At the end of a tumultuous 2022 for energy markets, 2023 was, in comparison, something of a calm after the storm. Energy prices declined from their 2022 peaks more quickly than many forecast relieving some of the political pressures (and dangers) of rushed market redesigns. However, ramifications continued to be felt throughout supply chains and by households and industry hit by inflation and suppressed demand. Resulting cost increases also challenged the energy industry itself, including a rare reversal in the long-term downward trend in renewable energy equipment prices. This in turn has put pressure on decarbonisation trajectories and the political commitment to keep the foot on the pedal.

Nevertheless, change continues at pace. Despite the headwinds the IEA projects a record 440 GW of renewable energy will have been installed in 2023, led by huge increases in China, while Electric Vehicles are expected to post a 35% year-on-year increase in sales. The increases in overall energy demand in developing markets continues to put pressure on overall emissions although a plateau (peak?) in emissions from the global power sector seems to be crystallising.

At ECA these macro trends have been observed in our very busy and active workload for the year. The socio-economic impacts – both positive and negative – of the energy transition have gained increased attention. We have undertaken analyses looking at just transition pathways for coal phaseout in Indonesia, considered the impact of carbon pricing in Montenegro, Bosnia & Herzegovina and Malaysia (including the implications of the forthcoming Carbon Border Adjustment Mechanism), investigated decarbonisation pathways that limit the impact on the natural world in the United Kingdom, and assisted a global energy-intensive industrial firm decarbonise its own energy supply through renewable procurement in several markets.

All this work has driven a need to continue growing our team, welcome new staff, and expand and deepen our economic modelling and policy analysis capabilities for investigating and advising on the big energy sector questions of the day.

We are excited to continue this journey in 2024 and do our part in supporting our clients through providing the independent, robust, clear, and considered analysis and recommendations that is our hallmark.

From everyone at ECA, a very happy new year.