EnergyTransitionFactbookPreparedforthe14thCleanEnergyMinisterial1ItismypleasuretosharewithyoutheEnergyTransitionFactbook,whichillustratesthecriticalprogresstheworldismakingintransitioningtonet-zeroemissions–andidentifieskeytrendsinthedevelopmentanddeploymentofcleanenergy,includingwindpower,photovoltaics,electricvehicles,andtechnologiesinearlierstagesofdevelopment,suchashydrogenandsustainableaviationfuel.Therehavebeenencouragingdevelopmentssincelastyear’sfactbook.Globalcleanenergyinvestmenttopped$1.1trillionin2022.Globalelectricvehiclesalesexceeded10millionin2022forthefirsttime,andmorethanonein10carssoldtodayarefullyelectricorhybrid.TheUSbeganimplementingtheInflationReductionAct,thesinglelargestfinancialcommitmentinitshistorytoaddressclimatechange,whichhashelpedtoaccelerateinvestmentinnewcleanenergyandEVmanufacturing.ThisprogresshasalsobeenshapedbyenergysecurityconcernsarisingfromRussia’sinvasionofUkraine,sincecleanenergycanallownationstobecomemoreenergyself-sufficient,whilealsodrivingeconomicgrowthandimprovingpublichealthbyreducingairpollution.Muchworkremains,ofcourse.Wealthynationsmustdomoretosupportdevelopingnationsinexpandingaccesstoclean,affordableenergy.Insomenations,marketbarriersremainprevalent,makingitmoredifficultforbusinessesandconsumerstomovetocleanerfuels.Butmomentumisbuildingtowardafuturepoweredbycleanenergy.Thisfactbook,usingresearchfromBloombergNEFandothersources,providespublicandprivatesectorleadersthecriticalinformationtheyneedtoacceleratethetransitiontocleanenergy,alongwithallthehealthandeconomicbenefitsitwillbring.MichaelR.BloombergFounder,BloombergL.P.Founder,BloombergPhilanthropiesUNSecretary-General’sSpecialEnvoyforClimateAmbitionandSolutionsCoverletter2Introduction:Energytransitionin20223Powersector:Renewables,integration,storage,grids19Transport:Electrification,heavy-dutytransport33Industry:Decarbonizinghard-to-abatesectors,hydrogen44Finance:Assetinvestment,greenbonds,ESG533EnergytransitioninvestmentinCEMmemberssurgedtoover$1trillionin2022Betweenthem,CleanEnergyMinisterialmembers,includingtheEuropeanUnion,attracted$1trillionininvestmentforenergytransitiontechnologiesin2022–anewrecord.Thismarkeda34%jumpfromthepreviousrecordof$760billion,reachedin2021,andincludedmajorinvestmentinrenewables,powerstorageandelectricvehicles.Collectively,themembersagainaccountfor91%ofallenergytransitioninvestmentworldwide.AmongindividualCEMmembers,mainlandChinacontinuestoattractthemostinvestment,followedbytheUSandGermany.InvestmentinmainlandChinaspiked70%year-on-yearto$546billion.Investmentalsojumped11%intheUS(toreach$141billion)and9%inGermany(to$55billion).CEMmembers’annualenergytransitioninvestmentSource:BloombergNEF.Note:‘OtherEU’includesEuropeanCommissionmembersthatdonotholdindividualCEMmembershipstatus.17418319132154680100981271414204635507601,01702004006008001000120020182019202020212022Energytransitioninvestment($billion),historicIndonesiaMexicoUnitedArabEmiratesNewZealandRussiaChileOtherPortugalDenmarkFinlandPolandOtherEUNorwaySwedenAustraliaNetherlandsCanadaBrazilItalySpainIndiaSouthKoreaJapanUKFranceGermanyUSMainlandChina42442803143684421161181572894484204635507601,01702004006008001000120020182019202020212022Energytransitioninvestment($bn)HydrogenCCSEnergystorageSustainablematerialsNuclearElectrifiedheatElectrifiedtransportRenewableenergyInvestmentinelectrifiedtransportin2022jumpedmorethan54%fromtheyearprior,to$448billion.Transportandrenewableswerenearly90%of2022investment.SurginginvestmentinEVsupplychainsandgrowingpurchasesofEVsfromconsumersallowedtheelectrifiedtransportsegmentsurge.Investmentjumpedby$158billionandglobalEVsalestotaledover10million.Renewableswasthesecondlargestsectorforinvestmentin2022,attracting$442billion–20%higherthantheyearprior.Expandeddeploymentofsolarcapacityremainedthekeydriverofgrowth.Othersegmentsremaincomparativelysmallbutaregrowingswiftly.Electrifiedheat,nuclear,energystorage,sustainablematerials,CCS,andhydrogeninvestmentcontinuedtorepresentjustoveratenthoftotalinvestment,withcertainsegmentsgrowingatparticularlyrapidclips.Hydrogenattracted$370million,upfromanestimated$100millionin2021.Energystorageinvestmentjumpedbynearlyhalf,to$15billion.CEMmembers’annualenergytransitioninvestmentNinein10dollarsinvestedwenttorenewablesorelectrifiedtransportSource:BloombergNEF,Marklines.Note:CCSreferstocarboncaptureandstorage.Energytransitioninvestmentreferstomoneyspenttodeploycleantechnologiessuchascleanenergy,electricvehicles,heatpumps,hydrogenandcarboncapture.Renewableenergyreferstowind(on-andoffshore),solar(large-andsmall-scale),biofuels,biomassandwaste,marine,geothermalandsmallhydro.5Therenewableenergysectordirectlyandindirectlyemployed12.7millionpeoplein2021(thelastyearforwhichthereiscompletedata).Theenergytransition’sworldwidegrowthhasresultedinsubstantialjobcreation.Theriseinemploymenthaslargelybeenconcentratedonthesolarphotovoltaic(PV),bioenergyandhydropowersub-sectors,whichbetweenthemrepresentnearly80%ofalljobscreated.Windpowerrepresentedanother11%ofglobalrenewableemploymentin2021.Renewableenergyjobcreationhassofarbeenhighlyconcentratedinrelativelyfeweconomies.MainlandChinaaccountedfornearly40%ofglobalrenewablesemployment,followedbytheEuropeanUnionat10%.Renewableenergynowemploys12.7millionpeoplearoundtheworldSource:IRENARenewableEnergyandJobsAnnualReview2022.Notes:Bioenergyincludesliquidbiofuels,solidbiomassandbiogas.Hydropowerincludesdirectjobsonly.‘Others’includesgeothermalenergy,concentratedsolarpower,heatpumps(ground-based),municipalandindustrialwaste,andoceanenergy.Globalrenewableenergyemploymentbytechnology3.373.683.753.984.293.053.183.583.533.441.992.051.962.182.371.151.161.171.251.370.810.80.820.820.770.430246810121420172018201920202021MillionjobsOthersSolarheating/coolingWindenergyHydropowerBioenergySolarphotovoltaic6BloombergNEFhasmodeledmultiplescenariosforhowtheenergytransitionmayunfoldoverthenextthreedecades.UndertheNetZeroScenario(NZS),globalemissionsstarttofallin2024andreachnetzeroin2050,consistentwiththeParisAgreementgoaloflimitingglobalwarmingto2Cabovepre-industriallevels.Inthisscenario,thepowersectorleadstheway,asdeploymentofrenewables,nuclear,carboncaptureandstorage(CCS)andzero-carbonhydrogenallrampupby2030.Emissionsfromthetransportsectorfollowamoregradualdownwardpath,withemissionsfromcars,trucks,buses,planesandotherspeakingin2024.Emissionsfrombuildingswillhavealreadypeakedin2022undertheNZS,buttheirdeclinetozerowillbeslow.Thesetrendshighlighttheneedtoinvestintechnologiestodaytoaddressthe‘hard-to-abate’sectorstomorrow.GreenhousegasemissionsbysectorandprojectedpeakyearunderBloombergNEF’slong-termNetZeroScenarioElectricityandtransportsectoremissionsmaybereadytopeakSource:BloombergNEF.Note:Labelsshowyearofpeakemissions.‘Other’includesagriculture,forestry,fishing,theenergyindustry’sownenergyconsumption,andotherfinalenergyconsumptionthatisnotfurtherspecified.MtCO2standsformillionmetrictonsofcarbondioxide.02,0004,0006,0008,00010,00012,00014,00016,000200020102020203020402050MtCO2PowerIndustryTransportBuildingsOther202220242022201476%29%10%9%45%Jan2021LegislatedGovernmentpositionbutnotlegislatedInlegislativeprocessUnderdiscussionNotarget17%48%27%9%Jan2023Source:BloombergNEF.Note:‘Underdiscussion’stageoccurswhengovernmentshavebegunconcreteofficialdiscussionstoimplementatarget.Over90%ofCO2emissionsnowoccurincountrieswheresomeformofnet-zerotargetisatleastunderdiscussionJanuary202155%withanet-zerotargetatleastindiscussionJanuary202391%withanet-zerotargetatleastindiscussionNationalgovernments’commitmentstoreduceCO2emissionshaveincreasedsharplyinthelasttwoyears.Around91%oftheworld’spopulationnowlivesinacountrywithsomeformofcommitmenttoachievenet-zeroemissions.Onesixthoftheworld’sgreenhousegasemissionsnowtakeplaceincountrieswithlegislatednet-zerocommitmentsonthebooks.Another48%ofemissionsoccurwherenationalgovernmentshavestatedbutnotlegislatednet-zerotargets.Commitments,asmeasuredingreenhousegasemissionscovered,havenearlytripledintwoandahalfyears.InJanuary2020,34%ofglobalemissionswerefromnationseithercontemplatingorenforcingnet-zerotargets.Yetonly2%wereaccountedforbycountrieswithlegallysettargets.Thislattershareroseto6%bythestartof2021andisnow17