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Renewables Will Overtake Coal by Early 2025, Energy Agency Says:

 

A new report, the international group said that solar, wind and other renewable sources will expand much more swiftly than forecast last year.

A row of tall white wind turbines lines a mountain ridge next to a large pile of coal in the foreground.
Turbines from the Roth Rock wind farm abut a coal processing plant in Oakland…

Worldwide, growth in renewable power capacity is set to double by 2027, adding as much renewable power in the next five years as it did in the past two decades, the International Energy Agency said Tuesday.

Renewables are poised to overtake coal as the largest source of electricity generation by early 2025, the report found, a pattern driven in large part by the global energy crisis linked to the war in Ukraine.

“This is a clear example of how the current energy crisis can be a historic turning point toward a cleaner and more secure energy system,” said Fatih Birol, the I.E.A. executive director, in a news release.

The expansion of renewable power in the next five years will happen much faster than what the agency forecast just a year ago in its last annual report, said Heymi Bahar, a senior analyst at the I.E.A. and one of the lead authors of the report. The report revised last year’s forecast of renewable growth upward by 30 percent after the introduction of new policies by some of the world’s largest emitters, like the European Union, the United States and China.

While there has been a wartime resurgence in fossil fuel consumption as European countries have scrambled to replace gas from Russia after its invasion of Ukraine in February, the effects are likely to be short-lived, the agency said.

Instead, over the next five years, the global energy crisis is expected to accelerate renewable energy growth as countries embrace low-emissions technology in response to soaring fossil fuel prices, including wind turbines, solar panels, nuclear power plants, hydrogen fuels, electric vehicles and electric heat pumps. Heating and cooling buildings with renewable power is one of the sectors that needs to see larger improvement, the report said.

The United States passed the Inflation Reduction Act this year, a landmark climate and tax law that, among many investments to reduce planet-warming greenhouse gas emissions, made an “unforeseen” expansion in long-term tax credits for solar and wind projects extending through 2032, Mr. Bahar said. Previously, these tax credits had been revised a few years at a time. Extending the credits until 2032 provides better certainty for investors, which is important in the energy industry, Mr. Bahar said.

China alone is forecast to install almost half of the new global renewable power capacity over the next five years, based on targets set in the country’s new five-year plan. Even still, the country is accelerating coal mining and production at coal-burning power plants.

The recent momentum in renewable energy growth is not enough to help the world limit global warming to 1.5 degrees Celsius (2.7 degrees Fahrenheit) compared to preindustrial levels, said Doug Vine, director of energy analysis at the Center for Climate and Energy Solutions. The goal was set by the landmark Paris climate agreement in 2015; beyond that threshold, scientists say the risk of climate catastrophe, including deadly heat waves and coastal flooding, increases significantly.

Scientists have calculated that meeting the 1.5 degrees Celsius goal would require countries to curb or offset all carbon dioxide emissions by 2050. “We are still not there,” Mr. Bahar said, but the agency’s new report indicates that narrowing the gap is “within the reach of government policies and actions.”

The main obstacles in wealthy countries are lengthy permitting procedures and lack of improvements and expansion to grid infrastructure, the report said. Some European countries have made progress on that front, including Germany, which has reduced permitting timelines, and Spain, which has streamlined permitting and increased grid capacity for renewable energy projects.

For low-income countries, the report said, the challenge is both weak grid infrastructure and the lack of access to affordable financing for renewable projects, which require higher upfront costs for capital than they do for maintenance and operation. High interest rates on loans are often a barrier for many lower-income countries that are the most vulnerable yet least responsible for climate change.

At last month’s United Nations climate conference in Sharm El Sheikh, Egypt, many global leaders made calls to overhaul two powerful financial institutions, the World Bank and the International Monetary Fund, which represent a global financial system that the leaders say disadvantages poorer countries. If implemented, supporters say, the reforms could offer struggling countries lower interest rates and enable financial institutions to attract trillions of dollars in private capital to help those countries transition to renewable energy.

 

 

What Is a Wealth Tax?

Investopedia
A wealth tax is a tax based on the market value of assets owned by a taxpayer. Some developed countries choose to tax wealth, although the United States has historically relied on taxing annual income to raise revenue.

During the 2020 election, the immense and increasing disparity in wealth in the United States prompted politicians such as Sen. Bernie Sanders (I-Vt.) and Sen. Elizabeth Warren (D-Mass.) to propose a wealth tax, in addition to the income tax. In March 2021, Warren introduced S.510, a revised version of her earlier proposal, to impose a tax on the net worth of very wealthy individuals. Although the first version failed, a new version of her proposal was introduced in 2024.

KEY TAKEAWAYS

  • A wealth tax is a tax levied on the net fair market value of a taxpayer’s assets.
  • A wealth tax applies to the net fair market value of all or some of a variety of asset types held by a taxpayer, including cash, bank deposits, shares, fixed assets, personal cars, real property, pension plans, money funds, owner-occupied housing, and trusts.
  • France, Norway, Spain, and Switzerland all have wealth taxes.
  • U.S. politicians have proposed adding a wealth tax as a way to distribute the tax burden more fairly in a society with immense economic disparity.

 

Understanding Wealth Taxes

A wealth tax, also called capital tax or equity tax, is imposed on the wealth possessed by individuals. The tax usually applies to a person’s net worth, which is assets minus liabilities. These assets include (but are not limited to) cash, bank deposits, shares, fixed assets, personal cars, real property, pension plans, money funds, owner-occupied housing, and trusts.

An ad valorem tax on real estate and an intangible tax on financial assets are both examples of a wealth tax.1 Generally, countries that impose wealth taxes also impose income and other taxes.

Only four Organisation for Economic Co-operation and Development (OECD) countries currently levy a net wealth tax: France, Norway, Spain, and Switzerland.2 Previously, in the early 1990s, 12 countries reportedly imposed a wealth tax, indicating that the popularity of this form of taxation is diminishing.3

In the United States, federal and state governments do not impose wealth taxes. Instead, the U.S. imposes annual income and property taxes. However, some consider property tax a form of wealth tax, as the government taxes the same asset year after year. The U.S. also imposes an estate tax on the death of individuals owning high-value estates.4

However, that levy represents a relatively insignificant contribution to U.S. tax receipts. For example, in 2020 the total collections from gift and estate taxes were equivalent to only 0.1% of U.S. GDP.5

 

Examples of a Wealth Tax

In effect, a wealth tax impacts the net value of the assets accumulated over time and owned by a taxpayer as of the end of each tax year. An income tax impacts the flow of the additions in value that a taxpayer realizes, whether as earnings, investment returns such as interest, dividends, or rents, and/or profits on disposition of assets during the year.

Let’s look at an example of how the wealth tax differs from income tax. Assume a single taxpayer earns $120,000 annually and falls in the 24% tax bracket. That individual’s liability for the year will be 24% × $120,000 = $28,800. What is the tax liability if the government taxes wealth instead of income? If the taxpayer’s assessed net worth is $450,000 and the wealth tax is 24%, then the tax debt for the year will be 24% × $450,000 = $108,000.

In reality, annual wealth tax rates are significantly lower than annual income tax rates. In France, for example, the wealth tax used to apply to total worldwide assets.6 As of 2023, however, it only applied to real estate assets worth more than €1.3 million ($1,400,000). If the value of those assets is greater than €1.3 million, the calculation of wealth tax starts at €800,000.6

Assets between €800,000 and €1,300,000 are subject to a 0.5% tax. Rates continue to rise at graduated thresholds—0.7%, 1%, 1.25%—until, finally, real estate assets over €10,000,000 are taxed at 1.5%. A wealth tax cap limits total taxes to 75% of income.76

If a taxpayer is not a resident of a particular country, then the wealth tax generally only applies to their holdings in that country.

 

Sen. Warren’s Wealth Tax Proposal

Here’s Sen. Warren’s original 2021 proposal, which was to take effect in the 2023 tax year:

  • Taxpayers subject to the wealth tax: those whose net assets (i.e., assets minus debt) are valued at over $50 million, based on their 2022 valuation.
  • Tax rate: 2% on net assets valued over $50 million and up to $1 billion; 3% on net assets in excess of $1 billion.
  • Assets subject to tax: all types of assets—anything that the wealthy person owns, including stock, real estate, boats, art, and more.
  • Revenue effect: S.510 is estimated to raise up to $3 trillion over 10 years and to apply to approximately 100,000 households.8

Upon introduction, the bill had seven Senate co-sponsors: Sens. Kirsten Gillibrand, Mazie Hirono, Edward Markey, Jeff Merkley, Bernie Sanders, Brian Schatz, and Sheldon Whitehouse. An eighth senator, Alex Padilla, later became another co-sponsor. Two House co-sponsors, Reps. Brenda F. Boyle and Pramila Jayapal, supported a companion bill in that chamber.

Although the bill died in committee after the second reading, Sen. Warren re-introduced her wealth tax legislation, with nearly identical proposals, in March 2024. Reps. Boyle and Jayapal sponsored equivalent legislation in the House of Representatives.9810

 

Pros and Cons of a Wealth Tax

Proponents of wealth taxes believe this type of tax is more equitable than an income tax alone, particularly in societies with significant wealth disparity. They believe that a system that raises government revenue from both the income and the net assets of taxpayers promotes fairness and equality by taking into account taxpayers’ overall economic status, and thus, their ability to pay tax.

Critics allege that wealth taxes discourage the accumulation of wealth, which they contend drives economic growth. They also emphasize that wealth taxes are difficult to administer.

