Just over a year ago, the World Health Organization (WHO) officially declared a global pandemic. At the time, there was a great deal of uncertainty about how COVID-19 would impact the energy industry. More than 12 months later, we witnessed a 20% drop in oil demand, a 5% reduction in electricity consumption, and the largest year-over-year reduction in global CO2 emissions. However, through it all, the energy transition continued to move forward at an accelerated rate.
Using our news commentary feature, we have been tracking key developments in the energy industry over the first year of the global pandemic, covering nearly 650 individual developments across more than 10 of our major topic areas. These innovation-related events range from partnerships and investments to recent R&D and policies. Each news commentary includes information about the companies involved and our take on the development.
The news trends analysis is one of the main factors shaping the Lux Energy Team's outlook for 2021 and beyond. Many of the transformational developments that occurred directly influenced the Energy Program's four key themes – Evolution of Electricity Networks, Decarbonization of Industry, The Business of the Energy Transition, and Future Energy for Mobility – and shaped our 2021 predictions. In the below figure, we analyze the activity over the past 12 months within one of our main topics, energy for mobility.
As we enter the second year of the global pandemic, we take a look back at the "Truly Disruptive" and "Very Important" developments over the past 12 months. In addition, we have selected the most read and discussed innovation-related events.
- China extends NEV subsidies by two years, but more policy changes are likely to come. In response to the COVID-19 pandemic, governments doubled down on electrification by extending or increasing subsidies for electric vehicles. China, the world's largest market for electric vehicles, is the most impactful of these announcements.
- Volkswagen invests additional $200 million into QuantumScape. Although Lux has not been impressed with QuantumScape's progress, that has not stopped VW from pouring money into the solid-state battery startup, making it the most funded company in the space to date.
- Uber quietly announces it's testing battery swapping in San Francisco with Ample. As many ride-hailing companies look to reduce emissions, keeping a fleet of electric vehicles charged is currently a challenge. Uber is looking to test battery swapping with startup Ample to explore the space.
- Another multibillion-dollar funding round adds to Rivian's massive war chest. The window for new electric vehicle startups to enter the automotive space is closing as major automakers ramp up their own efforts. Rivian is one of the few likely to survive, backed by massive funding from Amazon and Ford.
- Plug Power and SK Innovation partner to advance the hydrogen ecosystem in Asia. Hydrogen was one of the most popular topics of 2020, and no company was more at the center of that than Plug Power. The company's expansion into Asia came with a partnership with one of the leading energy companies in the region.
- Delta pledges $1 billion to offset 350 million MT of emissions by 2030. Without mature zero-emission propulsion solutions for aviation, most airlines will be forced into offset programs to manage emissions.
- Lilium raises $240 million to continue eVTOL development. Overall, the VTOL space slowed in 2020, as Uber sold its Uber Elevate program, and timelines for deploying air taxis slipped. Lilium was the exception to this trend, as it raised major funding rounds and announced launch plans for operations in Florida.
- Rolls-Royce and Airbus cancel hybrid plane joint project before 2021 test flights. Electrifying commercial airliners is a challenge due to the energy density requirements for long flights, and in part due to COVID-19's impact on the aviation sector, Rolls-Royce and Airbus canceled their hybrid plane project.
- Norway's Civil Aviation Authority expects the country's first domestic scheduled flights with electrified aircraft to be in the air by 2030. Smaller regional aircraft are the most promising segment for full electrification in aviation, and Norway's many short-distance flights make it a key country to watch for progress in this area.
- SkyNRG partners with LanzaTech for 30,000 MTPY alcohol-to-jet commercial facility in Europe. With no short-term alternative solutions to reducing emissions, biofuels are the clear answer. This marks the second commercial facility from SkyNRG.
- Thailand's Energy Absolute launches all-electric ferry service in Bangkok. Ferries were one of the first opportunities to prove that the marine sector can be commercialized, and this project shows that activity is not restricted to Europe.
- Toyota develops marine fuel cell system based on Mirai powertrain, with first delivery to zero-emission demonstration vessel. Toyota's fuel cell passenger vehicle program never gained the critical mass required for large-scale adoption. In response, Toyota is adapting its technology for other applications like heavy-duty trucking and the marine space.
- Post-combustion sulfur scrubbers gain traction after IMO 2020, but recent oil prices may push the industry toward an LSFO alternative. A precipitous drop in demand for transportation fuels tipped the economic scales in favor of post-combustion scrubbers, likely a temporary measure, as LSFO alternatives will win out.
- Maersk, Ørsted, and other Danish companies embark on full-scale electrofuels production by 2030. This announcement marked the most high-profile electrofuels project to date, producing electrofuels for a variety of applications, including methanol used in shipping.
- Wärtsilä is developing 100% hydrogen fueled gas engines. Adoption of hydrogen as a transportation fuel in the marine space is not restricted to fuel cells, as major player Wärtsilä is exploring combusting the fuel.
The past year dramatically reshaped the industry's attitudes and actions toward powering mobility. We began to see rhetoric turn into action; in our analysis, projects, investments, and partnerships are the three leading types of news items we wrote.
Looking toward 2021, those interested should expect momentum behind reducing emissions from transport to continue. There may be some setbacks; the SPAC craze in 2020 created unsustainably high valuations, and we already see a bit of a market correction to more reasonable levels thus far in 2021. Additionally, some spaces – such as eVTOL – remain quite crowded and ripe for consolidation.
If the 2000s were a decade of proving technical validity for electrification, and the 2010s were the decade that proved it was in demand, the 2020s will be centered around manufacturers focusing more efforts upstream to become more vertically integrated, with a possible shift from a demand-limited to supply-limited market.