dive for anyone interested in the energy efficiency, renewables, natural gas, or renewables sector.
Download the Factbook here and watch the video of its release here.