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A shift towards domestic manufacturing, continuing high costs for components, and a push towards more concrete policy frameworks will be some of the key themes in the global Clean Technology space this year, according to a new report.
It is expected that solar PV supply chain tightness will persist and maintain high prices in 2022, particularly in the first half. However, there are some positive developments that will alleviate the current supply chain challenges, such as the ramping up of new polysilicon capacity and the entrance of new wafer players in the solar PV market.
Trade barriers and geopolitics will start to reshape the global manufacturing map. Policies aiming to reduce dependence on international module imports in major solar installation markets like India, where the government has launched the Production Linked Incentive (PLI) scheme or the United States which is currently discussing the Build Back Better bill, could become an important driver to incentivize domestic manufacturing of solar PV.
Lithium-ion (Li-ion) battery prices rose 10–20% in the latter half of 2021. Cost increases have been predominantly for LFP cells, the favored technology for grid energy storage systems. Price declines are not predicted to resume until 2024.
A lack of standardization and infrastructure, plus unaffordability have been the main barriers to the development of CCUS and hydrogen technologies. Since last year, policymakers have begun to target all three with measures to provide clarity to corporates and investors and begin to build a framework to facilitate the development of large-scale projects.
Definitions are beginning to be published for low-carbon or ‘clean’ investments, for example, the European Union’s proposed revision of RED II—rules for renewable fuels of non-biological origin—will effectively set the standard in the region for green hydrogen.
It is expected the policy push to continue through 2022. The main elements of future EU frameworks (i.e. revision of RED II, the Hydrogen and Gas Market Decarbonisation Package) will now be negotiated between the Commission, Parliament, and the Member States. The United Kingdom, meanwhile, plans to agree to support packages for its first CCUS projects this year.
“Rising carbon prices, targeted support and quotas are providing increasing certainty around demand trajectories for CCUS and hydrogen. In the United States, the bipartisan infrastructure bill has allocated $12 billion for CCUS and $9.5 billion for clean hydrogen. Meanwhile, quotas requiring the substantial use of low-carbon hydrogen and ammonia by the end of the decade have been set in both the European Union and South Korea.” – Catherine Robinson.
Last year solidified the revival of the CCUS industry, as increasingly ambitious global climate goals drove demand for potential solutions. The active pipeline for large-scale CCUS projects—those at the construction, design, financing, and planning stages—increased by 26% in 2021.
In terms of industrial diversification, the CCUS active pipeline is signaling a shift away from the traditional natural gas processing facilities, which has historically been the lead sector, to a broader pool of projects including heavy industries, hydrogen production, and power generation.
“As this market continues to gain traction, more projects will be announced in multiple regions and industries. Regional expansion is expected to continue in 2022. While North America and Europe will continue to lead the market, additional countries that have net-zero targets, high emissions, and a good understanding of storage capacity will likely announce new CCUS projects in 2022.” – Paola Perez, research analyst.