Administration and enforcement of a wealth tax present challenges not typically entailed in income taxes. The difficulty of determining the fair market value of assets that lack publicly available prices leads to valuation disputes between taxpayers and tax authorities. Uncertainty about valuation also could tempt some wealthy individuals to try tax evasion.

Direct wealth taxes have been repealed in several countries, partly because they tend to scare off wealthy people and hinder foreign investment.

Illiquid assets present another issue for a wealth tax. Owners of significant illiquid assets may lack ready cash to pay their wealth tax liability. This creates a problem for people who have low incomes and low liquid savings but own a high-value, illiquid asset, such as a home. Similarly, a farmer who earns little but owns land with a high value may have trouble coming up with the money to pay a wealth tax.

Some accommodations may be feasible to address administrative and cash flow issues—for example, allowing tax payments to be spread over a period of years or creating special treatment for specific asset categories such as business assets. However, exceptions could undermine the purpose that many attach to a wealth tax: structuring the overall tax system to make all taxpayers pay their fair share.

 

Does the United States Have a Wealth Tax?

The United States imposes property and estate taxes but does not have a general wealth tax. However, that could soon change. U.S. Sen. Elizabeth Warren (D-Mass.) and some of her peers are trying to push through a bill that would see households and trusts worth over $50 million get taxed a percentage of their net worth (either 2% or 3%) each year.10

 

What Is Good About a Wealth Tax?

Proponents view the wealth tax as a way to boost the government’s public spending coffers by taking extra money from those who don’t really need it. Such a tax generally only applies to the wealthiest, and it can be argued that the money it will cost them will have zero impact on their quality of life.

 

What Is the Downside of a Wealth Tax?

A wealth tax is difficult to administer, tends to encourage tax evasion, and has the potential to drive the wealthy away from countries that enforce it. These caveats, coupled with debates about how to implement it fairly, perhaps explain why so few countries in the world impose such a tax on their residents.

 

The Bottom Line

A wealth tax is a levy on the total value of a person’s assets, as opposed to taxes on their income, real estate, or asset sales. Wealth taxes have been implemented in some European countries, and proposed by U.S. politicians as a way of moderating extreme wealth inequality.

These 4 charts show the world just passed a major clean energy milestone

By  and , CNN

The Villanueva solar power plant in Coahuila State, Mexico. Solar power boomed in 2023, the fastest growing source of electricity generation for the 19th year running, according to new data.
CNN — 

The world has passed a clean energy milestone, as a boom in wind and solar meant a record-breaking 30% of the world’s electricity was produced by renewables last year, new data shows.

The planet is reaching “a crucial turning point” toward clean energy, according to the Global Electricity Review published Wednesday by climate think tank Ember. It predicts global fossil fuel generation will fall slightly in 2024, before experiencing much bigger declines in subsequent years.

It’s a significant step toward the world reaching 60% renewable electricity by 2030, which is critical to meeting global climate goals, said Dave Jones, global insights director at Ember.

A look at the data reveals just how much the global power sector is changing.

Record-breaking renewables

In 2000, renewables made up less than 19% of the global energy mix. Now they make up more than 30%. Taking nuclear energy into account, the world generated almost 40% of its electricity from low-carbon sources last year.

Although global levels of planet-heating pollution reached a record high in 2023, the boom in renewables has pushed the electricity sector’s carbon intensity — the amount of carbon pollution produced per unit of electricity — to a record low in 2023, 12% less than its 2007 peak.

The rise of renewables is also pushing fossil fuels into decline, slowing their growth by almost two-thirds over the past decade, the report found. Already, more than half of countries are five years past their peak in fossil fuel-generated electricity.

Fossil fuels’ share in the overall electricity mix has fallen from 64.7% in 2000 to 60.6% in 2023. Ember predicts this number will drop significantly in 2024, to 57.6%, as the rapid increase in solar starts to be felt.

“We’re going to get that boom in renewables, which will really change the picture very quickly,” Jones told CNN.

Booming solar

Solar was the fastest-growing source of electricity in 2023 for the 19th consecutive year, according to the report. It made up nearly twice as much new electricity generation as coal last year.

The surge of solar installations happened at the end of 2023, so the full effect is yet to be felt, said Jones. “I think that 2024 will bring a bit of a shock when you start seeing those numbers,” he said, especially among those who assume the demand for fossil fuels such as gas is going to just keep rising.

While coal and gas still make up the bulk of global electricity generation, their growth rate last year was far lower than that of wind and solar.

“The speed of solar and wind expansion is remarkable and a sign that society can bring about rapid change,” said Niklas Höhne, a climate scientist at the non-profit the NewClimate Institute, who was not involved in Ember’s research.

Renewable growth would have been even higher if it hadn’t been for significant drops in hydropower output due to drought in countries such as China and India, the report found. The shortfall was mostly filled by coal.

China leading the pack

China is far and away the leader on solar, accounting for nearly 36% of global generation last year.

meanwhile in china
What’s happening in China and what does it mean for the rest of the world?
But it’s a different story when looking at how big a role it plays in China’s national electricity mix — just 6%, far below many other major solar-producing nations.

Solar makes up more than 10% of annual electricity generation in 33 countries, according to the report, including Chile (30%), Australia (17%) and the Netherlands (17%) — and California, the world’s fifth-largest economy, generates 28% of its electricity from solar.

Electricity demand set to soar

Global electricity demand increased to a record high in 2023 — adding the equivalent of Canada’s entire electricity demand — but the rate of growth slowed compared to the average over the past decade.

China was the main driver of demand, while the United States and the European Union saw sharp falls amid milder weather and — particularly for the EU — a temporary slump in industrial activity.

Electricity demand is set to soar from 2024 onward, Ember’s analysis found. Electric vehicles, heat pumps and electrolysis — the process used to make green hydrogen, a much-hyped clean energy — will increase demand, alongside technologies such as air conditioning and artificial intelligence.

The spread of these technologies will increase the growth in electricity demand, but overall demand will decline as electrification is more efficient than fossil fuels, according to the report.

Overall, Ember’s report “does provide hope,” said Nancy Haegel, a research advisor at the National Renewable Energy Laboratory, who was not involved in the analysis. “It shows that we can generate significant amounts of electricity with renewable energy.”

The question is whether the pace of the transition will be fast enough, she told CNN. “Choices in the next 10 years are critical.”

 

 

I spent 5 years interviewing 233 millionaires—here are the 6 habits that made them ultra wealthy

Striking it rich is not a fluke. It takes hard work, fearlessness and a growth mindset.

I spent five years studying the habits of 233 millionaires — 177 of them were self-made — to find out how they make use of their time. Based on my research, I identified six principles they all shared that helped them build wealth.

The best part is that anyone can implement these and start working towards becoming a millionaire.

1. Self-made millionaires are constantly learning.

For the millionaires I interviewed, learning and self-improvement were top priorities.

Forty-nine percent reported that they took a few minutes every day to learn new words, and 61% shared that they practiced new skills (i.e., a sport or online class) for a minimum of two hours a day. Another 63% said they listened to audiobooks during their work commutes.

Seventy-one percent said they often read self-help books. Many of them gravitated towards biographies of successful people.

2. Self-made millionaires listen more than they talk.

One strategy that came up many times during my interviews was the “5:1 listening rule.”

In group settings, for every minute they spoke, the millionaires listened for five minutes. This helped them to strengthen their work relationships and get a number of different perspectives on a given issue.

And 81% said that they actively sought feedback from others every day, both inside and outside of the workplace.

3. Self-made millionaires build great teams.

In my study, 86% of self-made millionaires worked an average of 50 hours or more a week. But they didn’t work alone. Many succeeded because they focused on their strengths and figured out a way to outsource their weaknesses.

If they did not possess a particular skill, they delegated to someone who was great at it, so they could focus on the bigger picture and have more time and mental energy to execute it.

Surrounding themselves with people who shared their vision made it possible to go the distance with their goals.

4. Self-made millionaires dream big.

Many of the millionaires in my study used a strategy I call “Dream-Setting.” They sat down and wrote out what their ideal, perfect life looked like 10 years into the future.

One of the millionaires in my study was passionate about wine, and thought that he could make millions investing in it. His family and friends didn’t think it was possible, but he was undeterred.

Over the course of 15 years, he became an expert in the industry. In 2001, he liquidated a small fraction of his wine collection and was able to buy his dream home on the beach in Florida.

He made $4 million in earnings — all because he refused to give up on an idea he believed in.

5. Self-made millionaires prioritize their health.

Good health translates into longevity, which means more time to create more wealth.

One millionaire struggled with her weight for a long time. One day, she decided to walk one mile a day. After a month, she increased to two miles, then three.

By the time I interviewed her, she had run three marathons. She attributed her energy, focus and drive to succeed in part to these incremental fitness goals that changed her life.

6. Self-made millionaires make their own luck.

I’m not talking about the kind of luck you have in Las Vegas; a whopping 94% of millionaires in my study said that they never gamble.

Luck in this context isn’t happenstance, but taking a gamble on something new. Many of the millionaires shared an ability to see what is invisible to others, and come up with creative solutions and alternate routes to success.

Ultimately, persistence creates opportunities, and luck eventually comes to those who refuse to quit on their dreams and goals.

Tom Corley is an accountant, financial planner and author of “Rich Kids: How to Raise Our Children to Be Happy and Successful in Life”, Effort-Less Wealth and “Rich Habits: The Daily Success Habits of Wealthy Individuals.”

COP28 Goal of Tripling Renewables Feasible Only with Urgent Global Course Correction

Despite a record renewable growth in 2023, the energy transition remains off track due to persistent structural barriers and a notable shortfall in investment.

