Looking back and ahead: climate tech trends in 2023 and 2024

Executive Editor
A thermometer with a globe at the end of it and the 2024 written next to it on a black backdrop.
Illustration by Samson Awosan.

We’ll be watching elections, economics and (nearly) every cleantech shovel going in the ground across the United States this year.

We have a lot to cover in a span short enough to keep your attention, so consider this a reader’s digest version of my 2024 outlook and 2023 reflections.

Every year since 2018, I’ve looked back and ahead at the trends shaping the past year and the year to come, including reality checks of my previous predictions.

Take a quick look back: My Cipher outlooks for 2022 and 2023; and my outlooks while reporting at Axios in 20182019, 2020 and 2021.

First, five trends we’re watching in 2024:

1. Go time for Inflation Reduction Act.

Last year was consumed by the boring but essential act of writing all the rules governing the 2022 Inflation Reduction Act, so this year we can expect to see significantly more projects move from the announced to construction phase. Shovels in the ground, in other words.

We’ll be monitoring this closely in our just-launched interactive Cleantech Tracker. Take a spin around the map to see what’s taking root where.

Outside the U.S., we’ll watch how the increase in domestic projects affects global competition, especially as it relates to China, the historical leader in cleantech.

2. Cleantech rebound?

I’ll be watching to see to what degree the damning trifecta of high interest rates, high inflation and supply chain bottlenecks ease and help lift the macro burdens weighing on clean energy.

Lower interest rates could be key to opening the initial public offering market to more cleantech startups, said Eric Toone, the technical investment lead at Breakthrough Energy Ventures, one of the world’s biggest funders of climate tech startups (whose parent organization, Breakthrough Energy, also supports Cipher).

“These investments have to start returning money to investors and the fact the IPO market remains closed is problematic,” Toone said, though he also expressed optimism about the development of these startups in general.

“Cleantech 2.0 is much more firmly rooted in reality” than cleantech 1.0, Toone said. “It makes me feel good that in 2023 we saw some of the technologies we began supporting in 2017 starting to do pilot and commercial deployments.”

3. Tangible impacts from COP28 agreement.

The agreement coming out of the United Nations’ summit in Dubai in December included language for the first time ever calling on countries to transition away from fossil fuels.

Environmentalist Bill McKibben said the language may have handed activists a tool to use — in lawsuits, in rallies and more — to hold the world accountable for agreeing to transition away from fossil fuels. This change could come slowly, but it’ll be important if/when it does.

4. Political impacts, U.S. edition.

November’s presidential election could significantly alter the public climate discourse, and possibly much more, if a Republican wins the White House.

Other outlets are writing endlessly about this, so I’ll keep this extra brief. The wheels of the Inflation Reduction Act are likely to keep turning, but a GOP president (and possibly a more conservative Congress) would likely seek to slow processes down and significantly increase oversight looking for misused government funds.

5. Political impacts, global edition.

The Economist (subscription required) says more people are set to vote this year than ever before. As in the U.S., the impacts on climate (and everything else) will be far-reaching.

European Parliament elections in June could be pivotal to the bloc’s Green Deal and its future climate ambitions, writes Cipher’s chief Europe correspondent Anca Gurzu:

  • In the five years since the last elections, the costs of the green transition have become palpable to the average citizen (exacerbated by Russia’s invasion of Ukraine that sparked a broader energy crisis). Right-wing parties are keen to capitalize on some people’s apprehension about this transformation, and a tilt to the right could dilute the European Union’s appetite to accelerate the transition.

Other elections around the world we’re watching include those in India and Indonesia, writes Cipher’s senior global correspondent Bill Spindle:

  • These are the world’s most populous country and the biggest nation in Southeast Asia, respectively. The electoral stakes for the energy transition aren’t as high as in U.S. elections, but whatever occurs in these regions is significant because this is where most future energy demand is coming from.
  • Both countries (India especially) have across-the-board political support for ramping up renewable energy quickly, albeit on a small base, while also backing continued use of coal as the main way of powering their economies for decades to come.

Second, reality checks of my 2023 predictions:

1. Energy security for both fossil fuels and renewables.

Europe appears to have successfully staved off a full-blown energy shortage following Russia’s 2022 invasion of Ukraine and subsequent reduction of its gas resources to the bloc.

Such moves, a combination of increasing gas supplies from elsewhere, energy savings and relying more on other technologies, like heat pumps, is a testament to how war-time footing can affect fast change.

Meanwhile, renewables’ security took a bigger hit than I had predicted. The trifecta I mentioned above helped fuel an estimated 28% drop in venture capital spending in this space compared to 2022. Look no further than the trials of offshore wind — which heavily relies on cheap, upfront capital — to see the acute impacts.

2. How the new U.S. climate law permeates at home and abroad.

I was a bit early on this prediction since last year was nearly completely consumed by the rulemaking process (as noted above). Although the wheels of bureaucracy are slow, they are moving!

The frustration by some U.S. allies, namely Europe, of the protectionist measures in the IRA have spurred them into action too, Anca writes:

  • Europe worked to redesign its industrial competitiveness by coming up with its own plan to harness cleantech manufacturing at home and tinkering with subsidy rules to ensure businesses don’t flock to the U.S. The hard reality, however, is that the EU cannot compete with IRA in terms of subsidy volumes.

3. To what degree fossil fuel infrastructure and workers can transition to cleantech.

To effectively combat climate change, global progress must be made on the parallel tracks of 1) retraining fossil-fuel workers to either work in cleantech or other sectors altogether and 2) repurposing (or replacing) fossil fuel technologies with cleaner versions.

I had hoped to focus on this subject more explicitly last year, but candidly, I didn’t get to it. It’s a perennial topic that will permeate our debates for the next several decades at least, so I need to make time sooner than later, and I have a few specific ideas brewing.

4. Move over mitigation. We need room for adaptation.

The surprise agreement at December’s COP28 in Dubai regarding key operational details of a fund to help lower income countries cope with the impacts of climate change was at least partly fueled by the extreme weather much of the world experienced last year. Such extremes are likely again this year, thanks to the ongoing El Niño weather pattern temporarily supercharging global warming.

The money so far committed is woefully less than what’s needed, The Guardian points out. Nonetheless, more progress has been made on this front than there had been at many such gatherings in prior years. Expect adaptation to be a central topic at this year’s United Nations climate summit hosted in Azerbaijan.

Editor’s note: Breakthrough Energy Ventures is a program of Breakthrough Energy, which also supports Cipher.