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The past year hasn’t generally been a cheerful one for those hoping the world will get a grip on climate change. We’re now around the middle of the 2020s, a decade when carbon dioxide emissions need to decline by about half if we’re to avoid damaging warming. Instead they’re still rising, if only just. The recent COP28 climate meeting in Dubai provided little sign of change.

It’s not all bad, however. Today we’re looking at three pieces of bad climate news you may have missed over the past year. 

Burning Down

China’s array of permit approvals for coal generation, combined with the tail end of a multi-year drought that put much of its vast hydroelectric sector out of action, might have given the impression that solid fuel had a good year in 2023. Global demand grew by about 1.4% to 8.54 billion metric tons, the International Energy Agency wrote in its annual review of the sector this month.

Yet that headline masks the precipitous decline in markets where coal is competing on a level playing field with alternative sources of generation.

In Europe, dire warnings of a “return to coal” proliferated in 2022, after Russia’s invasion of Ukraine caused governments to put plants on standby in the event of disruptions to gas supplies. Those fears haven’t played out. Coal generation fell 30% – not a typo – in the core countries of western Europe and Scandinavia over the past year, according to BloombergNEF, as rising renewable power and efficiencies pushed fossil generation to its lowest level on record.

In the US, consumption has slipped to its lowest level since the 1950s, with further falls predicted next year when coal-fired generation will fall behind power from solar panels and wind turbines.

China and India, which consume two-thirds of the world’s coal, remain the major problem. Even there, its days are numbered, with the IEA expecting Chinese consumption to fall in 2024. Solid fossil fuel kickstarted the industrial revolution and we still burn too much of it – but 2023 will prove to be the year we passed the peak.

An Ill Wind

What has been the best performing developed-world stock in the Bloomberg World Energy Large & Midcap Price Return Index over the past quarter? Chevron Corp. or Exxon Mobil Corp., flush with billions of dollars of acquisitions? Phillips 66, the refiner that’s subject to a $1 billion campaign by activist shareholder Elliott Investment Management?

Believe it or not, it’s a company in the most unloved bit of the energy market – Vestas Wind Systems A/S, the Danish turbine-maker whose shares have gained 32% since the end of September. “Don’t get caught a little bit by one or two negatives,” Chief Executive Officer Henrik Andersen told investors in November: The outlook is “actually optimistic.”

Engineering companies generally suffer most when the market is already recovering, as they work through a legacy of contracts agreed when prices were more favorable. That’s precisely what’s happening with wind right now. Despite all the negative headlines, new offshore wind remains cheaper than fossil-fired alternatives in Europe and China, and onshore power has widened its cost advantage over coal and gas elsewhere.

Material costs for key components are falling, while several years of lobbying resulted in the introduction of European Union rules in October that were welcomed as undoing challenging bottlenecks. A small number of projects that were underpriced are likely to suffer high-profile difficulties, but others will be fine – such as Hornsea 3, the 2.9 gigawatt farm in the North Sea that Orsted AS said last week it will proceed with, after much speculation it would be canceled. BloombergNEF has cut its forecast for installations outside China until 2035 by just 4%, to 275 gigawatts – hardly a crisis situation.

Get Your Motor Running

For years, the electric vehicle industry has been searching for its holy grail – a battery pack that costs less than $100 per kilowatt hour. Batteries make up about a third of the cost of an EV, and the rule of thumb has always been that they won’t be able to compete with conventional cars on dealership pricing until that metric falls to the $100 level.

Just 12 months ago, soaring prices for key battery metals meant that dream seemed further away than ever – but commodity booms tend to be short-lived, while the busts last longer. Prices of lithium hydroxide are down roughly 80% so far this year, and Goldman Sachs Group Inc. is now predicting we’ll hit $100 just over a year from now, in 2025.

The signs of price parity are already showing up in the real world, even though those cheaper batteries aren’t yet in use. In China, EVs are competing with comparable conventional vehicles and the country could be close to a point where adoption is led by consumer tastes rather than government incentives, according to Goldman. It’s not so different in the US, where the price of new EVs has fallen 21% over the past 12 months to the point that they’re barely marked at a premium to the industry average.

Cheap batteries aren’t the preserve of factories in China, South Korea and Japan, either: BYD Co. last week announced it would build a car plant in Hungary, where costs for rechargeable cells look to be comparable to those in Asia.

Reasons to be Cheerful

Predictions are hard, especially about the future, in the words of a quote often attributed to physicist Niels Bohr. So it’s hard to say whether we’ll look back on 2023 as the year when centuries of human emissions peaked and started to decline, or the moment when a new herd of obstacles to the energy transition loomed into view. The big changes, however, are almost always missed in the moment. Don’t give up hope that the coming 12 months will see the climate positives outweigh the negatives again.