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Ten predictions for energy in 2024

A solar slowdown, relief for OPEC+, the rise of blue hydrogen, and other trends to watch out for in the year ahead

8 minute read

On 13 December, the governments of the world meeting at the COP28 climate talks in Dubai agreed what’s been described as a “historic” statement, for the first time setting a goal of transitioning away from fossil fuels.  

That objective sets a change of course for the global energy system. Consumption of oil, gas and coal has been growing, and all three fuels hit new record highs in 2023. But, at the same time, renewable energy has been booming. Production from wind and solar power worldwide in 2023 was about 55% higher than in 2020.  

When Wood Mackenzie analysts offered 10 predictions for 2023 in Energy Pulse a year ago, they identified some of the key features of this fast-evolving landscape. Their predictions highlighting the downward pressures on metals prices, the strength of global oil demand, North American oil and gas companies’ renewed enthusiasm for production growth and the rebound in US solar installations, among others, turned out to be on target. 

This year, we expect some of those trends to continue, but there are also new issues emerging. Here are our 10 predictions for what we think will be key developments in energy and natural resources in 2024: 

1. The global solar growth slowdown will begin 

Even though total global solar capacity will continue to grow rapidly over the coming decade, the pace of growth in annual installations will start to slow in 2024 compared to the rates seen in recent years. If our forecast for 2023 holds, average annual growth in capacity installations over 2019-23 was 28%, including 56% growth in 2023. By contrast, annual average growth from 2024-28 will be about zero, including a few years with contractions. Growth in the global solar market is following a typical S-curve. Over the last few years, growth has climbed rapidly up the steepest part of the curve. Starting in 2024, the industry will be past the inflection point, characterised by a slower growth pattern. The global solar market is still many times larger than it was even a few years ago, but it’s natural for an industry to follow this growth path as it matures. 

Not every region is currently in the same place along the S-curve. Africa and the Middle East, for example, have a long way to go before they hit their growth inflection points. But two major markets are driving this global growth pattern: Asia Pacific, dominated by China, and Europe. 

Michelle Davis – Head of Global Solar 

2. Nuclear power will continue to rise up the policy agenda as a climate solution 

A quote often misattributed to Albert Einstein is that nuclear power is "one hell of a way to boil water". It was actually coined in 1980, after the Three Mile Island reactor accident that helped to turn the tide of public opinion against atomic energy. In 2024, however, nuclear power is set to win widespread support as a key solution to the world's energy crisis, for the first time in over half a century. Nuclear power has faced, and still faces, challenges of public acceptability and economic competitiveness against renewables and fossil fuel generation. But it is the only reliable, dispatchable, small physical-and-material footprint, plug-and-play zero-carbon solution for power generation. 

Julian Kettle – Vice Chair, Metals and Mining 

3. The evolving balance between decarbonisation and security of supply will act as a brake on investment decisions in gas and LNG for many companies 

After Russia’s invasion of Ukraine, the global gas and LNG industry reprioritised securing supply. More than 65 million tons per year of LNG sale and purchase agreements were signed by end-users in 2022 and 2023. Investments in new LNG supply were always going to slow in 2024, given the scale of investments already made and the expected market rebalancing. But COP28 has added new uncertainty to the outlook for gas. As a fossil fuel, it is one that the governments of the world aim to transition away from. But as the most widely accepted “transitional fuel”, it will still have a role to play in providing energy security for some time. 

Companies and governments will need to reconsider investments against this evolving backdrop, possibly slowing some of them further. Industry participants will need to realign their portfolios and strategies to navigate the contradictions and the range of possible outcomes for gas demand. 

Kristy Kramer – Head of Gas and LNG Consulting 

4. A slowdown in non-OPEC oil production growth will ease the pressure on the OPEC+ countries 

This year, there has been a large increase in non-OPEC oil production of about 2 million barrels per day, piling the pressure on the OPEC+ group to cut its output to prevent a slump in prices. Next year, we expect that non-OPEC growth to slow to just 0.8 million b/d.  

The largest factor in the projected slowdown is our expectation of a sharp deceleration in US oil production growth next year, but other countries including Brazil will also contribute. The non-OPEC slowdown will relieve the pressure OPEC+ has faced in 2023. Among the caveats to this view: a surge in US productivity (see below). 