Dubai, United Arab Emirates / Berlin, Germany, 19 March 2024 – Achieving the global target set at COP28 to triple renewable power capacity by 2030 relies heavily on establishing conducive conditions for such growth. Tripling renewable power capacity by 2030 is technically feasible and economically viable, but its delivery requires determination, policy support and investment at-scale.

Tracking COP28 outcomes: Tripling renewable power capacity by 2030 highlights that 2023 has set a new record in renewable deployment, adding 473 gigawatts (GW) to the global energy mix. However, the brief by the International Renewable Energy Agency (IRENA) concludes that tripling renewable power capacity depends on overcoming systemic and structural barriers to the energy transition.

Evolving policies, geopolitical shifts and declining costs have all played a role in propelling the rapid expansion of renewable energy in markets worldwide. Yet, to triple renewable power capacity, concerted efforts are required to enhance infrastructure, policies and workforce capabilities, underpinned by increased financing and closer international cooperation, as outlined in IRENA’s World Energy Transitions Outlook brief presented at the Berlin Energy Transitions Dialogue today.

An average of almost 1,100 GW of renewables capacity must be installed annually by 2030 – more than double the record set in 2023. Annual investments in renewable power generation must surge from USD 570 billion in 2023 to USD 1550 billion on average between 2024 and 2030.

“We urgently need a systemic shift away from fossil fuels to course-correct and keep the tripling goal within reach.”

Francesco La Camera
Francesco La CameraDirector-General

Francesco La Camera, Director-General of IRENA, said: “In the wake of the historic UAE Consensus on tripling renewables at COP28, these capacity additions – despite setting a new record – clearly indicate that achieving the target is far from guaranteed. As the custodian agency, IRENA monitors related progress across key indicators every year. Our data confirms that progress continues to fall short, and the energy transition remains off track. We urgently need a systemic shift away from fossil fuels to course-correct and keep the tripling goal within reach”.

Achieving the tripling target is far from assured as an additional 7.2 terawatts (TW) of renewable power would need to be deployed to reach the required 11 TW by 2030. However, current projections indicate the target will remain out of reach without urgent policy intervention. G20 nations, for example, must grow their renewable capacity from under 3 TW in 2022 to 9.4 TW by 2030, accounting for over 80% of the global total.

Accelerated investments in infrastructure and system operations (e.g. power grids, storage), revised policies and regulations (e.g. power market design and streamlined permitting), measures to fortify supply chains and cultivate requisite skills, and substantial increases in investments – including public funds facilitated through international collaboration – are imperative.

Despite considerable renewable potential, developing countries have received disproportionately low levels of investment. Although energy transition related investments have reached a record high, exceeding USD 2 trillion in 2023, emerging markets and developing economies accounted for just over half of global investments. 120 developing nations attracted only 15% of global renewable investment, with Sub-Saharan Africa receiving less than 1.5%, despite being home to the highest share of energy-deprived populations.

In contrast, fossil fuels received USD 1.3 trillion in subsidies in 2022, equivalent to the annual investment required in renewable generation capacity to achieve a threefold increase by 2030. A key aspect of IRENA’s 1.5°C Scenario is that the increase in renewable energy use must be coupled with a corresponding decline in fossil fuel reliance. Both aspects are lagging. G20 members alone disbursed a record USD 1.4 trillion in public funds to bolster fossil fuels in 2022, directly contradicting the commitment made at COP28 to transition away from fossil fuels.

Greater international cooperation will be indispensable to ensure financial flows to the Global South and uphold the tripling pledge. Countries in Sub-Saharan Africa face some of the world’s highest finance costs, underscoring the need for enhanced international collaboration, including the involvement of multilateral development banks and an expanded role for public finance.

Strategic use of public finance is paramount to attract investment at scale and deliver an inclusive energy transition that yields socio-economic benefits for all. This requires structural reforms, including within multilateral finance mechanisms, to effectively support the energy transition in developing countries.

10 Best Low-Risk Investments Right Now-2024

10 Best Low-Risk Investments Right Now

Whether you’re new to markets or a seasoned pro, low-risk investments are a great option for conservative investors who want to protect their money from potential losses while still benefiting from modest growth.

It’s important to understand that while investing in low-risk assets can preserve your capital, it also limits your returns. Benefits of low-risk investing include additional diversification, and it’s especially helpful for people who are saving money for near-term financial goals like a home down payment.

1. U.S. Treasury Bills, Notes and Bonds

  • Risk level: Very low.
  • Potential returns: Low to moderate, depending on maturity.

U.S. Treasury securities are backed by the full faith and credit of the U.S. government. Historically, the U.S. has always paid its debts, which helps to ensure that Treasurys are the lowest-risk investments you can own.

There are a wide variety of maturities available. Treasury bills, also referred to T-bills, have maturities of four, eight, 13, 26 and 52 weeks. They are sold at a discount to their face value, and your return is the difference between the purchase price and par value at redemption.

Treasury notes come in maturities of two and ten years. Treasury bonds have long maturities of 20 to 30 years, which means they carry slightly more risk than shorter-duration Treasury securities. Both bonds and notes make interest payments every six months.

The market for U.S. Treasurys is the largest, most liquid market in the world, making them easy to sell if you need access to your cash before the maturity date.

2. Series I Savings Bonds

  • Risk level: Very low
  • Potential returns: Depends on the rate of inflation

I bonds are a special type of U.S. savings bond with a variable interest rate designed to keep up with inflation, as measured by the consumer price index (CPI).

They offer returns based on two interest rates: A fixed rate that remains the same for the 30-year term of the bond, plus a variable interest rate that is updated every six months to match the prevailing rate of inflation.

In addition, I bonds benefit from semiannual compounding: Earned interest is added to the value of the bond twice a year, gradually increasing the principal on which you earn interest. You must hold the bond for at least one year before cashing out, and there is a small penalty if you cash out before five years have passed.

If you live in a place with high taxes, I bonds are a good option since their interest payments are exempt from both state and local taxes.

3. Treasury Inflation-Protected Securities (TIPS)

  • Risk level: Very low
  • Potential returns: Depends on the rate of inflation

Treasury inflation-protected securities (TIPS) are issued by the U.S. Treasury, and like I bonds they use a special mechanism to ensure that returns keep up with the rate of inflation. TIPS offer maturities of five, 10 or 30 years.

Most bonds promise to return your original investment—the so-called principal—plus a fixed or variable amount of interest. TIPS offer a fixed rate of interest, but their principal value increases or decreases in line with the prevailing rate of inflation as measured by CPI.

At maturity, if the principal is higher than your original investment, you keep the increased amount. If the principal is equal to or lower than your principal investment, you get the original amount back. TIPS pay interest every six months, based on the adjusted principal.

4. Fixed Annuities

  • Risk level: Very low
  • Potential returns: Modest

Fixed annuities are a popular type of annuity contract that are frequently used for retirement planning but can also be useful for medium-term financial goals. Sold by insurance companies and financial services companies, a fixed annuity guarantees a fixed rate of return over a set period of time, regardless of market conditions.

There are two stages in the life of an annuity: the accumulation phase and the payout phase. In the first, you make a series of payments into your annuity and earn interest that grows the value of your account tax deferred. The payout phase may be either a single, lump-sum payment or a series of regular payments over time.

Although inflation can erode the value of a fixed annuity, many companies offer cost-of-living-adjustment (COLA) riders that help the value of your annuity keep up with rising prices.

5. High-Yield Savings Accounts

High-yield savings accounts offer an unbeatable combination of a modest return on your money, unlimited liquidity—you can withdraw money whenever you wish—plus the backing of the Federal Deposit Insurance Corp. (FDIC), which insures deposits up to a set limit.

With next to no risk of losing money plus the possibility of modest returns (depending on prevailing rates), parking your emergency fund or cash you need for near-term purchases in a high-yield savings account makes a lot of sense.

The interest rates offered by high-yield savings accounts can vary widely depending on market conditions. But you’ll never lose money on your principal and earned interest.

6. Certificates of Deposit (CDs)

  • Risk level: Very low
  • Potential returns: The best CDs may offer returns that match or beat high-yield savings accounts

These time deposit accounts allow you to invest your money at a set rate for a fixed period of time. Withdrawing the money prior to your maturity date will trigger an early withdrawal penalty fee.

There are different types of CDs—like regular, bump-up, step-up, high-yield, jumbo, no-penalty and IRA CDs, for example—and different financial institutions will have different rules and fees. Certificates of deposit are insured by the FDIC up to statutory limits, which makes them a very low-risk investment option.

7. Money Market Mutual Funds

  • Risk level: Low
  • Potential returns: Modest

Money market mutual funds invest in various fixed-income securities with short maturities and very low credit risks. They tend to pay a modest amount of interest, but unlike other kinds of mutual funds there’s very little chance to make money from appreciation.

This type of investment offers plenty of liquidity, and because of the types of investments they make, they are considered to be very safe with very little risk of losing money. But unlike savings accounts or CDs, they are not backed by the FDIC.

Money market mutual funds are best used as a parking place for cash that you might want to keep easily accessible for a big purchase or another investment opportunity.

8. Investment-Grade Corporate Bonds

  • Risk level: Moderate
  • Potential returns: Modest to high

Corporate bonds are fixed-income securities issued by public companies. When a public company has a very good credit rating, their bonds are investment grade—also called high grade—which means the company is very likely to keep paying interest over the life of the bond and return the principal at maturity.

Credit rating agencies like Moody’s, Standard & Poor’s and Fitch assign credit ratings to companies after doing in-depth research on their finances and stability. But just because a bond is considered investment grade today is no guarantee that a company won’t get into trouble tomorrow and see their credit rating downgraded. That’s why this type of investment carries more risk than the others noted above.

