Those who follow the energy transition seem perpetually pitched between elation and despair. For every fragment of positive news — surging Chinese EV sales; record-low prices for solar panels and batteries — there is a dollop of misery, be it a botched climate conference or still-resilient investment in oil and gas.
And yet some of the most important climate developments in 2024 have barely made the headlines. Here are three positive trends you might have missed that may play out in more visible ways during 2025.
The sun also rises. The past year has been a brutal one for the Chinese companies that dominate the solar industry. A rush to build new production lines has sent capacity well ahead of current demand, forcing down prices and driving almost every player deep into the red. The six companies that dominate the sector will lose about 15 billion yuan ($2.1 billion) this year, based on the median of analyst estimates compiled by Bloomberg.
Things look a lot better in 2025, however: Bruised by the experience of 2024, big players are cutting capital spending while small and medium-sized manufacturers are going out of business, tightening the market.
A notoriously cyclical industry appears to be nearing another turning point: Bloomberg Intelligence predicts revenues will rise 25 percent in 2025, and analysts expect the big six’s net income to hit 11 billion yuan over the full year.
Europe shifts gears. Sales of electric cars in Europe have been dismal this year, with third-quarter volumes down 9 percent from 12 months earlier. That’s led to fears that the region could follow the U.S. in watching its transition to electric vehicles stall, leaving it far behind China, where half of new car sales now come with a plug.
Don’t be so sure about that: From 2025, fleet sales in the European Union must be on average 15 percent more efficient than they were in 2021, a target that manufacturers are aiming to hit by whetting consumers’ appetites with a range of exciting new battery models.
Several new iconic designs are set to go on sale next year. There’s also a dirt-cheap city car coming on the market from Renault SA’s Dacia marque, plus a host of Chinese imports that are likely to make their way past the EU’s new tariff barriers.
BloombergNEF expects 3.2 million plug-in cars to sell in Europe in 2024, up just 2 percent from last year. There’s a good chance that accelerates dramatically in 2025, ending up north of 4 million vehicles.
Charging up the grid. You don’t need to buy any fuel to power a wind or solar farm, so it’s paradoxical that recent years have had some of the highest wholesale power prices in history. That’s because of a quirk of how electricity markets usually work: via minute-by-minute auctions where the price for everyone is set by the most costly generator that’s needed to meet grid demand. Historically, that’s always been a gas turbine.
It’s an old adage of commodities that the cure for high prices is high prices, and that’s playing out right now. Lithium-ion batteries can increasingly provide peak power at costs that undercut gas, and there has been a rash of new installations as capitalists make efforts to arbitrage the price opportunity. The Texas and California grids each have about 11 gigawatts of batteries connected, sufficient to power Hungary for 12 months. That already seems to be keeping maximum costs lower than in previous years. As batteries get cheaper still, the grid volatility that has caused such angst in recent years may subside.
Averting catastrophic climate change was always going to involve plenty of steps forward as well as steps back. Still, there are plenty of positive trends out there, once you peer past the more alarmist headlines.
However gloomy things may look right now, the transition to a cleaner global economy isn’t flagging yet.
David Fickling is a Bloomberg Opinion columnist covering climate change and energy.
