2021 was a landmark year for clean energy and climate policy, from dozens of nations pledging to phase out coal, to the most ambitious federal climate proposals in United States history, to automakers going all in on electrified transportation.
Many of these developments were forecast by policy experts who thought Democratic control of the White House and Congress, fast-falling clean energy and electrified technology prices, and the undeniable need to confront climate change by cutting emissions portended a groundswell of action.
But the outlook for 2022 is not as clear. Will China commit to phasing out new domestic coal plants? Will the U.S. Senate finally pass the Build Back Better Act (BBBA) and unlock hundreds of billions in investment? How will billions in electric vehicle (EV) and grid investments from the Infrastructure Investment and Jobs Act (IIJA) be allocated? And will growing consumer demand for clean energy drive new renewable energy, EV, and electrified appliance sales?
leading policy experts shared their predictions for the year ahead including coal’s accelerating decline, federal investments energizing clean energy adoption and grid expansion, and millions of EVs hitting U.S. roads to help EV chargers become a new investment class.
Coal’s downward spiral will accelerate
The global coal industry’s downward spiral will accelerate in 2022. While power generation from coal temporarily rebounded in 2021 during COVID economic recovery, the fundamental economic and political pressures continue escalating against it. New wind and solar are cheaper than existing coal in many parts of the world, the new coal plant pipeline is collapsing, and banks and insurance companies are rejecting coal projects in droves.
Key dominoes fell against coal in late 2021. China, the last major source of new coal plant finance, announced it would end international funding for new plant construction. Dozens of nations committed to phase out coal at the UN COP26 climate summit, pledging to “consign coal to history.” The International Energy Agency projects renewables will dominate new energy investments this decade, producing more electricity than fossil fuels.
Climate science is crystal clear – we must phase out coal power in the developed world by 2030, and the rest of the world soon after, for a fighting chance at a livable climate. In 2022, we will make progress in three key areas.
First, we will see the beginning of the end for new coal plant construction as one country after another commits to no new coal plants. The world’s second largest coal burner, India, is all in on clean energy and seriously weighing ending new coal construction to meet pollution and climate goals.
Second, the U.S. and Europe will continue accelerating their coal phase outs. Two of the biggest coal burners a decade ago, two-thirds of U.S. coal plants and over half in Europe have announced retirement or retired since then, thanks to determined advocates and falling clean energy prices. Coal burning will essentially end in both this decade.
Finally, the rest of the world will begin its coal transition in earnest, including developing countries. A landmark deal announced last year will help South African utility Eskom phase out coal, a critical step for the world’s 12th biggest carbon emitter. Lining up more of these efforts will speed progress.
As the world moves beyond coal, all eyes are on the biggest unknowns: Will China, which burns over half the world’s coal, follow suit and end new coal plant construction domestically? And will the global coal phase out happen fast enough?
Americans will purchase nearly 2 million EVs in 2022
This year marks the end of the beginning for electric vehicles (EVs), as public perception of the technology shifts from novelty to mainstream, thanks in large part to reduced manufacturing costs, extended range capabilities, an increase in available models, greater availability of affordable used EVs, and an ever-growing charging infrastructure landscape. In turn, Americans will purchase nearly 2 million EVs in 2022.
Last year, we saw vehicle manufacturers across the spectrum commit to increasing EV production and making them more affordable. Legacy mass-market automakers like Ford and GM announced their shared aspiration to achieve up to 50 percent of total annual U.S. sales to be EVs by 2030. Ford even had to double its annual production projections due to consumer demand. At the same time, EV pioneers like Tesla exceeded their expected vehicle deliveries, putting nearly a million Teslas TSLA on the road globally last year, even while facing significant supply-chain issues. And Toyota pledged to hop on board, announcing the company’s investment of over $17 billion to roll out 30 new EVs by 2030.
This technology shift will be enabled by policy initiatives implemented primarily at the federal level. President Biden issued an executive order in August targeting half of all new passenger car and light-duty truck sales to be zero-emission vehicles (ZEVs) by the end of the decade. Also, Congress passed the Infrastructure and Jobs Act, signed by the president, which sets aside up to $7.5 billion in EV charging infrastructure deployment, $12.5 billion for clean vehicles, and $10 billion for grid and battery technology improvements. EV momentum is palpable as we begin a new year.
This impending progress is for nothing, however, if EV and charging infrastructure distribution and accessibility aren’t realized by frontline communities who have been, and continue to be, most impacted by transportation-related air pollution and climate change-induced disasters.
Commercial EV charging infrastructure emerges as a new investment asset class
In 2022, U.S. conversations around EV charging will shift from a focus on how to install public passenger EV charging hubs to managing the electrification of medium- to heavy-duty vehicle fleets. Charging stations that can service many large commercial fleet vehicles at once will need to be quickly developed along key highway corridors, major logistical hubs, as well as on last-mile delivery routes.
When these larger EVs start to hit the market in 2022, commercial charging infrastructure projects will emerge as a new investment asset class – one that can provide even greater returns on investment, given the projected energy demands and land use considerations that accompany building out large-scale charging infrastructure. Strategic coordination between the federal government, private investors, and fleet owners and operators will help us capitalize on this once-in-a-generation opportunity to transform our transportation ecosystem.