9. Preferred Stocks

  • Risk Level: Moderate
  • Potential returns: Modest to high

Preferred stocks combine the characteristics of stocks and bonds in one security—providing investors with dependable income payments plus the potential for shares to appreciate over time.

Shares of preferred stock are issued with a set face value, and income from preferred stock gets preferential tax treatment, as qualified dividends tend to be taxed at a lower rate than bond interest.

Although common stock dividends are reduced or eliminated before preferred stock dividends, in the case of company profit loss, preferred stock dividends may also be lowered or eliminated.

10. Dividend Aristocrats

  • Risk level: Moderate
  • Potential returns: Moderate to High

Many public companies pay dividends, but the dividend aristocrats are special. These companies have demonstrated remarkable long-term stability and reliability in their dividend payouts.

A public company is considered to be a dividend aristocrat after having increased their annual dividend payments for a minimum of 25 years in a row. There are other qualifications—included in the S&P 500 index, have a minimum market capitalization of $3 billion—but what matters for investors is that these companies have maintained good dividend yields over the long term.

Owning shares of a public company can be more risky than other options on this list, but the dividend aristocrats can also provide you with dependable cash flow no matter what the stock market is doing—plus the chance of appreciation over time.

What is Risk?

Risk within the context of investing is the potential for your investments to lose all of their money or simply achieve lower returns than you anticipated or hoped for.

Risk tolerance is your personal comfort with uncertainty. The greater your risk tolerance, the more you’re willing to bet that an investment will pay off and the more you’re willing to lose if you bet wrong. In investing, higher risks generally mean higher rewards.

If you can’t afford to lose any money, then you must have a low risk tolerance. Even if you can afford to lose money on an investment, if your personal temperament means that you will cash out investments at a loss during times of market volatility in spite of an investment strategy designed for long-term growth, then a conservative investment strategy may be right for you.

Considerations for Low-Risk Investors

Understand Your Risk Tolerance

Although each of the investments listed above is considered low risk, there is still a sliding scale of risk associated within them.

Plopping your money into a certificate of deposit that guarantees a specific rate of return will be much lower risk than entering the world of the dividend aristocrats.

In other words, even a “low risk” investor should spend some time considering just how much “risk” they can tolerate and pick an investment accordingly.

Know Your Time Horizon

Knowing when you want to access your money—your investing time horizon—is also essential when it comes to investing.

Certain certificates of deposit charge fees for withdrawing your money before the maturity date, for example, while money that’s in a high-yield savings account is yours pretty much at the click of a button or ATM visit.

Use your plans for this money—monthly income, home down payment in five years, retirement income, etc.—to also help dictate where you decide to invest.

by Benjamin Curry

Ten predictions for energy in 2024

 

On 13 December, the governments of the world meeting at the COP28 climate talks in Dubai agreed what’s been described as a “historic” statement, for the first time setting a goal of transitioning away from fossil fuels. 

That objective sets a change of course for the global energy system. Consumption of oil, gas and coal has been growing, and all three fuels hit new record highs in 2023. But, at the same time, renewable energy has been booming. Production from wind and solar power worldwide in 2023 was about 55% higher than in 2020. 

When Wood Mackenzie analysts offered 10 predictions for 2023 in Energy Pulse a year ago, they identified some of the key features of this fast-evolving landscape. Their predictions highlighting the downward pressures on metals prices, the strength of global oil demand, North American oil and gas companies’ renewed enthusiasm for production growth and the rebound in US solar installations, among others, turned out to be on target.

This year, we expect some of those trends to continue, but there are also new issues emerging. Here are our 10 predictions for what we think will be key developments in energy and natural resources in 2024:

1. The global solar growth slowdown will begin

Even though total global solar capacity will continue to grow rapidly over the coming decade, the pace of growth in annual installations will start to slow in 2024 compared to the rates seen in recent years. If our forecast for 2023 holds, average annual growth in capacity installations over 2019-23 was 28%, including 56% growth in 2023. By contrast, annual average growth from 2024-28 will be about zero, including a few years with contractions. Growth in the global solar market is following a typical S-curve. Over the last few years, growth has climbed rapidly up the steepest part of the curve. Starting in 2024, the industry will be past the inflection point, characterized by a slower growth pattern. The global solar market is still many times larger than it was even a few years ago, but it’s natural for an industry to follow this growth path as it matures.

Not every region is currently in the same place along the S-curve. Africa and the Middle East, for example, have a long way to go before they hit their growth inflection points. But two major markets are driving this global growth pattern: Asia Pacific, dominated by China, and Europe.

Michelle Davis – Head of Global Solar

2. Nuclear power will continue to rise up the policy agenda as a climate solution

A quote often misattributed to Albert Einstein is that nuclear power is “one hell of a way to boil water”. It was actually coined in 1980, after the Three Mile Island reactor accident that helped to turn the tide of public opinion against atomic energy. In 2024, however, nuclear power is set to win widespread support as a key solution to the world’s energy crisis, for the first time in over half a century. Nuclear power has faced, and still faces, challenges of public acceptability and economic competitiveness against renewables and fossil fuel generation. But it is the only reliable, dispatchable, small physical-and-material footprint, plug-and-play zero-carbon solution for power generation.

Julian Kettle – Vice Chair, Metals and Mining

3. The evolving balance between decarbonisation and security of supply will act as a brake on investment decisions in gas and LNG for many companies

After Russia’s invasion of Ukraine, the global gas and LNG industry reprioritized securing supply. More than 65 million tons per year of LNG sale and purchase agreements were signed by end-users in 2022 and 2023. Investments in new LNG supply were always going to slow in 2024, given the scale of investments already made and the expected market rebalancing. But COP28 has added new uncertainty to the outlook for gas. As a fossil fuel, it is one that the governments of the world aim to transition away from. But as the most widely accepted “transitional fuel”, it will still have a role to play in providing energy security for some time.

Companies and governments will need to reconsider investments against this evolving backdrop, possibly slowing some of them further. Industry participants will need to realign their portfolios and strategies to navigate the contradictions and the range of possible outcomes for gas demand.

Kristy Kramer – Head of Gas and LNG Consulting

4. A slowdown in non-OPEC oil production growth will ease the pressure on the OPEC+ countries

This year, there has been a large increase in non-OPEC oil production of about 2 million barrels per day, piling the pressure on the OPEC+ group to cut its output to prevent a slump in prices. Next year, we expect that non-OPEC growth to slow to just 0.8 million b/d. 

The largest factor in the projected slowdown is our expectation of a sharp deceleration in US oil production growth next year, but other countries including Brazil will also contribute. The non-OPEC slowdown will relieve the pressure OPEC+ has faced in 2023. Among the caveats to this view: a surge in US productivity (see below).

Ann-Louise Hittle – Head of Macro Oils

5. US oil and gas producers will do more with less

The biggest macro story from the US oil and gas industry next year could be that efficiency gains refuse to plateau. Total upstream capital spending in the Lower 48 states is expected to fall in 2024, for the second successive year. But, at the same time, total Lower 48 production of both oil and gas will continue inching higher, setting new records for each. Muted movement in the rig count will be more than offset by continued improvement in drilling speeds and pad cycle times, completion efficiencies and improved project execution. All this serves as a reminder of just how lean and mean US shale has become.

Robert Clarke – Vice-President, Upstream Research

6. A large US E&P could merge with a large international E&P

The pure-play model of geographically focused exploration and production companies has lost its luster since investors began rejecting production growth in favor of cash distributions. Large-scale M&A is increasingly targeting diversification, as companies look to build resilient financial platforms. Internationalization is the next logical step in this strategy. US buyers’ strong equity currency will be a lure for overseas targets, helping to make deals happen.

Greig Aitken – Director, Corporate Research

7. Hydrogen project FIDs will continue to skew blue

The ambitions for low-carbon hydrogen around the world, reflected in government policies and corporate project development, are quite remarkable. As is a 108-mtpa global project pipeline that skews 80% to green hydrogen, made from electrolyzing water. However, the rate of project maturation for electrolyzed hydrogen will remain slow as developers struggle to overcome key obstacles.

Two of the most important challenges that green hydrogen projects will face are achieving competitive costs and securing firm commitments from off takers. Projects with credible counterparties and those targeting hydrogen as a feedstock in existing applications are most likely to move ahead. Those targeting new applications will struggle to achieve costs that compete with traditional fossil fuels. Blue hydrogen projects will also move slowly through the project development cycle, but more will achieve FID as they benefit from competitive economics and scaling more quickly.

Melany Vargas – Head of Hydrogen Consulting

8. Carbon offsets will regain momentum, against all the odds

The voluntary carbon market was at a crossroads in 2023, with market activities bogged down by a loss of confidence, and buyers craving clarity. COP28 couldn’t reach an agreement on Article 6 and market sentiment suffered frustration again. The situation seems dire, but there are reasons to believe this could be the dark before the dawn. Buyers are wising up and weeding out low-quality offsets from the market. In the absence of centralized oversight from the UN, independent governance bodies are setting guidelines and offering clarity. And offsetting programs are working hard to evolve. We expect to see the results of these efforts in 2024.

Elena Belletti – Global Head of Carbon Research

9. Novel carbon capture technologies will finally enter commercial scale

In 2024, new CCUS projects are no longer noteworthy in and of themselves. We track up to 100 commercial-scale projects, with 50 having a decent chance of progressing. What is new, however, is the much-awaited graduation of novel technologies from pilot to commercial scale. New techniques to capture carbon dioxide such as modularization, solid adsorption and bio-recycling will be fully deployed for the first time in 2024. These promise lower energy intensity and cost reductions of up to 50% compared to incumbent methods. If successful, barriers will be lowered for emitters in vital heavy industries such as cement and chemicals. And the technology companies can expect a rush of orders.