%.8Betweenthem,themembersoftheCleanEnergyMinisterialhavemadelong-termpledgestoreachnet-zeroemissionsthatcover76%ofglobalemissions,or34,909millionmetrictonsofCO2.AlmostonefifthofCEMmembershavelegislatednet-zerotargets,while58%havestatedagovernmentalpledgeandanother24%haveatargetunderdiscussion.EmissionsfromCEMmemberscoveredbynet-zerotargetsCEMmembers’net-zeropledgesencompass76%ofglobalemissionsSource:BloombergNEFandWRICAIT.Note:Pledgesasofyear-end2022.Uses2019dataasbaselineemissions.MtCO2standsformillionmetrictonsofcarbondioxide.6,15620,3868,36734,90905,00010,00015,00020,00025,00030,00035,000MtCO2UnderdiscussionGovernmentpositionLegislated18%58%24%100%9Globalaverageelectricitytariffsrose7%from2020to2021.AstheCOVID-19receded,globalpowerproductionjumped5.6%in2021,ledbyAsia.Powergenerationspikedto27,300terawatt-hours(TWh)from25,800TWhtosetanewhighfollowingthreeyearsofstableelectricitydemand.Undersupplyconnectedtotheriseindemandledtoageneralriseinpowertariffs.TheaveragetariffpaidinCEMmemberswasnearlydoubletheglobalaverage.ThislargelyreflectedthesharpspikeinpowerpricesinEurope.Overall,tariffsjumped13%year-on-yearinCEMmembersin2021.AverageelectricitypricesbyregionTheglobalenergycrisishaselevatedpowerpricesSource:BloombergNEF.Note:Considersaverageresidential,commercial,industrialandwholesaleelectricityrates.‘CEMmembers’considersratesfromallCEMstatuscountriesandEuropeanCommissionmembers.60801001201401601802002202018201920202021$permegawatt-hourEuropeCEMmembersLatinAmericaandCaribbeanAfricaGlobalAmericasAsia-PacificMiddleEast10Today,eitherwindorutility-scalesolaristhecheapestsourceofnewbulkelectricitygenerationineconomiesaccountingfor82%ofpowersupplyand85%ofglobalGDP.IndonesiaandSouthKoreaaretheonlyG-20economieswhererenewablesarenotthecheapestformofgeneration.RenewableprojectsinmainlandChinadeliverthelowestcostsseenintheworld.Themarketishometothecheapestfixed-axissolar($39/MWh),onshorewind($34/MWh)andoffshorewind($66/MWh),thankstoitsstrongmanufacturingcapabilities.Solarandwindareexpectedtobecomethecheapesttechnologiesby2030.WeexpectsolarandwindtobecomethecheapestpowertechnologiesinthevastmajorityofG-20economiesnolaterthan2030thankstofallingcapexandimprovingefficiencyofsolarandwind.Cheapestsourceofnewbulkgeneration($/megawatt-hour,levelized)bymarket,1H2023Renewablesarethecheapestpowersourcewheretwo-thirdsoftheworldlivesSource:BloombergNEF.Note:Themapshowsthetechnologywiththelowestlevelizedcostofelectricity(orauctionbidforrecentdelivery)fornew-buildplantsineachmarketwhereBNEFhasdata.LCOEsexcludesubsidies,taxcreditsandgridconnectioncosts,andincludeacarbonpricewhereapplicable.WedonotestimateLCOEsforRussiaorSaudiArabia.WeassumethatCCGTsarethecheapestnewtechnologytobuildinRussiagivenlowfuelcostsandrelativeinexperiencebuildingrenewables.OnshorewindOffshorewindFixedaxisPVTrackingPVGas–CCGTCoal11Globalcoal-firedpowergenerationsurged750terawatt-hoursin2021fromtheyearpriorastheglobaleconomybegantorecoverfromtheeffectsoftheCovid-19pandemic.Thereboundcameaftertwoyearsofdecline,inpartduetoweakeroverallelectricitydemand.InmainlandChina,thenetchangeincoal-firedgenerationwasup395terrawatt-hours(TWh).Butitwashardlyalone,asdemandforcoal-firedpoweralsoincreasedinIndia(up153TWh)andtheUS(up21.4TWh).Windandsolarpostedtheirbiggesteversingle-yeargrowthincontributiontonewgeneration.Outputfromthetwotechnologiesjumped404TWhyear-on-year.Windcontributedanadditional261TWhtoreach1,864TWh,or6.5%ofallgenerationglobally.Solar’scontributionroseby143TWh,crossingthe1,000TWhthresholdforthefirsttimetoreach3.7%ofglobalgeneration.Globalyear-on-yeargenerationchangebytechnologyCoal-firedpowergenerationhasbouncedbackasCovid-19hasrecededSource:BloombergNEFPowerTransitionTrendsreport585409109-237271316-256-27375029711613910410189226-11996326198205201158-12491105118137177270170261566178118137126148143-500-300-1001003005007009001,1001,3001,5002012201320142015201620172018201920202021TWhSolarWindOthernon-fossilOther-fossilOilanddieselNuclearNaturalgasMarineHydroGeothermalCoalBiomassandwaste12Globalfossilfuelpowergenerationvs.globalemissionsRecorddemandandfossil-fuelburnpropelledpower-sectorCO2emissionstoanall-timehighSource:BloombergNEFPowerTransitionTrendsreportAstheglobaleconomyrecoveredfromthepandemicin2021,CO2emissionsfromthepowersectorjumped7%fromtheyearpriortoreachanewall-timehighof13,601millionmetrictonsofcarbondioxideequivalent(MtCO2e).Thetotalfarsurpassedthepreviouspre-pandemichighof13,305MtCO2e,setin2018,andcameafterdeclinesin2019and2020.Thejumpwasduetorecordvolumesofgenerationfromcoalandnaturalgasin2021.Coal-firedelectricitygenerationtotaled9,622terawatt-hours(TWh),farexceedingtheprevioushighof9,401TWhsetin2018.Naturalgascombustionalsoreachedarecordof6,2423TWhin2021,surpassingthepreviouspeakof6,131TWhsetin2019.Evenoilcombustionforelectricitygenerationincreasedto646TWhin2021,althoughitremainsfarbelowtherecentpeakof924TWhin2012.11,50012,00012,50013,00013,50014,00002,0004,0006,0008,00010,00012,00014,00016,00018,00020122014201620182020MtCO2eTWhOilanddieselNaturalgasCoalTotalemissions13Asenergyconcernscontinuetogrow,particularlyinwesternEurope,interestinfindingwaystogenerateheatusingelectricityhassurged.BNEFtracked$53billioninvestedinelectrifiedheatin2021,up10.5%fromtheyearprior.AcrossEurope,theUSandelsewhere,residentialheatpumpsaleshit6.4millionunits.Thiswasalmost50%higherthanin2017.Heatpumpuptakeusuallyleadstoreducedenergyconsumptionasaheatpumpproducestwotothreetimesmoreheatthantraditionalelectricheatersusingthesameamountofelectricity.Inverycoldcountries,suchasCanada,themoreexpensiveground-sourceheatpumpsworkbetterbuthaveyettogainwidepopularity.TheInternationalEnergyAgency(IEA)projectsinoneofitsscenariosthat55%ofallheatingcouldcomefromheatpumpsin2050.Top10countriesbyheatpumpshareoftotalheatingEnergysecurityconcernsarespeedingresidentialheatpumpadoptionSource:BloombergNEF,IEA.Note:Shareiscalculatedonthe%offinalenergyconsumptionfortotalheating.Includesresidentialheatingonly.0%2%4%6%8%10%12%14%16%201020152020ShareofHeatPumpsintheresidentialheatingmixNorwayFinlandFranceDenmarkAustriaGermanyLithuaniaPolandNetherlandsHungary14Over31gigawattsofnewbatterystoragecapacitywasaddedtogridsinCleanEnergyMinisterialmembersin2022,upfrom9.7gigawattsaddedin2022.Therapidgrowthhighlightstheimportanceofstorageforglobalgrids,particularlyasrenewableenergypenetrationratesrise.MainlandChinaaccountedforjustoverhalfoftheoverallmarket.InstallationsinmainlandChinamorethanquintupledfromtheyearprior,to15.8gigawatts.TheUS,whichwastheworld’slargestdemandmarketin2021,droppedtosecondplacein2022.Nonetheless,theUSmarketmorethandoubledyear-on-yearas10.4gigawattswereinstalled.TheUKmarketalsotripledinsize,to2.2gigawatts,in2022.Annualnewlycommissionedutility-scalebatterystoragecapacityinCEMmembersBatterydeploymentsmorethantripledinCEMmembersin2022Source:BloombergNEF.Note:‘OtherCEM’includesotherCEMmembersandtheEuropeanUnion.GWstandsforgigawatts.1.62.915.81.24.210.42.22.13.42.122.563.709.9331.81-510152025303520182019202020212022StoragePowerOutput(GW)byCommisioningDateOtherCEMUKUSMainlandChina15Atleast22CleanEnergyMinisterialmembersinstalledatleast1megawattofpower-storagecapacityin2022,upfrom20in2021.Agrowingnumberofcountriesarefindinguseforlarge-scalebatteriesonthegrid.Onacapacitybasis,mainlandChina,theUSandtheUKaccountedfor89%ofallstorageinstalledin2022.However,totalcapacityinstalledinotherCEMmembersgrewbymorethanhalf,to3,407megawatts,in2022.Australia(whichinstalled763megawatts),SouthAfrica(675MW),Germany(371MW)andIndia(307MW)werethelargestofthesemarkets.Keydriversofgrowthhaveincludedtheneedforgreatergridflexibilityasvariablerenewablegenerationgrows,andnewpolicysupports.BatteriesarebeingdeployedinagrowinglistofeconomiesSource:BloombergNEF.Note:ExcludesmainlandChina,theUKandtheUS.MWstandsformegawatts.Annualnewlycommissionedutility-scalebatterystoragecapacityinotherCEMmembers28984340013777636751682213713071584739008806872,1293,4070500100015002000250030003500400020182019202020212022StoragePowerOutput(MW)bycommissioningdateNewZealandNorwayIndonesiaRussiaUnitedArabEmiratesPolandChileFinlandPortugalSpainJapanSwedenBrazilItalyNetherlandsCanadaMexicoSouthKoreaFranceIndiaGermanySouthAfricaAustraliaOtherEU16Approximately17%ofautomobilessoldin2022couldplugintothepowergrid.Oneinnine(11%)werepurebattery-electricvehicles(BEVs),whileonein25(4%)wereplug-inhybridelectrics(PHEVs).Inall,10.4millionelectricvehiclesweresoldin2022,up60%comparedto2021.InmainlandChina,passengerEVsalessurged92%in2022.NorthAmericaandSouthKoreafollowed,eachmarking48%year-on-yeargrowth.InEurope,thegrowthratewas17%.Aboutsevenin10EVssoldeachquarterarepurebatteryelectric.Around72%ofallEVssoldin2022wereBEVs,upfrom70%in2021.ThebalancewerePHEVs.NearlyafifthofallpassengervehiclessoldinCEMmemberswereplug-ins.Around13%wereBEVand5%PHEV.GlobalandCEMmembers’electricvehiclesalesasashareoftotalcarsalesApproximatelyoneinsixcarssoldtodaycanplugintoawallSource:BloombergNEF,Marklines,Jato,BloombergIntelligence.Note:CEMmemberdatadoesnotcoverallCEMmembers.'EV'encompassesbothbattery-electricvehicles(BEV)andplug-inhybridelectricvehicles(PHEV)3%3%5%11%17%15%11%4%0%2%4%6%8%10%12%14%16%18%20%20182019202020212022CEMmembers(estimated)EVBEVPHEV17Source:GlobalCCSInstitute,BloombergNEF.Note:EJisexajoules.IndustryfacesspecificdecarbonizationchallengesIndustrialenergyconsumptionbytypeIndustryrepresentsasubstantialshareofenergyuseandgreenhousegasemissions.Industryaccountsforapproximately29%ofallglobalenergyuse,andaroundafifthofallgreenhousegasemissions.Themajorityofindustrialenergyconsumptionisusedtoproduceprocessheat.Processheatistheenergyinputofthermalmanufacturingprocesses,suchassteamreformationofmethanetoproduceammoniaorsmeltingtoproducesteel.Countriesfacedifferentchallengesindecarbonizingindustry.Thesechallengesrangefromscale(mainlandChinaisbyfarthelargestindustrialenergyconsumer)toparticularheatdemand(somecountrieshavemostlyhigh-temperatureheatdemand,whichmakesithardertofindlower-orzero-carbonsubstitutes).Industrialenergyconsumptionbysector0%20%40%60%80%100%ArgentinaAustraliaBrazilCanadaChinaFranceGermanyIndiaIndonesiaItalyJapanMexicoRussiaSaudiArabiaSouthAfricaSouthKoreaTurkeyU.K.U.S.IronandsteelCementandlimeAluminumChemicalsMiningConstructionFoodandtobaccoPaperandpulpOtherHigher-temperatureLower-temperatureneeds0.60.93.21.941.81.22.48.62.11.03.41.65.82.01.02.11.40.911.6ArgentinaAustraliaBrazilCanadaChinaFranceGermanyIndiaIndonesiaItalyJapanMexicoRussiaSaudiArabiaSouthAfricaSouthKoreaTurkeyUKUSProcessheatOtherEJ18Introduction:Energytransitionin20203Powersector:renewables,integration,storage,grids19Transport:electrification,heavy-dutytransport33Industry:Decarbonizinghard-to-abatesectors,hydrogen44Finance:Assetinvestment,greenbonds,ESG5319Annualnewpower-generatingcapacityadditions,globalRenewablesnowdominateannualcapacityadditions2021(thelastyearforwhichBNEFhascompletedata)wasanotherrecordfortheinstallationofzero-carbonpower-generatingtechnologies.Nolessthan86%oftheworld’snewnominalcapacityfedintothegridsthatyearcamefromrenewables(wind,solar,hydroandothertechnologies)andnuclearpower.Solarinstallationssetanotherannualrecord.Installationsofresidential,commercialandindustrial,andutility-scalesolarroseto182gigawatts(GW)in2021,up26%fromthe145GWrecordtheyearprior.However,windpowercapacityadditionsdeclinedforthefirsttimesince2017-2018.Atotalof90GWofnewwindpowerwereaddedtogridsgloballyin2021,down7GWfrom2020.Source:BloombergNEF83556770824829523113525556463950683427393449363134161927274533496353525062979032424656751011071191451822572462672833072812962883393640501001502002503003504002012201320142015201620172018201920202021GWOther-fossilGeothermalBiomassandwasteNuclearOilanddieselSolarWindHydroNaturalgasCoal20Solarisnowtheworld’smostpopularnewpower-generatingtechnologyinthemosteconomies.In53ofthe112economieswhereBloombergNEFcouldconfirmnew-buildactivityin2021(thelastyearofcompletedata),solarwasthetoptechnologyadded,asmeasuredinnameplatecapacity.Thatisupfrom14%ofeconomiesin2012.Thesolarphenomenonisoccurringbothinfrontofandbehindtheelectricitymeter.Thesefiguresincluderesidential,commercial,industrialandutility-scalesolaradditions.Mostpopularnewpower-generatingtechnologyinstalledin2021(bycapacity)RenewablesarethetopchoiceformosteconomiestodaySource:BloombergNEF.Note:Mapcoloredbywhichtechnologywasmostinstalledin2021alone.ChartdepictsthepercentageofeconomiesthatinstalledthemostMWofeachtechnology.Itisbasedoneconomy-leveldatafor136economies,butexcludeseconomiesthathavenotrecordedanycapacityadditions.Solarincludessmall-scalePV.48%15%13%13%8%NuclearCoalBiomassGeothermalOilGasWindHydroSolar21GlobalLCOEbenchmarks,2018-23OnshorewindandsolarPVremaincheapesttechnologies,offshorewindstartsundercuttingfossilfuelsOnshorewindandsolarremainthecheapestnew-buildtechnologiesforproducingelectricity,apositiontheyhaveheldsince2018.Onshorewindandsolarcostdeclineshaveslowedduetomoreexpensivematerialsandshippingandfinancingcosts.Slowercostreductionsarealsoconsistentwiththematuringofthesetechnologies.Everydoublingofmodulecapacity,whichdrivesa28.5%costdecline,takeslongertoachieve.Offshorewindcostsarenowonparwithcoal,at$74/MWhglobally.BNEFexpectsoffshorewindLCOEstocontinuetofallasthetechnologymatures.Low-carbondispatchabletechnologies,suchascarboncaptureandstorage(CCS),nuclearandhydrogen,areneededtodecarbonizethepowersector.CoalandgaswithCCScost$121/MWhand126/MWh,respectively.Acombined-cycleplantburninghydrogencosts$239/MWh,andnucleargenerationcosts$225/MWhonaverage.Source:BloombergNEF.Note:LCOEstandsforlevelizedcostofelectricity.Theglobalbenchmarksarecapacity-weightedaveragesusingthelatestcountryestimates–apartfromnuclear,hydrogenandCCS,whicharesimpleaverages.Offshorewindincludesoffshoretransmissioncosts.Coal-andgas-firedpowerincludecarbonpricingwherepoliciesarealreadyactive.LCOEsdonotincludesubsidiesortax-credits.LCOEsshownbyfinancingdate.PVstandsforphotovoltaic,MWhstandsformegawatt-hour.Onshorewind42Offshorewind74Fixed-axisPV44TrackingPV48Batterystorage155Coal74Gas92CoalandCCS123GasandCCS128Hydrogen239Nuclear2250501001502002503003501H2H1H2H1H2H1H2H1H2H1H181920212223LCOE($/MWh,real2022)22Aswindandsolarcapacityadditionscontinuetogrow,sotoodotheircontributionstocountries’powergrids.In2021(thelastyearwithcompletedata),10nationsmetoveraquarteroftheirelectricitydemandwithwindandsolarpower.Denmarkhaslongbeenthegloballeaderinthisrespect.Renewablesmet65%ofdemandtherelastyear.Inmostofthesecountries,therenewables’shareofcontributionsin2021actuallyslippedcomparedtotheprioryear.AseconomiesrecoveredfromCovid-19lockdowns,top-lineelectricitydemandjumped.Asaresult,renewables’percentageoftotalgenerationinthesecountriesdippedsomewhat,eveninsomecaseswheretheirabsolutecontributionsasmeasuredinmegawatt-hoursgrew.Mostnationswheretheshareofwind/solarenergyisabove25%areinEurope.However,Uruguay(38%)andNamibia(27%)alsoexceededthisthresholdin2021.Theworld’stop10nationsforwind/solarpenetrationthrough2021Windandsolararemakingunprecedentedcontributionstonationalgrids0%10%20%30%40%50%60%70%80%DenmarkUruguaySpainPortugalLithuaniaIrelandEstoniaGreeceGermanyNamibiaSource:BloombergNEF23Utility-orstate-runreverseauctionsforcontractstodeliverzero-carbonpowerhavehelpedspurleast-costcleanenergybuildaroundtheglobe.In2022,globalauctionactivitymorethandoubled,largelyduetoamajorjumpinactivityinmainlandChina.India,anauctionspioneer,wasthesecond-largestindividualmarketforsuchactivityin2022.Atotalof10gigawatts(GW)ofprojectswoncontractstodeliverpowerin2022,downfrom20GWin2021.Thegovernmenthasstatedplanstotender50GWeveryyearfromfiscalyear2023throughfiscalyear2027withatleast10GWbeingwindpower.Thisispartofthegovernment’slargergoalofachieving500GWofnon-fossilfuelcapacityby2030.AsofFebruary2023,Indiahad169GWofwind,solar,hydroandbio-energy,accordingtotheMinistryofNewandRenewableEnergy.CleanenergyauctionsaregrowinginpopularitywithmainlandChinaandIndialeadingSource:BloombergNEF.Note:Chartonlyshowsauctionsforutility-scaleprojects.Auctionedcapacitybasedonalternatecurrent(AC).GWstandsforgigawatts.Annualrenewableenergyauctionvolumes40422916120281520103049405966561179710823605010015020025020182019202020212022GW(AC)OthersIndiaMainlandChina24OffshorewindpowerdeliverycontractssignedundertendersGovernment-organizedtendersarefuelinganoffshorewindcapacityboomTheUK,GermanyandtheNetherlandsannouncedmajorauctionresultsin2H