Ann-Louise Hittle – Head of Macro Oils 

5. US oil and gas producers will do more with less 

The biggest macro story from the US oil and gas industry next year could be that efficiency gains refuse to plateau. Total upstream capital spending in the Lower 48 states is expected to fall in 2024, for the second successive year. But, at the same time, total Lower 48 production of both oil and gas will continue inching higher, setting new records for each. Muted movement in the rig count will be more than offset by continued improvement in drilling speeds and pad cycle times, completion efficiencies and improved project execution. All this serves as a reminder of just how lean and mean US shale has become. 

Robert Clarke – Vice-President, Upstream Research 

6. A large US E&P could merge with a large international E&P 

The pure-play model of geographically focused exploration and production companies has lost its lustre since investors began rejecting production growth in favour of cash distributions. Large-scale M&A is increasingly targeting diversification, as companies look to build resilient financial platforms. Internationalisation is the next logical step in this strategy. US buyers’ strong equity currency will be a lure for overseas targets, helping to make deals happen. 

Greig Aitken – Director, Corporate Research 

7. Hydrogen project FIDs will continue to skew blue 

The ambitions for low-carbon hydrogen around the world, reflected in government policies and corporate project development, are quite remarkable. As is a 108-mtpa global project pipeline that skews 80% to green hydrogen, made from electrolysing water. However, the rate of project maturation for electrolyser hydrogen will remain slow as developers struggle to overcome key obstacles. 

Two of the most important challenges that green hydrogen projects will face are achieving competitive costs and securing firm commitments from offtakers. Projects with credible counterparties and those targeting hydrogen as a feedstock in existing applications are most likely to move ahead. Those targeting new applications will struggle to achieve costs that compete with traditional fossil fuels. Blue hydrogen projects will also move slowly through the project development cycle, but more will achieve FID as they benefit from competitive economics and scaling more quickly.  

Melany Vargas – Head of Hydrogen Consulting 

8. Carbon offsets will regain momentum, against all the odds 

The voluntary carbon market was at a crossroads in 2023, with market activities bogged down by a loss of confidence, and buyers craving clarity. COP28 couldn’t reach an agreement on Article 6 and market sentiment suffered frustration again. The situation seems dire, but there are reasons to believe this could be the dark before the dawn. Buyers are wising up and weeding out low-quality offsets from the market. In the absence of centralised oversight from the UN, independent governance bodies are setting guidelines and offering clarity. And offsetting programs are working hard to evolve. We expect to see the results of these efforts in 2024. 

Elena Belletti – Global Head of Carbon Research 

9. Novel carbon capture technologies will finally enter commercial scale 

In 2024, new CCUS projects are no longer noteworthy in and of themselves. We track up to 100 commercial-scale projects, with 50 having a decent chance of progressing. What is new, however, is the much-awaited graduation of novel technologies from pilot to commercial scale. New techniques to capture carbon dioxide such as modularisation, solid adsorption and bio-recycling will be fully deployed for the first time in 2024. These promise lower energy intensity and cost reductions of up to 50% compared to incumbent methods. If successful, barriers will be lowered for emitters in vital heavy industries such as cement and chemicals. And the technology companies can expect a rush of orders. 

Mhairidh Evans – Head of CCUS Research 

10. Geoengineering will become a hot topic 

In the conclusions of the first Global Stocktake at COP28, countries acknowledged that the remaining global carbon budget is shrinking rapidly, with a risk of overshooting the 1.5 °C goal. That means hundreds of billion tonnes of carbon dioxide will need to be removed or captured and stored to get the world back on course for no more than 1.5 °C of warming by 2100. 

Geoengineering techniques can be used to enhance the carbon absorption capacity of the planet, and to reflect sunlight back into space, helping to keep the earth cool. For example, aerosols or other chemicals can be released a few kilometres up into the atmosphere, thus reflecting more sunlight away from the planet’s surface. I believe that in 2024, governments and scientific institutions will come together to study this fascinating subject more deeply and discuss the pros and cons of pursuing it. 

Prakash SharmaVice President, Scenarios and Technologies 

That is all from me and the rest of the Energy Pulse team for 2023. Many thanks to all of you for reading this year. Have a great holiday, and we will be back again in 2024.