Mhairidh Evans – Head of CCUS Research

10. Geoengineering will become a hot topic

In the conclusions of the first Global Stock take at COP28, countries acknowledged that the remaining global carbon budget is shrinking rapidly, with a risk of overshooting the 1.5 °C goal. That means hundreds of billion tons of carbon dioxide will need to be removed or captured and stored to get the world back on course for no more than 1.5 °C of warming by 2100.

Geoengineering techniques can be used to enhance the carbon absorption capacity of the planet, and to reflect sunlight back into space, helping to keep the earth cool. For example, aerosols or other chemicals can be released a few kilometers up into the atmosphere, thus reflecting more sunlight away from the planet’s surface. I believe that in 2024, governments and scientific institutions will come together to study this fascinating subject more deeply and discuss the pros and cons of pursuing it.

Prakash Sharma – Vice President, Scenarios and Technologies

-Wood McKenzie

Market Outlook for 2024: Slow Global Growth Clouds Forecast for Equities


2023 started with low and declining expectations for global growth and heightened fears of a recession. However, China’s reopening, large fiscal stimulus in the U.S. and Europe, and the residual strength of U.S. consumers stabilized growth. Additional market optimism was related to ChatGPTluxury goodsweight-loss drugs, the expectation of Federal Reserve (Fed) rate cuts and the bitcoin rally, resulting in a broadly positive performance for risk markets. That was despite the largest increase in interest rates in decades, major wars, an energy crisis, a regional banking crisis, recession in parts of the eurozone and emerging signs of credit and consumer deterioration in the U.S.

Contemporaneous positive economic data was enough to lift risk markets, which could be seen as complacency against a backdrop of declining consumer strength and increased credit stress (e.g. rising credit card and auto loan delinquencies). Household liquidity trends indicate that for 80% of consumers, excess savings from the COVID era are already gone, and by mid-2024 it is likely that only the top 1% of consumers by income will be better off than before the pandemic.

“We expect both inflation data and economic demand to soften in 2024. Should investors and risky assets welcome an inflation decline and bid up bonds and stocks, or will the fall in inflation indicate the economy is sliding toward a recession? We think the decline in inflation and economic activity we forecast for 2024 will at some point make investors worry or perhaps even panic,” said Marko Kolanovic, Chief Global Markets Strategist and Global Co-Head of Research at J.P. Morgan.

“Overall, we are not positive on the performance of risky assets and the broader macro outlook over the next 12 months. The primary reason is the interest rate shock (over the past 18 months) will negatively impact economic activity. Geopolitical developments are an additional challenge as they impact commodity prices, inflation, global trade in goods and services and financial flows. At the same time, valuations of risky assets are expensive on average,” Kolanovic added.

It is hard to see an acceleration of the economy or a lasting risk rally without a significant reduction in interest rates and reversal of quantitative tightening. This is a catch-22 situation, in which risk assets can’t have a sustainable rally at this level of monetary restriction, and there will likely be no decisive easing unless risky assets correct (or inflation declines due to, for example, weaker demand, thus hurting corporate profits). This would imply that some market declines and volatility would need to take place first during 2024 before easing of monetary conditions and a more sustainable rally.

Avoiding recession has now become consensus thinking but looking at the relatively small number of recessions throughout history as a reference point, yield curve inversion signals indicate recession risk is highest between 14 and 24 months after the onset of inversion.

“That time period will cover most of 2024 and should make it another challenging year for market participants,” Kolanovic said.

Equity market outlook 

In 2022, the S&P 500 slid close to 20% in the wake of the Fed’s decision to rapidly hike interest rates. However, equity markets advanced in 2023, recovering some lost ground.

While stocks have remained positive year to date, the outlook for earnings growth has not been as strong as investors hoped. Equity concentration in the S&P 500 is now at levels not seen since the 1970s, meaning the rise in stocks this year has been driven by a cluster of tech mega-cap stocks. This dynamic, which has been seen ahead of previous economic slowdowns — along with an end to a period of record pricing power as 40-year high inflation begins to soften — suggests corporate margins are set to face major headwinds in 2024.

S&P 500 outlook 2024

Infographic depicting the projected earnings growth and price target for the S&P 500 in 2024.

“Absent rapid Fed easing, we expect a more challenging macro backdrop for stocks next year, with softening consumer trends at a time when investor positioning and sentiment have mostly reversed. Equities are now richly valued with volatility near the historical low, while geopolitical and political risks remain elevated. We expect lackluster global earnings growth with downside for equities from current levels,” said Dubravko Lakos-Bujas, Global Head of U.S. Equity and Quantitative Strategy at J.P. Morgan.

For the S&P 500, J.P. Morgan Research estimates earnings growth of 2–3% next year with earnings per share (EPS) of $225 and a price target of 4,200, with a downside bias.

J.P. Morgan economists expect U.S. and global growth to slow by the end of 2024. At the same time, liquidity continues to contract as major central banks shrink balance sheets at an unprecedented pace and borrowing rates remain restrictive across consumer and corporate segments.

Among U.S. households, excess liquidity and cash-like assets have fallen from a peak of $3.4 trillion (T) to $1T and should largely be exhausted by the second quarter of 2024, based on J.P. Morgan Research estimates.

“While it is difficult to pin down the start date and depth of a recession ahead of time, we think it is a live risk for next year, even though investors are not pricing in this uncertainty consistently across geographies, styles and sectors yet.”

Geopolitical risks also remain high, with two major conflicts currently ongoing and national elections soon taking place in 40 countries, including the U.S. As such, equity volatility is expected to generally trade higher in 2024 than in 2023, and the extent of the increase depends on the timing and severity of an eventual recession.

“While it is difficult to pin down the start date and depth of a recession ahead of time, we think it is a live risk for next year, even though investors are not pricing in this uncertainty consistently across geographies, styles and sectors yet,” Lakos-Bujas added.

From a regional perspective, the U.S. continues to command a quality premium over other markets, given its sector composition and cash-rich mega-cap stocks.

Outside the U.S. and within international developed markets (DM), the outlook for U.K. equities is optimistic, given significant valuation support and favorable sector compositions.

“Despite cheap valuation, we expect European equities to have a V-shaped path, ending the year relatively flat. On the other hand, Japan remains attractive with a potential pick-up in retail participation, strong balance sheets, improving shareholder focus, better consumer real income growth and a still supportive policy backdrop,” said Mislav Matejka, Head of Global Equity Strategy at J.P. Morgan.

A bumpy start to the year is expected for emerging markets (EM) given high rates, geopolitical developments and lasting U.S. dollar strength. However, EM should become more attractive through 2024 on EM-DM growth divergence, demand for diversification away from the U.S. and low investor positioning.

For China, which has lagged meaningfully this year, there is the prospect of better performance if the growth momentum delivers on the upside and geopolitical risks stay contained.

“2024 can likely provide a tactical entry point for strategic allocations, with bond yields peaking ahead of rate cutting, and stocks likely to correct due to the disconnect between a slowing economy and unrealistic consensus earnings expectations.”

Global economic forecast

Global growth exceeded expectations in 2023. Despite synchronized monetary tightening from central banks around the world, the private sector proved to be resilient and positive fiscal and commodity price shocks also provided relief.

J.P. Morgan economists expect the global economy to avoid a near-term recession, but an end to the global expansion by mid-2025 remains the most likely scenario.

In this scenario, inflation remains sufficiently sticky at around 3%, meaning central banks will maintain higher-for-longer policy stances. This will ultimately lead to an earlier end to the expansion than currently anticipated by many.

But at the same time, with a healthy private sector that has weathered the monetary tightening cycle surprisingly well and some disinflationary signs emerging, soft-landing optimism is on the rise.

“Our top-down views have become more open to a soft-landing scenario (to 40%) but remain biased toward an end to the global expansion by mid-2025.”

On balance, the global outlook calls for the following:

  • Growth is poised to slow as positive shocks fade, while rising yields and tighter credit bite.
  • Inflation moderation is expected to be limited by lingering damage to supply and a shift in inflation psychology.
  • Pressure will likely be concentrated in the business sector where margins should compress, prompting a slowdown in hiring and spending.
  • Vulnerability is likely to build gradually: We see a 25% chance of recession by the first half of 2024, 45% by the second half of 2024 and 60% by the first half of 2025.
  • Inflation will not fall to target on a sustained expansion path, but recent developments soften our skepticism.
  • U.S. supply-side performance has been impressive this year, easing labor markets despite strong growth.
  • Domestic demand shortfalls in China and Europe point to a potential ongoing disinflationary impulse.
  • A soft landing is dependent on an inflation decline that allows monetary easing to begin by about mid-year.
  • A mild recession is not a mild event and would generate a much worse outcome than a sluggish-growth soft landing.

Since mid-2022, J.P. Morgan Research’s global outlook has moved away from focusing on a single narrative and has instead rested on recognizing a range of outcomes that each have a material likelihood.

“It is no surprise that a tide of soft-landing optimism is now on the rise, boosting asset prices and expectations for early policy ease. Our top-down views have become more open to a soft-landing scenario (to 40%) but remain biased toward an end to the global expansion by mid-2025,” said Bruce Kasman, Chief Global Economist at J.P. Morgan.

“We continue to put the most weight on a ‘boiling the frog’ scenario, whereby elevated interest rates eventually drive the global economy into recession. We put a 60% chance on this occurrence,” Kasman added.

Global real GDP

Table depicting real GDP in global markets, DM, U.S., Euro area, EM and China in 2023 and 2024.

