S&P Global — 23 October 2024
Daily Update: October 23, 2024
Different Challenges for the Energy Transition in Emerging Markets
By Nathan Hunt
Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy
Energy markets are different in emerging economies. Demand is growing much more rapidly. Project financing is a challenge. Energy affordability is an existential issue. While these factors also affect developed markets, they are far less acute. This makes the energy transition both a luxury and a necessity. A group of researchers at S&P Global recently examined this issue in an article, “Fitting decarbonization into the power sector priorities of emerging economies,” part of a larger series on emerging markets.
Emerging markets hold more than half of the world’s population but only use about half as much energy per capita as Organisation for Economic Co-operation and Development countries. However, energy demand is growing more rapidly in emerging markets due to factors such as population growth, urbanization, economic development and electrification.
Decarbonizing energy grids can seem like a luxury available only to the world’s wealthiest countries. In emerging markets, long-standing underinvestment in energy infrastructure, scarce public funds and foreign capital, and reliance on fossil fuels can make decarbonization appear almost impossible.
However, many emerging markets possess advantages in terms of natural resources, such as hydroelectric power, and have relatively few high-polluting energy plants. Just as many emerging economies moved directly to mobile telephony, skipping the era of landlines, countries that create an energy grid maximized for renewables may skip the era of coal. But in South and Southeast Asia and South Africa, coal is central to the broader economy and employs a large local workforce, creating hard limits on their ability to pivot to renewable capacity.
For emerging markets, the challenges of decarbonization include limited existing energy access, energy security amid geopolitical uncertainty, energy affordability that often leads to government subsidies, existing fossil fuel commitments, high levels of government control that can discourage market players, and limited access to capital.
Despite these challenges, many emerging markets have found ways to make the increasingly favorable economics of renewables work for them. Other emerging economies have looked toward the carbon restrictions of the EU’s Carbon Border Adjustment Mechanism policies as a commercial opportunity to sell into a wealthy market with few competitors. Hydrogen is also a potential bright spot, with emerging economies such as Colombia and Vietnam developing hydrogen capabilities.
Ultimately, private sector investment will likely be required to decarbonize energy in emerging markets.
Today is Wednesday, October 23, 2024, and here is today’s essential intelligence.
NH Governor Candidates Differ On Offshore Wind, Net Metering, Nuclear
A tight New Hampshire governor's race has the potential to shape the energy policy of a state that has traditionally taken a more cautious approach to the energy transition than its New England neighbors. The two leading candidates running to replace Republican Gov. Chris Sununu — Republican Kelly Ayotte and Democrat Joyce Craig — offer contrasting visions of renewable energy development that could either bring New Hampshire more in line with states such as Massachusetts and Maine or continue their predecessor's independent streak.
—Read the report from S&P Global Market Intelligence
Fading Rate Cut Expectations Push US Dollar Even Higher
A labor market that refuses to cool, inflation that remains stable and an economy that continues to expand have lowered expectations that the Federal Reserve will cut interest rates much this year and bolstered the US dollar. Since the end of September, the US dollar index, which measures the dollar against a basket of foreign currencies, has risen 3.4% as inflation and jobs data have lowered the odds for multiple rate cuts in the last two Fed meetings of 2024.
—Read the article from S&P Global Market Intelligence
What Would An Escalation Of The War In The Middle East Mean For GCC Banks?
The recent escalation of the war in the Middle East has increased the risk of broader regional ramifications for sovereigns' and banks' creditworthiness. Against this backdrop, S&P Global Ratings has created four stress scenarios to assess how the risk could evolve and how it could affect banks in GCC countries.
—Read the article from S&P Global Ratings
Market Bearish As Indonesian Cobalt Metal To Further Oversupply Europe
Oversupply remains a key driver of price in the European cobalt metal market, with a continued depressed outlook for the product amid Chinese overproduction. With more Chinese metal producers increasing production capacity and other origins like Indonesia becoming more prevalent, the oversupply picture has become the norm in the European market.
—Read the article from S&P Global Commodity Insights
Listen: How The 2024 Elections Could Reshape US Domestic Energy Policy (Feat. Commodities Focus)
For this week's episode, Energy Evolution presents an episode of the Commodities Focus podcast, another show in the network of S&P Global Commodity Insights' podcasts. Political experts say Nov. 5 will likely become known as one of the most pivotal elections in US history. Whether Donald Trump or Kamala Harris wins the presidency, and whether Republicans or Democrats control Congress, the energy sector faces major potential shifts. There will be implications for supply chains, energy infrastructure and the overall direction of US energy markets.
—Listen and subscribe to the podcast from S&P Global Commodity Insights
GenAI Funding On Track To Set New Record In 2024
Venture capital funding for generative AI startups is poised to exceed the impressive records of 2023. In the first three quarters of this year, GenAI startups secured over $20 billion, according to S&P Global Market Intelligence data. That puts 2024 on track to exceed the 2023 total of $22.7 billion. As in the previous year, this year's funding surge was significantly driven by billion-dollar mega-rounds from prominent players such as OpenAI LLC and Anthropic PBC.
—Read the article from S&P Global Market Intelligence
Webinar: Sustainable Evolution In New Age Vehicle Manufacturing - A Drive Towards A Greener Economy (Nov. 7, 2024)
Join us in this webinar to hear about the evolution of trends in manufacturing technologies for vehicles. We will focus on the rapid shift to Battery Electric Vehicles (BEVs) and how Original Equipment Manufacturers (OEMs) have developed new processes within production to accommodate this shift. These new processes have a direct impact on the overall profit per vehicle.
—Register for the webinar from S&P Global Mobility