2022,awarding8.7gigawattsofcapacitybetweenthem.TheUKallocatedcapacityatarecord-breakingstrikeprice.TheNetherlandsawardedasubsidy-freeprojectthatwillbelinkedtohydrogenandothertechnologies.Seabedleasingactivitywasscarce,butmoreroundsareanticipatedin2023.Inall,43.8gigawattsofoffshorewindcontractsareexpectedtobeawardedthroughmid-2024,fuelingbuildtotheendofthedecade.Government-organizedtenderspromotegrowthandlong-termconfidenceinmarkets.Source:BloombergNEF.Note:Tolevelizeprices,weconsidertariffpriceandlength,inflation,amerchanttailassumptionanda25-yearprojectlifetime.Thecalculatedtariffpriceistheaveragetariffoverthefulllifeoftheproject.Foraproject’smerchanttailandzero-subsidyprojects,weassumethatthepreviousthree-yearaveragepowerpricestaysflatinrealterms.InGermany7andtheUK8weuseBNEF’srealizedpowerpriceforecasts.MWhstandsformegawatt-hours.0100200300200520102015202020252030Commercialoperationdate2021$/MWhMainlandChinaTaiwanJapanSouthKoreaVietnamFrancePolandDenmarkBelgiumFinlandJapanUSGermanyUKCfDRound4projectsSubsidy-freeprojectsintheNetherlandsandGermany25Near-termlithium-ionbatterycellandpackpriceforecastThedeclineinbatterypriceshaspaused2022markedthefirsttimeBNEFrecordedayear-on-yearriseinbatterypackprices.Thevolume-weightedpriceoflithium-ionbatterypacksacrossallsectorsaveraged$151perkilowatt-hour(kWh),up7%from2021.ButinflatedbatterypricesmaybepartiallyoffsetbyincentivessuchastheUSInflationReductionAct,whichawardsupto$45/kWhforbatterycellsandmodulesproducedintheUS.Meanwhile,stationarystorage,whichhasbeenespeciallyimpactedbyhigherbatteryprices,willcontinuetogrow,thankstopolicysupportacrossmajormarketssuchastheUS,mainlandChinaandEurope.StationarystoragehasrelativelysmallvolumescomparedtoEVs,meaningthatstorageprovidersandprojectdevelopershavelessleveragetonegotiatepricesthanlargeautomakersandarethusimpactedmorestronglybybatterypriceinflation.Source:BloombergNEF.502441282236170143120112108120124230208139887255523833312873264942032424219817215014115115220132014201520162017201820192020202120222023real2022$/kWhPackCellObservedpricesForecastprices26Afallinpricesforphotovoltaicequipmentisnowripplingthroughthesolarvaluechainasmanufacturers’capacityexpansionsmaterializeandcompetitionheatsup.Between322-380gigawattsofnewsolarcapacitywillbeinstalledin2023,BloombergNEFestimates.BNEF’smid-casescenarioof344gigawattswouldrepresenta36%increasefrom2022.MainlandChinaaloneisexpectedtoaddastaggering154gigawattsofsolarthisyear.Thepathto2030isfirmingupformanyhistoricallysmallermarketsaroundtheworld.ThailandandthePhilippinesareputtinginplaceauctionplansforsolarbuildbetween2024and2026,whileSouthAfrica,PakistanandUkraineallseesolaraspartofthesolutionfortheircurrentpowercrises.RecentglobalsolarPVdemandSolarisontrackforanet-zeropathwaydespitechallengesSource:BloombergNEF.Demandprojectionsportrayedindirectcurrent(DC).GWstandsforgigawatts.PVstandsforphotovoltaic.MENAstandsforMiddleEastandNorthAfrica.182931414556751011061181461822523223724033804464802010201120122013201420152016201720182019202020212022202320242025202320242025MainlandChinaNorthAmericaandCaribbeanEuropeIndiaOtherAsiaCentralandSouthAmericaMENASub-SaharanAfricaBuffer/unknownconservativeGW(DC)optimistic27MainlandChinaremainsthedominantplayerinmostsegmentsofthebatteryandsolarvaluechains.Thisincludestherefiningofcobaltandlithium,metalsusedinbatteries.Italsoincludesbatterycomponents(electrolytes,anodes,cathodesandcells)andsolarcomponents(polysilicon,wafers,ingots,cellsandmodules).Theglobalsupplychainforwindturbinemanufacturingismoregeographicallydispersed.MainlandChinaaccountsforjustoverhalfofproductionofnacellesworldwide,buttheUS,Europeandothersalsoproducesuchequipmentinlargevolumes.Themanufacturingofelectrolyzersforuseintheproductionofzero-carbonhydrogenisspreadrelativelyevenlyacrossregions.MainlandChinaaccountsforthelargestshareofsuchactivitybutEuropeisalsoamajorplayer.Cleanenergymanufacturingcapacitybylocation,2022CleanenergyequipmentproductionremainsgeographicallyconcentratedSource:BNEF.Note:Byfactorylocation.Solarphotovoltaic(PV),hydrogenandbatterycomponentsexpressedinmegawatts(MW),megawatt-hours(MWh),squaremeters(m²)ormetrictons.Nickelistheclass1variety,andlithiumisinlithiumcarbonateequivalent.H₂ishydrogen.DataasofOctober2022,exceptelectrolyzers,whichreferto2021,andnacelledata,whicharefor2020.RoWstandsforrestofworld.0%10%20%30%40%50%60%70%80%90%100%ModuleCellIngotsWafer&ingotPolysiliconCellCathodeAnodeElectrolyteSeparatorLithiumCobaltsulfateNickelsulfateNacelleElectrolyzerPVLithium-ionbatteriesMetalrefiningWindH₂MainlandChinaUSEuropeJapanSouthKoreaRoW28TheEUhassetanambitiousgoaloftransitioningawayfromrelianceonRussiangasimportsby2027.Togetthere,theEUplanstocutdemandsharplythroughgreaterenergyefficiencyandexpandeduseofheatpumps,andbyuppingproductionfromcoal,nuclearandbiomasssources.Italsoexpectscontributionsfromrenewablehydrogenandlowerdemandfrombothresidentialandindustrialconsumers.Finally,itseekstodiversifythesourcesforthenaturalgasitwillcontinuetoburn.Cleanenergyisn’ttheonlysectorgettingaboost.REPowerEUimpliesareboundincoalpowerby2030,duetohighgaspricesandpolicyresponsesexpectedtokeepcoalplantsoperatinglonger.EffortstodiversifygassuppliesalsodependonEuropeattractingmoreliquefiednaturalgas(LNG).EuropeanCommissiontargetsforEUnaturalgasconsumptionby2030,basedontheREPowerEUpackageTheEU’sgoalofhalvingitsnaturalgasusagewillrelyoncleanenergyandothersourcesSource:EuropeanCommission,EurostatBillioncubicmetersTargetsforstructuralgasdemandreductionsorgassavings:-117BcmRePowerEUFitfor5550103575OthergasBiomethanePipelinediversificationLNG2030gassupplytargetkey:RePowerEUTargetsforgassupplydiversification:95Bcm29Thenumberandcapacityofconventionalnuclearpowerplantsoperatingaroundtheworldhasremainedessentiallyflatsincethestartofthelastdecade.Todaythereare422plantsoperatinggloballywithacombinedcapacityof378gigawatts.Nationalaspirationsfornet-zero,thehighercostofnaturalgasandenergysecurityconcernspromptedbythewarinUkraine,however,arecreatingpolicyshiftsandmarketpullforcarbon-free,dispatchablebaseloadgeneration.Theneedtosupplyaround-the-clock,zero-carbonpowerremainsinboththeshortandlongterm.Firmsseekingtodevelopeithersmallmodularreactor(SMR)orfusiontechnologieshaveattractedsubstantialnew,privateinvestmentinrecentyears.Notably,Massachusetts-basedCommonwealthFusionSystemsraised$1.8billionin2021fromalargegroupofinvestorsthatincludedTigerGlobal,BillGates,Google,Temasekandothers.Globalnucleardeployment,2010-2022PrivateinvestmentincompaniesdevelopingfusiontechnologiesConventionalnuclearcapacityissliding,butnewertechnologiesareattractingcapitalSource:BloombergNEF.GWstandsforgigawatts.Source:BNEF,companyreports.Note:2022datauptoNovember.05010015020025030035040045005010015020025030035040045020182019202020212022#reactorsGWCapacityOperatingReactors05001000150020002500200220062010201420182022$millions30BloombergNEFhasmodeledmultiplescenariosforhowtheenergytransitionmayunfoldoverthenextthreedecades.UndertheBNEFNetZeroScenario(NZS),atleast$21.4trillionwillneedtobedeployedinsupportofelectricitygridsby2050toachieveaglobalnet-zerotrajectory.Yetgridinvestmenthasfallenshortinrecentyears,resultinginbottlenecksthatslowthedeploymentofrenewablesandelectrification.Lookingahead,theUSandChinaarepoisedtoaccountforthelargestsharesoffuturegridinvestmentatapproximately18%apiece.Some$274billionwasinvestedinthepowergridin2022.Thisannualspendneedstorisetonearly$1trillionby2050foranetzerotrajectorythatsupportsmorepowergenerationcapacity,servesnewdemandandreplacesexistinginfrastructure.Netzerowillrequireatleast$21trillioningridinvestmentby2050Source:BloombergNEFSplitofthe$21.4trillionprojectedtobeneededover2022-2050underBloombergNEF’sNetZeroScenario41%,Newconnections40%,Systemreinforcements19%,Assetreplacements39%,Transmission61%,Distribution24%,Digital76%,Notdigital36%,AsiaPacific25%,Americas18%,Europe21%,RestofWorldMainlandChinaIndiaJapanSouthKoreaAustraliaOtherAsiaUSCanadaBrazilMexicoOtherLatamGermanyFranceItalyUKIberiaPolandOtherEuropeRestofWorldDemandDriverVoltageDigitalRegionsMarketsShareoftotalgridinvestment31ProjectsandpartnershipsinthepowersectorUtilitiesareintegratingdigitalizationintotheiroperationsBloombergNEFtracked147newactivitiesstartedandpartnershipsformedbyutilities,oil,gasandotherenergycompaniesintheenergysectorin2022.Therewasarecordnumberofmaturedigitalizationactivities,indicatingthatutilitiesincreasinglyseedigitalizationasawaytocreatelong-termvalue,andaremovingbeyondpilotsandprojectstoscaletechnologies.Connectivity,analyticssoftwareandcloud/datahadthelargestshares.BNEFtracked147digitalactivitiesbycompaniesinthepowersector,ofwhich65%weremature(productdevelopmentandintegration,versuspilotsandprojects),upfrom54%in2021and35%in2020.Asactivitymaturesinsomeareas,suchasanalyticssoftware,projectsandresearchforsupportingtech,suchascybersecurity,usuallydevelopinparallel.Source:BloombergNEF.Initiativesincludeanalyticssoftware,automation,cloud/data,communications,connectivity,andinternet-of-thingssoftware.01020304050607080901001H2H1H2H1H2H1H2H1H2H20182019202020212022NumberofactivitiesTotal12-monthrollingaverage32Introduction:Energytransitionin20203Powersector:Renewables,integration,storage,grids19Transport:Electrification,heavy-dutytransport33Industry:Decarbonizinghard-to-abatesectors,hydrogen44Finance:Assetinvestment,greenbonds,ESG5333Globalsalesoffour-wheeledelectricvehicles(EVs)continuedtosurgein2022,drivenbyhighergasolineprices,subsidies,expandedvehiclemodelchoices,fueleconomystandardsandotherfactors.Salesofbattery-electricvehicles(BEVs)andplug-inhybridelectricvehicles(PHEVs)topped10.4millionin2022,upfrom6.5millionin2021.MainlandChinawasonceagainthebiggestmarket,withannualsalesnearlydoublingto6.1millionin2022.MainlandChinahasbeenthetopmarketforsalesforsevenyearsrunning.TheUSmarketcontinuedtogrowswiftlyandtopped1millionforthefirsttimein2022.Germanywasnotfarbehind,withover900,000EVssold.TheratioofBEVstoPHEVssoldremainedaboutthesame.Approximatelythreeinevery10EVssoldareplug-inhybrids,whiletherestarepurelyelectric.NewEVsalesbymajormarket/region,drivetrainGlobalEVsalesjumped60%totop10.4millionin2022Source:BloombergNEF,Marklines.Note:BEVstandsforbattery-electricvehicles,PHEVstandsforplug-inhybridelectricvehicles0.40.60.51.12.02.90.40.71.31.62.14.57.50.71.11.92.13.26.510.40246810122016201820202022MillionBEVPHEV0.30.51.11.11.23.26.10.40.30.30.71.00.40.70.90.71.11.92.13.26.510.40246810122016201720182019202020212022MillionOtherEUOtherIndonesiaNewZealandFinlandDenmarkPortugalAustraliaCanadaIndiaNorwaySpainSwedenItalySouthKoreaNetherlandsJapanFranceUKGermanyUSMainlandChina34EVsalesareprojectedtocontinuesurginginthenextfewyears,risingfrom10.4millionin2022toalmost27millionin2026.IntheUS,amajorpushfromtheInflationReductionActmeansEVsaccountfornearly28%ofpassengervehiclesalesby2026,upfrom7.6%in2022.TheEVadoptiongapbetweendevelopedandemergingeconomiescontinuestogrowinthenearterm,butJapansignificantlylagsotherwealthyeconomies.TheEVshareofnewpassengervehiclesalesjumpsfrom14%in2022to30%in2026.Thepercentagesinsomemarketsaremuchlarger,withEVsreaching52%ofsalesinmainlandChinaand42%inEurope.SomeofthemajorEuropeancarmarketsmoveevenfaster,withtheNordicsat89%,Germanyat59%andtheUKat49%.Globalnear-termpassengerEVsalesandshareofnewpassengervehiclesalesbymarketSomecountrieshavealreadyachievedmass-marketadoptionofEVsSource:BloombergNEF.Note:EuropeincludestheEU,theUKandEFTAcountries.EVincludesBEVsandPHEVs.2023-2026areBNEFforecasts.1122361014182227051015202530201620212026Million0%10%20%30%40%50%60%201620212026ChinaEuropeGlobalUSCanadaSouthKoreaAustraliaJapanSoutheastAsiaRestofWorldIndia35AsoftheendofMarch2023,some21governmentshadsetdatestoeliminateinternalcombustionengine(ICE)vehiclesales.NearlyallareCEMmembers.Thirty-threeregionalandmunicipalauthoritiesalsohavesuchgoalsinforce.AmongthemostnotablecommitmentstodateistheEuropeanCommission’sproposaltophaseoutICEvehiclesalesintheEUby2035.RegionalandstatelevelICEphase-outtargetsareimportantaswell.Thesetargetscanhaverealimpact,especiallyineconomieswherelargermandateshaveyettobeimplemented.TheUScurrentlyhasnophase-outtarget,butstate-levelICEphase-outtargetsalreadycoverabout40%of2021newpassengercarsalesinthecountry.Governmentsaremandatingphase-outsofinternalcombustionenginesSource:BloombergNEF.Note:IncludesCEMmembersandtheEuropeanUnion.Economiesindicatedas'EU-widetarget'arepartoftheEU-widephase-outpledgebuthaveyettoindicateeconomy-levelcommitments.Formore,seeBNEF’sElectricVehicleOutlook.ICEvehiclephase-outtargetsinCEMmembers36Higherfossil-fuelcostsareallowingconsumerstoenjoysubstantialsavingsbyowningEVs.‘Stickerpriceparity’,orthepointatwhichanEVislower-pricedintheshowroomthanitsICErival,isprobablystillthemostimportantdeterminantofEVadoption.Yettotalcostofownership(TCO)matterstoo.Surgingwholesaleelectricitypriceshavepushedupchargingcosts,especiallyatpublicfastchargers,butinmanycountries,fastcharginghasremainedcompetitivewithconventionalfuels.Inmostmarketstoday,theaverageper-kilometercostofcharginganEVatapublicfastchargerissimilartousinggasoline,whileresidentialchargingcostsaresignificantlylower.ThemainexceptionisSpain,wherepublicchargingcostsareconsiderablyhigherthangasoline,reducingtheincentivetoswitchfromICEvehiclestoEVs.InItalyandSpain,thepriceperkilometerwhenchargingwithresidentialelectricitysurpassedthegasolineequivalentforafewmonthsin2022,beforefallingbackbelowit.ThedeclineinpriceshappenedduetogovernmentsubsidiesthathavebeenintroducedinbothcountriestocounteractresidentialelectricitypricerisesComparisonofgasoline,residentialelectricity,andaveragepublicchargingpricesHighergasolinepriceshaveimprovedtheeconomicsofEVsSource:Bloomberg,BloombergNEF,Eurostat,Eco-Movement,EIA,EnergyPriceIndex.Note:kmstandsforkilometers.DCisdirectcurrent.0.000.050.100.1501-01-2101-12-2101-11-22$/km0.000.050.100.1501-01-2101-12-2101-11-22$/km0.000.050.100.1501-01-2101-12-2101-11-22$/km0.000.050.100.1501-01-2101-12-2101-11-22$/km0.000.050.100.1501-01-2101-12-2101-11-22$/km0.000.050.100.1501-01-2101-12-2101-11-22$/kmFranceGermanyItalyUS(average)SpainUS(California)GasolineResidentialelectricityPublicDCcharging37Oiluseavoidedduetothegrowingpopularityofelectrifiedtransporthasdoubledsince2015.Theadoptionofelectricvehiclesandfuel-cellvehiclesavoidedalmost1.7millionsofbarrelsofoiladayin2022–about3.8%oftotaldemandfromtheroadtransportsector.Globaloildemandinroadtransportisexpectedtoreachroughly43.9millionbarrelsadayin2022,aslightincreaseoverthepastyear.Theavoidedoildemandin2022correspondedtoemitting3.91milliontonsofcarbondioxideequivalent.Two-andthree-wheeledEVsaccountedfor61%oftheoildemandavoidedin2022.Thisisduetotheirrapidadoption,particularlyinAsia.PassengerEVsareexpectedtosurpassbusesin2022torepresent18%oftotaloildemandavoided.Theothertwosegmentsremainconsistentwithlastyear’sdata:busesaccountedfor16%ofavoidedoildemandin2022,andcommercialvehiclesaccountedforjust4%.Oildemandavoidedbyelectricvehiclesandfuel-cellvehiclesElectrifiedtransportissubtractingnearly1.7millionbarrelsofglobaloildemanddailySource:BloombergNEF,IEA.Note:totalfor2022isanestimate.-1.8-1.6-1.4-1.2-1.0-0.8-0.6-0.4-0.20.020152016201720182019202020212022eMillonsofbarrelsofoilperday2-and3-wheelersPassengervehiclesBusesCommercialvehicles38Atotalof2.78millionchargingpointshadbeeninstalledworldwideasofyear-end2022.Annualinstallationsgrewbyabouthalffrom2021to2022.Electricutilities,oilandgasmajors,governmentsandpure-playchargingnetworkoperatorsareallinvestingheavily.Thechargingmarketremainsfragmented.Anabsenceofnetworkstandardsandphysicalformatstandardsmeansthatthemarkethasyettoconsolidateandislikelytoremainfragmentedforsometime.Viablebusinessmodelsareemerging.However,criticalquestionsremainoutstandingfornetworkoperators,suchastheoptimalspeedforcharging,ideallocationofpublicchargers,andthebestapproachtobillingcustomers.MainlandChinaandEuropeleadintermsofabsoluteconnectorsavailable.MainlandChinahad1.8millionchargersasofyear-end2022,whileEuropehad0.6million.PublicEVchargingconnectorsinstalledTherearemorethan2.7millionpublicEVchargingconnectorsworldwideSource:BloombergNEF0.140.210.300.520.811.151.800.180.310.440.590.921.331.852.780.000.501.001.502.002.503.0020152016201720182019202020212022MillionsNorwayJapanItalyOtherUKOtherEUSouthKoreaGermanyFranceNetherlandsOtherCEMUSMainlandChina39Since2020,17automakers,rangingfromhigh-volumesellerssuchasGMtosmallerbrandslikeRolls-RoyceandMaserati,haveannouncedinternalcombustionengine(ICE)phase-outs.FourhavesetanenddateforICEvehiclesalesinEuropespecificallybuthavebeenvagueregardingglobalambitions.AutomakersthathaveannouncedICEphase-outtargetstodaterepresented28%ofglobalpassengervehiclesalesin2022.Amongthosethathavemadecommitments,onlymainlandChina-basedBYDhasachieveditsgoal.ThecompanystoppedsellingICEvehiclesinMarch2022.Source:BloombergNEF.Note:Ford,Hyundai,StellantisandVWICEphase-outtargetisforEuropeonly.OnNovember9,2021,FordsignedtheCOP26declarationonacceleratingthetransitionto100%zero-emissioncarsandvans,whichcalledforworkingtowardanICEphase-outgloballyby2040andinleadingmarketsby2035.Excludesinterimtargets.Net-zerotargetscopevariesbycompany,assomeonlycoverScope1and2emissions.AutomakersexpandpromisestodecarbonizeandproduceEVsAutomakers’drivetraindevelopmenttargetsICE-phaseout40OutsideofmainlandChina,Indiahasbeenthetopdemandmarketfortwo-andthree-wheeledelectricvehiclessinceatleast2016.Demandforsuchvehiclesslumpedin2020asthepandemictookhold,butitbouncedbackby9%in2021toreach617,000units.Globalsalesalsosufferedfromthepandemic,reachingjust14.6millionunitsin2021,farbelowthe18.7millionsoldin2019.Themarketforfour-wheeledelectricvehiclesinIndiaremainsinitsinfancy,partlyduetothevehicles'highcost.However,IndiapassengerEVsalesmorethantripledfrom2020to2021to15,000units.Indevelopingmarkets,affordabilityisoneofthemainbarrierstoEVadoptionbyconsumers.Oncepricecompetitivenessisreachedandothermainhurdlesareovercome,themarketrapidlyshiftstoEVs.IndiashareofelectricvehiclesalesbytypeTop10globalbattery-electrictwo-andthree-wheelermarkets(excludingmainlandChina)India’selectricvehiclemarketregainsitsfootingSource:SocietyofIndianAutomobileManufacturers,SocietyofManufacturersofElectricVehicles,BloombergIntelligence,BloombergNEF.Note:Includessalesoflow-speedmodels.-0.200.400.600.801.001.201.401.60201620172018201920202021MillionvehicleunitsUKNorwayNepalItalySpainFranceSouthKoreaTaiwanVietnamIndia60.68%36.97%2.35%0%10%20%30%40%50%60%70%80%90%100%201620172018201920202021ShareofElectricVehiclesalesThree-wheelerTwo-wheelerPassengerelectricvehicle41Decarbonizationhastakencenterstageintheaviationsectoroverthepasttwoyears,withagrowingnumberofairlinesandairportssettingtargetstocutnetemissionstozero.AsofJune2022,38oftheworld’stopairlines–morethanhalfofthosetrackedbyBloombergNEF–havecommittedtoachievingnet-zeroemissionsby2050orbefore.InOctober2021,theInternationalAirTransportAssociation(IATA)setanindustry-widegoaltoreachnet-zerocarbonemissionsby2050,astepupfromitspreviousambitionofa50%reductioninemissionsby2050.Someairlineshavesetnet-zerotargetdatessignificantlyearlierthan2050:forinstance,UScarriersJetBlueandAlaskaAirlinesbothaimtoreachnetzeroby2040.OverthreedozenairlineshavepledgedtohitnetzeroSource:BloombergNEF,companyannouncements.Airlinenet-zerotargetsbyannouncementdate0510152025303540January19July19January20July20January21July21January22July22January23202020212019202242Theraceisontodevelopthefirstmajorprojectsthatproducethenexportthezero-carbonhydrogencontainedinammonia.ProjectsinLatinAmericaarelikelytocompetewithprojectsinAustralia,Canada,theMiddleEastandpossiblytheUSforthemantleoflowest-costprovider.FordeliverytokeyportsinEurope(Rotterdam)andJapan(Tokyo),BloombergNEFestimatesprojectsinBrazilcouldby2030deliverthemostcompetitivegreenammoniaintheworld–withoutsubsidiestakenintoaccount.BrazilammoniadeliveredtoTokyoisalsothemostcompetitiveglobally,at$3.27/kgNH3,evenwithaconsiderablygreaterdistancebetweenthetwoports.MuchattentiontodatehasfocusedontheportofPeceminBrazil'sCearastate.GreenammoniaunsubsidizeddeliverycosttoEurope(Rotterdam),2030GreenammoniaunsubsidizeddeliverycosttoJapan(Tokyo),2030Brazilhasresourcestodeliverlowest-costammoniatoEuropeandJapanSource:BloombergNEF.Note:Costsarein$perkilogramofhydrogen.Ammoniacontains17.6%hydrogenbyweight.BrazilexportsfromPecem.CanadaexportsfromQuebectoRotterdamandfromVancouvertoTokyo.ChileexportsfromAntofagasta.USexportsfromHouston.UAEexportsfromRuwais.AustraliaexportsfromDampier.ColombiaexportsfromCartagena.Hydrogenproductionassumeslevelizedcostofhydrogen(LCOH)usingwesternalkalineelectrolyzerforeachcountry.1.231.861.651.812.132.112.431.411.411.411.411.411.411.410.240.190.410.300.380.560.272.883.463.473.523.924.084.110.00.51.01.52.02.53.03.54.04.5$/kg-H21.231.861.651.812.112.132.431.411.411.411.411.411.411.410.620.250.550.480.220.390.473.273.523.603.703.743.934.310.00.51.01.52.02.53.03.54.04.5$/kg-H243Introduction:Energytransitionin20203Powersector:Renewables,integration,storage,grids19Transport:Electrification,heavy-dutytransport33Industry:Decarbonizinghard-to-abatesectors,hydrogen44Finance:Assetinvestment,greenbonds,ESG5344Source:BloombergNEFMaterialsproducershavesteppeduptheircommitmentstodecarbonizationGlobalshareofCO2-intensivematerialscoveredbynet-zerotargetsCorporatecommitmentstodecarbonizeCO2-intensivematerialssteel,cement,plasticsandaluminumhavegrown.Theplasticsindustrywasanearlyleaderindecarbonizationpledgesduetoinvestorpressureonoilcompanies,witha53%capacitysharecoveredbynet-zerotargetsbyFebruary2022anda62%sharecoveredby2023.Aluminumnowhasmorecapacitycoveredbynet-zeropledges,ofallthetrackedmaterials,inpartbecausethedecarbonizationpathwayismuchclearer.ThelowersharesforsteelandcementarepartlyduetouncertaintyamongChineseproducersabouttheirpathtonetzero,despitepressurefromthegovernmenttoachievecarbonneutrality.27%38%30%47%53%62%24%73%Feb2022Jan2023Feb2022Jan2023Feb2022Jan2023Feb2022Jan2023SteelCementPlasticsAluminum45Source:BloombergNEF,IEAThepotentialfordecarbonizingheatvarieswidelybutcanbringmajorbenefitstolargesectorsBigprizes(buthardtoachieve)IronandsteelNon-metallicminerals(cement)TemperatureMajorfuelEfficiencygainsFuelswitchingNewtechnologyorprocessMediumprizes(mediumsizedifficulty)Smallprizes(buteasiesttoachieve)ChemicalsNon-ferrousmetals(aluminum)FoodandtobaccoPulpandpaperHighHighCoalCoalHighHighCoalElectricityLowLowGasRenewablesHardHardMediumMediumMediumMediumHardMediumMediumEasierEasierEasierMediumHardHardHardMediumEasierSectorStatusEaseofheatdecarbonization46Naturalresourcesarethekeytoproducinglow-costhydrogenwithrenewablepower.Braziloperatesonshorewindprojectswithsomeofthehighestcapacityfactorsintheworld.Partlyasaresult,ithastheworld’slowestpotentiallevelizedcostforzero-carbonhydrogenat$2.01-4.05/kg.Chile,thankstoitsexceptionallysunnyconditionsinsomeareas,alsohasthepotentialtoproducehydrogenatrelativelylowcost($2.77-$5.48/kg).Thecostoftheequipmentusedtoproducehydrogen–electrolyzers–iscriticalinthefinallevelizedcostofproducingthefuel.AlkalineelectrolyzersmanufacturedinmainlandChinatendtohavethelowestcost,whileproton-exchangemembrane(PEM)electrolyzerstendtobethemostexpensive.Equipmentcostsaredeclining,however.Indiahasthepotentialtobeamongthelower-costproducersofzero-carbonH2.Levelizedcostofhydrogenfromcheapestavailablerenewablepowerin28markets,2022Hydrogenfromrenewablesremainsexpensive,butcostsvarywidelybymarketSource:BloombergNEF.ValuesatthebottomshowcheapesthydrogenusingaChinesealkalineelectrolyzer,valuesatoptherangeshowcheapestvaluesusingaprotonexchangemembraneelectrolyzer,andblacklinesshowcheapestvaluesusingaWesternalkalineelectrolyzer.Electricitysourceiseithersolarorwind,whicheverischeaper.MMBtuismillionBritishthermalunits.0.014.929.844.659.574.489.3104.20.02.04.06.08.010.012.014.0BrazilChileArgentinaUSIndiaSpainCanadaSwedenTurkeyMexicoMainlandChinaUAEPeruUKSouthAfricaItalyFranceGermanyAustraliaPolandColombiaVietnamMalaysiaThailandIndonesiaPhilippinesSouthKoreaJapan$/MMBtu$/kg(real2021)PoweredbysolarPVPoweredbyonshorewindPEMelectrolyzer(topofrange)Westernalkalineelectrolyzer(line)Chinesealkalineelectrolyzer(bottomofrange)47Zero-carbonhydrogenremainseconomicallyuncompetitivecomparedto‘grey’H2.BloombergNEFhasidentifiedsixpolicysignpoststhatwillberequiredtochangethat.Thebestpolicymixwilldependondeploymentstageandmarkettype,withsupportneededformultiplepartsofthevaluechain.Withnet-zerotargetscoveringalmost92%ofglobalemissions,countriesarefocusingmoreoncraftingspecificpoliciestoachievetheirtargets.Onhydrogen,thereseemstobeapreferenceforsupply-sidesubsidiesoverdemand-sideincentives,fornow.Sixpolicysignpostsforzero-carbonhydrogendevelopmentSource:BloombergNEF.Note:DataupdatedasofAugust15,2022.Legend:Moreprogress,someprogress,lessprogressSignpostExplanationProgressin2H20221)Net-zeroemissiontargetsarelegislatedMakesitclearhard-to-abatesectorswillneedtodecarbonizeCountriesemittingover92%ofglobalCO2haveanet-zerotargetinforceorunderdiscussion2)HydrogenstrategiesandtargetsaresetSetstargetsforH2productionanduse,buildsinvestorconfidence42countrieshaveH2strategies,upfrom34inJuly2022and27inJanuary20223)Government-backedinvestmentmechanismsareavailableProvidesR&Dandperformance-basedfundingforhydrogenprojectsTotalfundingup16%fromJuly2022,and46%fromJanuary20224)Decarbonizationincentivesforend-usesectorsareputinplaceRaisesthechancethatindustrial,powerandtransportsectorsadoptH2SouthKoreaisclosetoimplementingtheworld’sfirsthydrogenconsumptionmandate5)StandardsonH2useareharmonized,regulatorybarriersremovedClearsorminimizesregulatoryhurdlestoH2projectsandtradeH2emissionsstandardsareemerging,withtheEUfinalizingitsstandardsfor“renewableH2”6)RegulatoryframeworksforH2transportandstorageemergeEnablesorreducesthecostsofbuildingahydrogeneconomySomeEUcountriesoutlinedsupportandaregulatoryframeworkforH2pipelines48HydrogenstrategiesasofFebruary202342economiesnowhavehydrogendevelopmentstrategiesInterestinhydrogenasamulti-purposeandpotentiallylower-CO2fuelisrapidlygrowing.AsofFebruary3,2023,42governmentshavewrittenstrategiestoboosttheirhydrogenproductionandconsumption.That’supfrom26economiesattheendof2021and13attheendof2020.Another36governmentsarepreparingstrategiesasofFebruary2023.TheUSreleaseditshydrogenstrategydraftinSeptember2022,allocating$9.5billionoverthenextfouryearstosupporthydrogenhubsandresearchprograms.Thestrategyoutlinesgoalstoproduce10millionmetrictonsofhydrogenperyearby2030todecarbonizeexistinghydrogenuseinammoniaandoilrefining,and50milliontonsperyearby2050toaddressthebroadereconomy.Source:BloombergNEF.Mappeddatashowsdatafordistincteconomies.49Governmentfundingforhydrogen(H2)continuestogrowinkeymarkets,withemergingeconomiessuchasIndiajoiningtheglobalH2subsidyrace.GlobalfundingforH2reached$146billionto2030,upby46%fromJanuary2022andup16%overthelastsixmonths.Fundingwortharound$24billionperyearisavailableintheEuropeanUnion(EU)and33othermarkets.Thisconsistsof$12.7billionperyearinsupportexplicitlytargetedatexpandinghydrogen,plusanother$11.3billionperyearfromtechnology-neutralfundsforwhichhydrogenprojectscanapply.Long-termgovernmentsupportforhydrogencouldtop$146billionSource:Governmentagencies,BloombergNEF.Note:‘Other’includesBelgium,mainlandChina,Denmark,Estonia,FinlandRomaniaandUruguay.Includessubsidiesannouncedandinforceuntil2030.Excludessub-nationalfundsandloanguarantees.Includesfuelcellfunds.Fundingamountsareannualized:forexample,a$100millionfunddeliveredover2021-30istrackedas$10million/year.Usesaverage2018-22FXrateforconversionstoUSD.H2isassumedtoaccess15%oftechnology-neutralfunds(suchastheNetherlands’SDE++scheme)and40%offundsfocusedonindustrydecarbonization.Assumes37%ofEUfundingfromkeyprogramsisforcleanenergyprojects,andthatH2iseligiblefor15%ofthosefunds.Averageannualbudgetfornationalsubsidiesopentolow-carbonhydrogenprojects4.74.53.51.91.91.81.10.80.70.60.50.50.30.30.20.20.150.130.4GermanyEUUSNetherlandsKoreaJapanFranceCanadaAustraliaItalyUKIndiaSpainAustriaNorwayPolandGreecePortugalOther$billion(2021real)TargetedsupportforhydrogenTechnology-neutralfundsforwhichH2projectscanapply($11.3bn)50CCUSprojectdevelopersarefollowingthe(public)money.Aspolicyiscurrentlythelargestdriverofinvestmentinthemarket,theUS,CanadaandtheUKarelikelytobeleadersthisdecade.However,otherregionsaresettorapidlyincreasetheircapacitythankstolargefinancialcommitments.Germanyhasannounceditisdevisinga‘CarbonManagementStrategy’todrivecapturecapacitytomegatonscaleby2045.Japanupdateditslong-termCCUSroadmapagainin2022.TheframeworkcouldpositionJapanasthefourth-largestmarketforCCUSasitistargeting6-12milliontonsperannum(Mtpa)ofcapturecapacityby2030.By2030,CO2storagewillsurpassCO2use.Today,mostoftheCO2capturedisusedforenhancedoilrecovery.ThisischangingrapidlyasCCUSbecomesaroutetodecarbonization.By2030,66%ofCO2willbedestinedforstorage,upfrom25%in2021.ExpectedCCUScapacityinCEMmembers,basedonprojectannouncementsCarboncaptureutilizationandstoragedevelopmentispoisedtorampupmid-decadeSource:BloombergNEF24.524.936.284.8113.1135.9145.9145.9155.028.936.655.356.356.362.316.219.722.224.529.831.631.639.019.319.316.516.216.212.00.050.0100.0150.0200.0250.0300.0350.0400.0202220232024202520262027202820292030MtCO2/yrRussiaPortugalPolandFinlandChileSouthAfricaMexicoJapanOtherEUDenmarkSpainNewZealandIndiaSouthKoreaGermanyUnitedArabEmiratesSwedenItalyBrazilFranceNorwayIndonesiaMainlandChinaAustraliaNetherlandsSaudiArabiaCanadaUKUS51MostG-20economiesareimprovingtheirpolicyregimestosupportthedecarbonizationofindustry.Eachyear,BloombergNEFevaluatesG-20economies’policiestodecarbonizethepower,transportandindustrialsegmentsoftheireconomies.Fromspring2021throughspring2023,mosteconomiesintheG-20boostedtheirindustrialdecarbonizationscores.Butcollectively,theyscoredjust48%fortheireffortsinthisarea–wellbelowtheirscoresforpowerandtransport.Germany,theUKandFrancehavemadethebiggestcommitments.Thisisdueprimarilytheseeconomies’detaileddecarbonizationstrategiesandsomeincentivestoensureimplementation,includingcarbonpricing.ThebiggestrecentpolicychangeshavebeeninNorthAmerica.TheInflationReductionActandInfrastructureInvestmentandJobsActhaveboostedUSleadershipinthisarea.BNEFindustrypolicyscores,2021-2023Policysupportforcuttingindustrialemissionshasgrown,butmajorworkremainsSource:BloombergNEF.Note:Unweightedscores.ForfurtherdetailsonBNEF'sscoringmethodologyseethereport(https://tinyurl.com/bdd9dew4).10%20%30%40%50%60%70%80%90%202120222023GermanyFranceUKItalyCanadaSouthKoreaUSJapanAustraliaMainlandChinaMexicoSouthAfricaIndiaArgentinaBrazilIndonesiaSaudiArabiaRussiaTurkey52Introduction:Energytransitionin20203Powersector:Renewables,integration,storage,grids19Transport:Electrification,heavy-dutytransport33Industry:Decarbonizinghard-to-abatesectors,hydrogen44Finance:Assetinvestment,greenbonds,ESG5353$1.6trillionininvestmentflowstothelow-carbontransitionweretrackedin2022Globalenergytransitioninvestment,BNEF’smeasureofmoneyspenttodeploylow-carbonenergytechnologies,topped$1.1trillionworldwideforthefirsttimein2022andwasup31%from2021.Thisfigureincludesinvestmentinprojects,suchasrenewables,storage,charginginfrastructure,hydrogenproduction,nuclear,recyclingandCCS–aswellasend-userpurchasesoflow-carbonenergytech,suchassmall-scalesolar,heatpumpsandzero-emissionvehicles.Climate-techcompaniesraised$119billionin2022,down29%from2021.However,investmentinclean-technologyfactoriesjumped44%from2021to$78.7billionin2022.Powergridinvestmenthit$274billionglobally.Transmissionanddistributionarecriticalenablersoftheenergytransition,eventhoughpowerlinesdonotthemselvesdisplacegreenhousegasemissions.Source:BloombergNEF.Note:SPACsarespecialpurposeacquisitioncompanies.PIPEsareprivateinvestmentinpublicequitytransactions.IPOsareinitialpublicofferingsonstockexchanges.VCPEisventurecapitalandprivateequity.2022globalenergytransitioninvestmentandclimate-techcorporatefinance1,1102747911902004006008001,0001,200EnergytransitioninvestmentPowergridsSupplychainandmanufacturingClimate-techcorporatefinance$billionSPACNon-SPACPIPESecondaryofferingIPOVCPEGridsSustainablematerialsElectrifiedheatElectrifiedtransportHydrogenCCSEnergystorageNuclearRenewableenergyCorporatefinanceOthercategories54Energytransitioninvestmentsurgedpast$1trillionin2022Newcapitalinvestedinsupportofdeployingenergytransitiontechnologieshitarecord$1.11trilliongloballyin2022.Renewables,whichincludewind,solar,biofuelsandothersourcesofpower,narrowlyretaineditspositionasthelargestsector,witharecord$495billioninnewprojectinvestments.Electrifiedtransport,whichincludesspendingonEVsandcharginginfrastructure,isnowaveryclosesecond.Thesectorgrewto$466billion(up54%)astheEVmarketcontinuedtoaccelerateglobally.Withtheexceptionofnuclearpower,whichhasbeenflatinrecentyears,allothersectorsalsosawrecordlevelsofinvestment.Together,electrifiedheat,sustainablematerials,energystorage,carboncapture(CCS),energystorageandhydrogenaddedanother$149billionin2022.Source:BloombergNEFGlobalinvestmentintheenergytransitionbysector3012853152853193634234953477881231231663034663944224684825226268491,11002004006008001,0001,20020152016201720182019202020212022$billionHydrogenCCSEnergystorageSustainablematerialsNuclearElectrifiedheatElectrifiedtransportRenewableenergy55Climate-techdealmakingwasdownineachquarterof2022comparedtotheyearprior,butthestoryvariedbetweenthepublicandprivatemarkets.Publicmarketfundingsviaprimarilystockofferingsfell45%in2022comparedwith2021.Meanwhile,venturecapitalandprivateequity(VCPE)stayedroughlylevel.Overallpublicmarketconditionsin2022werenotconducivetonewfundraising.Inaddition,later-stageclimatetechfirmsfoundopportunitiestoraisecapitalfromprivateequityfundsthankstothelargevolumesthosefundshaveraisedinrecentyears.Onaverage,VCPEdealsskewedlargerin2022withover$21.2billionraised.Onaverage,VCPEdealsin2022weredisproportionatelylarger,withmorethan$21.2billionraised.Thistrendwasparticularlyevidentattheupperendofthedealdistribution.Theamountraisedinnine-digitVCPEdealsincreasedby37%in2022.Companiesintheenergyandtransportationsectorstendedtoraisethelargestamounts.Corporatefinancinginlow-carbonenergybysubsector,2022Climate-techcompanyfund-raisingslippedin2022Source:BloombergNEF.Note:SPACsarespecialpurposeacquisitioncompanies.PIPEsareprivateinvestmentinpublicequitytransactions.IPOsareinitialpublicofferingsonstockexchanges.VCPEisventurecapitalandprivateequity.22.115.816.914.613.919.312.28.81Q20213Q20211Q20223Q2022$billionSPACNon-SPACPIPESecondaryofferingIPOVCPE56Atotalof1.3%ofworldgrossdomesticproductwenttoenergytransitioninvestmentin2022.Thatwasupfrom1%in2021and0.8%in2020.From2021to2022suchinvestment’sshareofGDPjumpedbyclosetoathird.InvestmentinmainlandChinaandFinlandasashareofGDPreached2.8%and2.5%in2022,respectively.Swedencameinthird,with1.8%ofGDP.At1.7%,Norwaywasaclosefourth.Thetop10spendingcountriesonaninvestment-to-GDPbasiswerelocatedinAsiaandEurope.Onaverage,CEMmembersinvested0.91%oftheirGDPintheenergytransition.Australia,MainlandChina,Canada,SpainandItalyrosesignificantlycomparedtolastyear.OverhalfofCEMmembersincreasedETIspendingperGDPin2022.EnergytransitioninvestmentperGDPintop20CEMmembersGlobalexpenditureinenergytransitionsisgrowingSource:BloombergNEFandIMF.0.0%0.5%1.0%1.5%2.0%2.5%3.0%3.5%20132015201720192021ETI($bn)percurrentpriceofGPD($bn)MainlandChinaFinlandSwedenNorwayGermanyDenmarkPortugalNetherlandsSouthkoreaSpainPolandFranceUKItalyAustraliaBrazilCanadaNewZealandUSJapan57SustainablelendingisbeingusedtoachievemanygoalsCompanies,financialinstitutionsandothershaveincreasinglyturnedtothepublicmarketstoraiselendingtopromoteenvironmentalorsocialimprovement.Activity-basedlendingencompassesgreenbonds,socialbonds,sustainabilitybondsandgreenloans.Theseareusedtoraisemoneytofinancenew,orrefinanceexisting,greenprojectsoractivities.Themoneyraisedmustbeusedfortheseactivities,whichcanbeforenvironmentalbenefit,socialbenefit,orboth.Behavior-basedlendingencompassessustainability-linkedloansandsustainability-linkedbondsusedtoraisemoneyforgeneralpurposes.Theactivitiesperformedwiththeraisedmoneyarenotwhatearnsbehavior-baseddebttypestheir‘sustainability’label.Behavior-baseddebtisdubbed‘sustainable’whenitistiedtoasustainabilitytargetfortheissuer,requiringthemtomodifytheirbehavior.Thiscouldbeagreenhousegasemissionreductiongoal,aquotafordiversityintheworkforceormanyothertypesofbehavior.Source:BloombergNEF,BloombergTerminal.Note:Instrumentsincludedarefrom1996to1H2022.Colorsdepictgrowthrate/sizefromgreen(most/greatest)tored(least/lowest).SustainablelendinglabelsandcharacteristicsLendinbTypeLendingstylePurposeMarketsize($billion)ProportionofsustainablelendingmarketGrowthrate2021-2022GreenBondActivity-basedEnvironmentalprojects2,42242%-10%Sustainability-linkedloanBehavior-basedInstitutionalESGtargets1,24321%-16%GreenloanActivity-basedEnvironmentalprojects73513%26%SustainabilitybondActivity-basedEnvironmentalandsocialprojects61511%-23%SocialbondActivity-basedSocialprojects5489%-39%Sustainability-linkedbondBehavior-basedInstitutionalESGtargets2104%-21%58SustainabledebtissuedbyinstrumenttypeSustainabledebtactivityslowedasmarketstightened,ESGscrutinywidenedSustainabledebtissuance,whichdescribesborrowingforenvironmentalorsocialpurposesanddebtforwhichtherepaymentistiedtosustainabilitymetrics,totaled$1.5trillionin2022.Thiswas16%belowthe2021recordandthefirst-everyear-on-yeardecline.Activityslowedacrossbroaderfixedincomemarkets.Inflationandhigherinterestratesconstrainedissuances.Thiswascompoundedbyincreasedscrutinyof'greenwashing'andgeneralbacklashagainstenvironmental,socialandgovernance(ESG)investing.Greenbondsremainedthemostpopularsustainabledebtinstrument,with$572billionissued,althoughthisfigurewasdownfrom$635billionin2021.Sustainability-linkedloans,whichtieinterestrepaymenttoanissuer’ssustainabilityperformance,werethesecondmostpopular,at$419billion–downfrom$502billionin2021.Socialbondssawissuancedrop39%in2022,from$218billionto$133billion.Source:BloombergNEF.0.20.20.30.30.60.60.50.40.00.20.20.10.10.20.20.10.10.10.10.10.10.250.320.620.831.761.49201720182019202020212022$trillionSustainability-linkedbondsGreenloansSustainabilitybondsSocialbondsSustainability-linkedloansGreenbonds59Governmentsaremovingtobetterdefinewhatare(andarenot)'green'investments.Taxonomiesareclassificationsthatsetouttheconditionsunderwhichaneconomicactivitycanclaimtobeenvironmentallyorsociallysustainable.Classificationhelpsprevent'greenwashing',ormisrepresentingthesustainabilitycredentialsofafinancialproductoracorporateactivity.TheEUhasintroducedcomplementarypolicies,likemandatingthedisclosureofcompanyrevenuesharesalignedwithitstaxonomy.Ithasadditionalchecksonwhetheractivitiesalignedwiththetaxonomy‘donosignificantharm’tootherenvironmentalobjectivessuchasbiodiversityandwastedisposal.GreentaxonomieshavebeenpassedinmainlandChina,RussiaandSouthAfrica.Anadditional31countrieshavetaxonomiesinplace.Anothersixhavetaxonomieseitherplannedorscheduled.Greentaxonomiesaroundtheglobe'Greentaxonomies'todefineenvironmentallysustainableactivitiescontinuetoproliferateSource:BloombergNEF,variouspolicydocuments.Note:Plannedpoliciesrefertothosethathavebeenannouncedorareunderdevelopment.Scheduledpolicieshaveasettimeframefortheirintroduction.DataasofMarch2023.BothmainlandChinaandTaiwanhavegreentaxonomiesinplace.60Governments,financialsandutilitiesarethebiggestissuersofgreenbondsGreenbondsremaintop-heavyintermsofissuersectors.Governments($186billion)andfinancialentities($184billion)eachaccountedfor32%ofthemarketin2022.Utilities,at$80billion,werethethirdlargestsector,accountingfor14%ofthemarket.Othersectors'issuancevolumewasmuchsmaller,totaling$122billionin2022.Technologywastheonlysectorthatissuedmoregreenbondsin2022thanin2021,risingbynearly50%to$8billion.IntelCorp.,LenovoGroupandASMLHolding,amongothers,debutedinthegreenbondmarketin2022andsupportedgrowth.Allothersectorssawissuancedecline,withconsumerstaples,communicationsandenergyalldroppingbyover40%Source:BloombergNEF.BloombergTerminalGreenbondissuancebysector17.521.644.848.376.3102.4201.1185.96.511.638.941.563.679.985.2190.8184.125.421.940.846.284.679.60100200300400500600700201420152016201720182019202020212022$billionTechnologyHealthcareEnergyConsumerstaplesConsumerdiscretionaryCommunicationsMaterialsUSmunicipalIndustrialsFinanceUtililtiesFinancialsGovernment61Copyright©BloombergFinanceL.P.2023.ThispublicationisthecopyrightofBloombergFinanceL.P.inconnectionwithBloombergNEF.Noportionofthisdocumentmaybephotocopied,reproduced,scannedintoanelectronicsystemortransmitted,forwardedordistributedinanywaywithoutpriorconsentofBloombergNEF.DisclaimerTheBloombergNEF("BNEF"),service/informationisderivedfromselectedpublicsources.BloombergFinanceL.P.anditsaffiliates,inprovidingtheservice/information,believethattheinformationitusescomesfromreliablesources,butdonotguaranteetheaccuracyorcompletenessofthisinformation,whichissubjecttochangewithoutnotice,andnothinginthisdocumentshallbeconstrued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