Rates forecast

The reversal of the fastest and most synchronized DM central bank tightening cycle of 2022–23 will start in the second half of 2024, against a backdrop of muted growth and falling inflation.

On the monetary policy side, the global tightening cycle across DM central banks will be most likely completed by the end of 2023. Central banks will be patient in holding policy rates if confidence around the convergence of inflation to target holds, but some will be under pressure to make additional hikes if the decline is too slow.

“We look for lower yields and steeper curves in 2024, with the largest moves expected to occur from spring onward. We forecast 10-year yields at 4.25% by mid-year and 3.75% by the end of 2024.”

Inflation in 2024 is expected to continue its downtrend trend on fading energy pressure and weaker labor markets, as the delivered tightening starts weighing on the growth outlook.

Headline inflation for DM countries

Table depicting headline inflation in Global DM, U.S., U.K., Japan, Euro area, Australia in 2023 and 2024.

Potential stickiness on the way down will put pressure on central banks to stay higher-for-longer and push back on premature expectations of cuts. On the other hand, downward pressure on inflation will give confidence to DM central banks that the delivered tightening has been effective in taking inflation back toward target.

“We expect a steady and gradual easing cycle toward a neutral level of rates across DMs if our macro baseline of soft landing unfolds, with differentiation across jurisdictions in terms of start date, pace and terminal. However, risks are tilted toward faster cuts in a recession scenario where the macro outlook warrants easy monetary policy,” said Fabio Bassi, Head of European Rates Strategy at J.P. Morgan.

In the U.S., the Federal Open Market Committee (FOMC) will likely start cutting rates in the third quarter of 2024 at a pace of 25 bp per meeting, while quantitative tightening (QT) will continue through 2024.

“We look for lower yields and steeper curves in 2024, with the largest moves expected to occur from spring onward. We forecast 10-year yields at 4.25% by mid-year and 3.75% by the end of 2024,” said Jay Barry, Co-Head of U.S. Rates Strategy at J.P. Morgan.

Commodity markets outlook

After falling in 2023, J.P. Morgan Research expects Brent oil prices to remain largely flat in 2024 and edge down a further 10% in 2025.

“Our Brent forecast has not changed since June and is expected to average $83 per barrel (bbl) in 2024,” said Natasha Kaneva, Head of Global Commodities Strategy at J.P. Morgan.

This will be buttressed by solid supply-demand fundamentals. “Despite sustained economic headwinds, we see oil demand rising by 1.6 million barrels per day (mbd) in 2024, underpinned by robust emerging markets, a resilient U.S. and a weak but stable Europe,” Kaneva said.

“Despite sustained economic headwinds, we see oil demand rising by 1.6 million barrels per day (mbd) in 2024, underpinned by robust emerging markets, a resilient U.S. and a weak but stable Europe.”

To keep the oil market balanced however, the OPEC+ (Organization of the Petroleum Exporting Countries) alliance will likely need to continue to constrain production. J.P. Morgan Research expects Saudi Arabia and Russia to extend their voluntary production/export cuts through the first quarter of 2024. Assuming Saudi Arabia pumps additional oil and Russia increases exports, global oil inventories will likely stay flat in 2024.

Over in U.S. gas markets, an overhang of supply will likely limit upside risks for U.S. gas prices in 2024. “We believe there are two stories that will dictate the year. The first narrative is one of oversupply and depressed pricing that is likely to linger through the first half of 2024 and, potentially, the entirety of the summer injection season,” said Shikha Chaturvedi, Head of Global Natural Gas and Natural Gas Liquids Strategy at J.P. Morgan. “The second is the ability for feed gas demand to not only offset but also outpace regional supply growth.”

Global commodity price forecasts

Turning to metals, gold and silver are forecasted to outshine the rest of the sector. The Fed cutting cycle and falling U.S. real yields are expected to push gold prices to new nominal highs in the middle of 2024, reaching an average of $2,175/oz by the fourth quarter. In the same vein, silver prices will likely follow gold, averaging around $30/oz in the fourth quarter.

“Across all metals, we have the highest conviction on a bullish medium-term forecast for both gold and silver over the course of 2024 and into the first half of 2025, though timing an entry will continue to be critical,” said Gregory Shearer, Head of Base and Precious Metals Strategy at J.P. Morgan.

In the agriculture markets, price risk is skewed to the upside off current spot levels, particularly through the first half of 2024. “Our price forecasts call for a bullish outlook across sugar and modest gains across grain, oilseeds and the cotton markets through 2024,” said Tracey Allen, Agricultural Commodities Strategist at J.P. Morgan. Sugar prices are projected to average $0.30/lb in 2024, while wheat prices are expected to average $6.33 per bushel.

FX outlook

Against an uncertain macro backdrop, how will FX perform in 2024?

“Foreign exchange (FX) market participants’ view on the macro outlook remains wide, spanning from a soft landing and additional Fed hikes to recession. Needless to say, they will need to navigate the transition among these scenarios tactically as these would imply different outcomes for the U.S. dollar,” said Meera Chandan, Co-Head of Global FX Strategy at J.P. Morgan.

While the road ahead for the U.S. dollar (USD) looks bumpy, the greenback is expected to remain at elevated levels, with potential for new highs. “If rate cuts are realized, the dollar would still yield more than 56% of global currencies on a real basis in 2024,” Chandan said.

Forecasts for major currency pairs

Infographic depicting 2024 forecasts for EUR/USD, GBP/USD, USD/JPY, AUD/USD, CAD/USD and NZD/USD.

Looking at the euro, prospects for a convincing rebound in 2024 appear dim as the region is flirting with recession amid restrictive rates. A recovery in the single currency would require not only Fed easing, but also improved prospects of regional growth.

“Euro underperformance versus the dollar may be a longer-term phenomenon,” Chandan said, with J.P. Morgan Research forecasting the euro/dollar pair to hover between parity and 1.05 for the first half of 2024.

The outlook is similar for the British pound, with the market oscillating between sticky inflation and weaker growth in 2024. The decisive issue for sterling in 2024 is largely about how far this year’s policy tightening can slow growth and the labor market, such that the Bank of England (BoE) is comfortable enough with the inflation outlook to cut the bank rate.

“We take a bearish stance on sterling going into 2024, but are mindful that the economy is more resilient to policy tightening than we thought,” Chandan added. J.P. Morgan Research forecasts the sterling/dollar pair to sink to 1.18 in the first quarter of 2024, before rising to 1.26 by December.

In Asia, structural pressures will continue to weigh on the Japanese yen in 2024. “We forecast yen appreciation in the second half of 2024 driven by shorter-term factors, namely relative policy rate changes. However, this appreciation may be shallow because of the underlying long-run downtrend,” said Katsuhiro Oshima, Head of Japan FX Research at J.P. Morgan.

Emerging markets outlook

“A key focus for us through 2024 is the U.S. economy and how it resolves cyclical uncertainty.”

Overall, the EM outlook will largely be dominated by U.S. growth and monetary policy cycles. These are the three key themes that will be at play in EM during 2024:

 

Top 10 Renewable Energy Trends in 2024

Tree Map reveals the Impact of the Top 10 Renewable Energy Trends

The Tree Map below illustrates the top 10 renewable energy trends that will impact companies in 2024. Advanced photovoltaics (PV) innovations are honing in on high-efficiency technologies. Moreover, big data and AI are enhancing renewable energy, facilitating applications like predictive maintenance and smart management. At the same time, distributed energy storage systems (DESS) add flexibility and stability to renewable energy generation.

Grid integration technologies are reducing transmission losses and stabilizing the grid effectively. These technologies optimize the use of off-grid sources such as biofuels, wind, and hydropower, even when situated far from demand centers. Further, green hydrogen plays a dual role, storing energy from renewables and aiding electrification. Meanwhile, bioenergy holds its ground as a favored choice, thanks to its decentralized nature.

Top 10 Renewable Energy Trends in 2024

 

Global Startup Heat Map covers 5152 Renewable Energy Startups & Scaleups

The Global Startup Heat Map below highlights the global distribution of the 5152 exemplary startups & scaleups that we analyzed for this research. Created through the StartUs Insights Discovery Platform, the Heat Map reveals that Western Europe is home to most of these companies while we also observe increased activity in the US and India.

Below, you get to meet 20 out of these 5152 promising startups & scaleups as well as the solutions they develop. These 20 startups were hand-picked based on criteria such as founding year, location, funding raised, and more. Depending on your specific needs, your top picks might look entirely different.

Top 10 Renewable Energy Trends in 2024

 

 

1. Advanced Photovoltaics

Solar companies are integrating PV systems with every aspect of our surroundings while minimizing the need for additional land usage. As a result, integrated PV, floatovoltaics, and agrivoltaics are logical shifts in trends. Additionally, startups are developing thin-film cells to make solar panels flexible, cost-effective, lightweight, and environment-friendly.

To improve PV performance, emerging companies are devising technologies to concentrate solar power using mirrors and lenses. Innovations in PV materials, such as the use of perovskite, are increasing energy conversion multifold. These innovations are further coupled with photovoltaic designs that enable maximum efficiency and high productivity.

Together, they promote sustainability through recycling, minimum resource utilization, and the use of alternate materials.

Lusoco provides Luminescent Solar Concentrators

Dutch startup Lusoco develops a luminescent solar concentrator technology. It uses high refractive index materials like glasses and polymers along with fluorescent ink to concentrate light to the edges where thin-film solar cells are placed. Moreover, the fluorescent coating also emits light during the night, enabling self-sustainable signages. The solution harvests energy while maintaining the aesthetics. The luminescent glasses are hence suitable for use in automotive, signages, and interior designing.

Norwegian Crystals makes Low-Carbon Monocrystalline Silicon Ingots

Norwegian Crystals is a Norwegian startup that manufactures low-carbon monocrystalline silicon ingots for high-performance photovoltaic devices. To produce these ingots, the startup melts high-purity silicon at high temperatures using the Czochralski technique. It also produces gallium-doped ingots that increase the lifetime of the solar cells and reduce the number of stabilization steps as compared to monocrystalline silicon. Through this, Norwegian Crystals control the carbon footprint of solar panel components at ultra-low levels, empowering consumers and businesses who consider the overall sustainability of solar energy generation.

2. AI and Big Data

The energy grid is one of the most complex infrastructures and requires quick decision-making in real-time, which big data and AI algorithms enable for utilities. Beyond grid analytics and management, AI’s applications in the renewables sector include power consumption forecasting and predictive maintenance of renewable energy sources.

It further enables IoE applications that predict grid capacity levels and carry out time-based autonomous trading and pricing. With innovations in cloud computing, virtual power plants (VPP) supplement the power generation from utilities. In addition, startups utilize data analytics and machine learning for renewable energy model designing and performance analysis.

Likewatt enables Energy Parameter Analysis

German startup Likewatt develops Optiwize, a patented software solution that provides energy parameter analysis using machine learning. Optiwize also calculates historical power consumption and carbon dioxide emissions as well as features renewable energy audits and weather forecasting. This allows individual and collective consumers to observe real-time consumption patterns. Moreover, it enables power producers to hybridize different technologies and optimize load sizing.

Resonanz facilitates Intelligent Energy Trading

Resonanz is a German startup that enables automated intelligent energy trading. The startup’s software tools, rFlow and rMind, integrate and manage data in real-time to create autonomous algorithmic decisions. Furthermore, the rDash interface visualizes production forecasts, market price indicators, and accounting data that aid decisions. Through these products, the startup enables market participants to increase their share of sustainable energy and returns at the same time.

3. Distributed Energy Storage Systems

DESS localizes renewable energy generation and storage, overcoming irregularity in production. Based on economic and other requirements, startups offer a range of battery and batteryless solutions. For instance, flow batteries leverage low and consistent energy, whereas solid-state batteries are lightweight and provide high energy density. For applications that require large amounts of energy, in a short period of time, capacitors and supercapacitors are also used.

Due to concerns regarding discharging, safety, and environmental pollution, startups are devising batteryless storage alternatives such as pumped hydro and compressed air technologies. On the other hand, surplus energy is converted to other forms of energy such as heat or methane for storage and reconversion through Power-to-X (P2X) technology.

Green-Y Energy offers Mechanical Energy Storage

Swiss startup Green-Y Energy develops compressed air energy storage technology. By increasing energy density while doubling the heat and cold extraction, the startup reduces the required storage volume as well as provides heat energy and cooling for domestic use. The process is also sustainable since water and air are the only working fluids. In addition, this compressed air is stored in durable and inexpensive commercial pressure tanks, allowing building managers and homeowners to integrate renewable energy systems.

MGA Thermal produces Thermal Energy Storage Material

MGA Thermal is an Australian startup that enables thermal energy storage. The startup’s product, Miscibility Gap Alloys, has a melting phase and a solid phase contact. On heat application, the melting phase component stores energy while the solid phase component rapidly distributes the heat. The resulting modular block structure exhibits high energy storage capacity at a constant temperature.

Moreover, the materials and containment units used are recyclable, safe, affordable, and easy to use. The large-scale storage potential of this solution enables renewable energy utility companies to provide continuous electricity even during peak hours.

4. Hydropower

Hydropower is the energy derived from moving water. Unlike solar and wind, hydro energy is predictable and, hence, more reliable. Besides, hydroelectric dams, as well as ocean-based energy harnessed from tides, currents, and waves, offer high energy density while reducing dependency on conventional sources.

The innovations in these renewable sources focus on energy converters and component improvements for harvesting energy more efficiently. Within hydropower, small-scale hydroelectric dams and tidal barrages enable decentralized energy generation. Ocean thermal energy conversion (OETC) harnesses energy through the thermal gradient created between the surface and deep water.

Some startups are also converting the salinity gradient formed due to the osmotic pressure difference between seawater and river into usable energy.

Seabased provides Modular Wave Energy Converter (WECs)

Seabased is an Irish startup that develops modular wave energy converters. These WECs are buoys on the surface connected with linear generators resting on the seabed. The moving waves provide energy to the buoys thereby generating electric power. The startup’s patented switchgear converts the power into electricity for grid use.

Moreover, the WECs can withstand harsh seas, enabling a flexible wave park expansion with high efficiency. Seabased’s solutions, thus, allow energy offshore companies and local coastal communities to generate wave energy as an alternative or hybrid to wind.

Green Energy Development (GED) Company designs Microturbines

Iranian startup GED Company offers microturbines for distributed generation of hydroelectricity from water streams like canals and rivers. The startup’s floating drum turbine (FDT) consists of an undershot waterwheel that floats on the water stream using a buoyant skid and is anchored with cables or hinged arms. The rotation of FDT by the stream produces electricity. The solution is low-cost, efficient, and ensures reliable distributed generation for electrification in remote and underdeveloped locations.

5. Wind Energy

Despite being one of the oldest energy resources, the rapidly evolving nature of the wind energy sector makes it one of the major trends. Startups are devising offshore and airborne wind turbines to reduce the demand for land-based wind energy. Innovations in this field often integrate with other energy sources such as floating wind turbines, solar, or tidal energy.

To further improve efficiency, there are constant advances in the aerodynamic designs of the blades. Startups also develop efficient generators and turbines for high-energy conversion. The sustainability of blade material is one of the challenges the industry faces today. To tackle this, startups are creating bladeless technologies and recyclable thermoplastic materials to manufacture blades.

Hydro Wind Energy offers Hybrid Hydro-Wind System

Based out of UAE, UK, and the US, Hydro Wind Energy provides a hybrid energy system. The startup’s product, OceanHydro, harnesses offshore altitude wind using kites or vertical axis wind rotors. It then combines wind energy production power from subsea oceanic pressure to obtain low-cost electrical energy and grid-scale storage.

Since the energy from the subsea is available on demand, such a hybrid solution is more reliable than offshore wind energy systems. This allows energy companies to maintain a continuous and higher base load for the grid.

Helicoid enhances Wind Blade Quality

Helicoid is a US-based startup that provides enhanced blade quality during wind blade manufacturing. The enhanced blade is produced as a result of changes in stacking and rotation of sheets of parallel fibers to form a helicoid structure. These blades have higher resistance to impact, erosion, and fatigue while also possessing higher strength and stiffness. This reduces maintenance and downtime costs as well as offers sustainable and energy-efficient blades for large-scale windmills.

6. Bioenergy

Bioenergy constitutes a type of renewable energy derived from biomass sources. Liquid biofuels with quality comparable to gasoline are directly blended for use in vehicles. To achieve this quality, companies improve biofuel processes and upgrade techniques. The majority of biofuel conversion processes like hydrothermal liquefaction (HTL), pyrolysis, plasma technology, pulverization, and gasification use thermal conversion for obtaining biofuels.

Further, upgrade techniques like cryogenic, hydrate, in-situ, and membrane separation are used for removing sulfur and nitrogen content. Similarly, the fermentation process produces bioethanol which is easy to blend directly with gasoline. Fermentation also has the ability to convert waste, food grains, and plants into bio-ethanol, thereby providing feedstock variability.

Energy-dense feedstocks result in optimum fuel quality. For this reason, startups and big companies consider algal and microalgal feedstocks for use in the aforementioned conversion processes.

Phycobloom produces Algal Bio-Oil

Phycobloom is a British startup that uses synthetic biology to produce bio-oil from algae. The startup’s genetically engineered algae release this oil into the surroundings. Since the same batch of algae is reused, it makes the process fast and inexpensive. Considering that algae require only air, water, and sunlight to grow, this technology also closes the loop between greenhouse gas emissions and fuel production. The startup’s solution thus lowers the dependency of the transportation sector on fossil fuels.

Bioenzematic Fuel Cells (BeFC) provides Paper-based Biofuel Cell

French startup BeFC generates electricity using a paper-based biofuel cell system. The system combines carbon electrodes, enzymes, and microfluidics. The enzymes convert glucose and oxygen into electricity using a miniature paper material. The technology is suitable for low-power applications, like sensor data collection and transmission. Moreover, the absence of plastic and metal makes it a sustainable and non-toxic form of energy storage means.

7. Grid Integration

Grid integration technologies primarily include transmission, distribution, and stabilization of renewable energy. Scaling up variable renewable energy generation is often far from demand centers which results in transmission and distribution losses. To overcome this, energy-efficient, grid electronic technologies such as Gallium Nitride (GaN) and Silicon Carbide (SiC) semiconductors are leveraged.

The challenge of frequency and voltage fluctuation due to variable renewable energy generation is solved through microcontroller-based solutions. Despite these technologies, stabilization of the grid is a huge challenge due to intermittent energy usage. Vehicle-to-grid (V2G) technology empowers the stabilization of the grid during peak hours while grid-to-vehicle (G2V) solutions leverage the vehicle as a storage unit. As a result, both the energy and transportation industry benefits.

Ageto Energy designs Microgrid Controllers

Ageto Energy is a US-based startup that produces microgrid controllers for coordinating all the elements of the microgrid. The startup’s microgrid controller, ARC, functions as a brain for the microgrid and integrates various conventional and renewable resources, including energy inverters, generators, power meters, and sheddable loads. ARC is encased in a durable enclosure to withstand extreme weather and temperature. In addition, it provides real-time monitoring and control of the microgrid.

Veir develops High-Temperature Superconductors (HTS)

US-based startup Veir offers high-temperature superconductors. The startup’s HTS cable operates at up to ten times the current of conventional wire while maintaining superconductivity. To maintain the HTS at operating temperature, Veir uses evaporative cryogenic cooling, which is twenty times more efficient than mechanical subcooling. This enables the generation and transmission of large-scale renewable energy, empowering utilities to easily transition to cleaner fuels.

8. Green Hydrogen

Hydrogen gas has the highest energy density of all fuels and produces near-zero greenhouse gas emissions (GHG). However, most hydrogen is derived from non-renewable sources in the form of grey and brown hydrogen. In the past decade, developments in renewable energy and fuel cells have pushed the shift to green hydrogen. While cleaner, it also struggles with the problems of low energy conversion efficiency of fuel cells and challenges in transportation. For these reasons, the developments in green hydrogen focus on improving hydrogen storage, transport, and distribution.

Lavo offers Green Hydrogen-Lithium Hybrid

Australian startup Lavo manufactures green hydrogen fuel cells that use solar energy and water to produce electricity. The startup’s patented solution, Lavo Hydrogen Battery System, features a metal hydride storage vessel that stores hydrogen. It also contains a lithium-ion battery for fast response time, thereby making it a hybrid solution. The battery system is durable and operates under wide temperature ranges. As a result, it avoids power outages under extreme weather conditions as well as enables businesses and communities to continuously store energy for days.

ElektrikGreen enables Green Hydrogen-based Fuel Cell Vehicles (FCVs)

ElektrikGreen is a US-based startup that uses green hydrogen to charge fuel cell vehicles. The startup’s at-home refueling station enables the charging of FCV by adding a fuel filler to the green hydrogen storage tanks. The technology integrates power conversion, energy storage, predictive management software, monitoring, and refueling, all in one simple-to-install system. ElektrikGreen’s solution also supports smart neighborhoods to maximize shared benefits through distributed energy.

9. Advanced Robotics

Production and process efficiency prove to be a major hurdle in harnessing renewable energy. Robotics enables accuracy and optimum utilization of resources to overcome this challenge. For example, automated solar panels orient themselves to maximize energy conversion. Equipment automation also expedites the maintenance processes while reducing the need for human work.

Drone inspection and robotics-based automatic operations and maintenance (O&M) handle dangerous repetitive work, thereby improving safety and productivity. An example of this is the use of drones based on phased array ultrasonic imaging to hastily detect internal or external damages on large wind turbines. Drones further enable the creation of digital twins and 3D maps using various data.

Greenleap Robotics designs Solar Panel Cleaning Robots

Indian startup Greenleap Robotics develops an autonomous cleaning robot for solar panels. The startup’s robot, Lotus A4000, uses ultra-soft microfiber cloth for removing dust and debris, enabling water-less cleaning. It also traverses misalignments among solar panels resulting in an improved cleaning range. Besides, centralized control facilitates predictive maintenance and self-charging for the robot. Greenleap Robotics enables large-scale solar plants to automate their labor-intensive work while being able to control and monitor it remotely.

SupAirVision provides Drone-based Blade Diagnostics

SupAirVision is a French startup that provides digitized wind blade diagnostics. The startup’s software tools, Sherlock and Volta, use AI to detect defects on the blades and diagnose the lightning paths of the blades, respectively. Another software tool, Clarity, detects the structural defects inside the blade. Together, they provide accurate, safe, and precise diagnostics, thus reducing wind turbine downtime. The technology benefits utility-scale wind turbine farms by offering scalable management solutions with minimum staff requirements.

10. Blockchain

Energy startups utilize blockchain technology to advance trusted transactions in the renewable energy sector. For instance, smart contracts advance peer-to-peer (P2P) electricity trading for transactive energy. Grids are vulnerable to cyber threats and blockchain is used to encrypt the data associated with grid operations and monitoring.

Through data encryption, blockchain facilitates digital transactions. Renewable energy providers are also taking advantage of blockchain to track the chain of custody of grid materials. Additionally, it allows regulators to easily access data for regulatory compliance.

Sitigrid offers P2P Energy Trading

British startup Sitigrid offers P2P energy trading using S-Chain, its patented distributed ledger technology. Using smart contracts, the startup facilitates the trading of surplus electricity in the open market and keeps a record of the transaction. It uses AI to optimize trades, thereby maximizing revenue for generators and minimizing costs for consumers. The underlying architecture provides local markets with an efficient settlement platform and empowers energy players to aggregate network services.

Green Life Energy promotes Renewables using Blockchain Tokens

UK-based startup Green Life Energy promotes the renewable energy sector through blockchain technology. It bridges the gap between Web3 utility and traditional industries through its digital carbon marketplace and ReFi (Regenerative Finance) payment platform. The platform reduces fraud, increases safety, and validates the nature of transactions.

By applying this model to renewable energy traders, carbon offsets, and renewable models, the startup helps the industry achieve systemic efficiency increases. Moreover, stakeholders enjoy all the benefits of transparency and accountability that blockchain offers.

Discover all Renewable Energy Technologies & Startups

To tackle climate change and meet environmental compliance, companies are turning to clean and sustainable energy. The challenge lies in making renewable energy cost-competitive with fossil fuels. Hardware innovations like advanced photovoltaics such as nanofibers and mono-passive emitter real contact (PERC) based panels improve solar conversion efficiency. Moreover, research on platinum-free catalysts, such as tin carbon, is enabling cheaper green hydrogen fuel cells.

The renewable energy trends and startups outlined in this report only scratch the surface of trends that we identified during our data-driven innovation & startup scouting process. Identifying new opportunities & technologies to implement into your business goes a long way in gaining a competitive advantage.

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7 Important Finance Trends (2024-2027)

by Josh Howarth

December 2023

From crypto to DeFi, the world of finance is changing faster than ever.

And financial services (like banks, insurance, and money management) are scrambling to keep up.

Many of these new trends come on the back of changing technology. While others are the result of a renewed focus on the customer.

Let’s look at a handful of current and developing finance trends that are set to explode over the coming months.

1. The Financial Services Industry Embraces Blockchain

undefinedSearch interest in “blockchain” has risen by 550% in 10 years.

For years, blockchain technology has been synonymous with cryptocurrency. However, experts believe that the technology will now become more integrated with existing financial systems.

For example, using blockchain would allow banks to conduct cheaper, more efficient transactions while maintaining tight security.

It can also be used to handle peer-to-peer lending, an industry that could see a growth of up to $150 billion by 2025.

More banks are transitioning to cloud-based banking in 2024, and blockchain will no doubt play a role in this.

HSBC and Wells Fargo already use blockchain technology to settle forex trades.

Paypal, Mastercard, and JP Morgan all allow users to make payments on their networks using blockchain currencies.

This involves cryptocurrency, of course, but it shows banks’ willingness to embrace blockchain.

It’s not just banks incorporating blockchain, either.

AXA, the French multinational insurance company, uses blockchain technology when insuring clients against flight delays.

An Ethereum blockchain then connects both the insurance contract and air traffic data.

As soon as a flight is over two hours late, the system takes notice and automatically triggers the insurance payout.

2. More People Download Personal Finance Apps

During the pandemic, downloads of personal finance apps grew roughly 90%.

Finance apps like Mint, Prism, and EveryDollar provided exactly what people were looking for and their popularity went through the roof.

world-mobile-users-min.png7.7 billion people have smartphones and access to personal finance apps.

These apps not only help people manage their money, but they offer ways to invest in stocks and crypto.

It’s not just the ability to manage your money remotely that’s attracting people, either. People specifically like having the power to run their financial world (literally) in the palm of their hand.

finance-mobile-apps-min.png6 out of 10 users prefer using finance apps over a desktop website.

And as the US adopts open banking, which will make financial apps even safer, this number will likely increase. And skeptical users who harbored security concerns might be persuaded to take a second look.

Square’s Cash App remains the most popular personal finance app available, and among its list of benefits is a rewards system, which ties into what we discussed above about customer loyalty programs.

undefinedSearches for “Cash App” have risen 94% over the last 5 years.

3. More People Get Their Money Professionally Managed

A new kind of wealth manager is quickly becoming the de facto money manager for many consumers: RIA.

Registered Investment Adviser (RIA) is a firm that is regulated by the Securities and Exchange Commission and specializes in giving financial advice and managing investments.

Compared to typical broker-dealers, RIA’s have what is known as a fiduciary duty to their clients.

This means that they are required to put their client’s interests before their own when making financial decisions.

This kind of high-touch and client-focused model is gaining traction in the US.

At the end of 2020, RIA’s managed a collective $110 trillion supplied by over 60 million clients around the US This is compared to roughly $20 trillion at the beginning of this century.

assets-under-management-min.pngTotal AUM managed by RIAs and broken down by type of client.

In addition, there are now just under 14,000 RIAs nationwide, employing close to a million people.

number-of-rias-min.pngThe number of RIA’s in the US by year.

Even at this growth rate, 47% of RIAs still believe that the industry has a lot of room to grow.

A study by Schwab found that over half of investors prefer to have a fiduciary (an RIA) manage their money compared to any other model.

independent-wealth-management-growth-...The trends that are driving RIA growth.

Overall, it seems that the growth of the RIA industry is leading more Americans to consider letting a professional manage their money.

4. Loyalty Programs Drive Repeat Business

From half-full punch cards sitting in the back of your wallet to website-specific rewards programs, the idea of a loyalty program is nothing new.

However, we’re seeing an uptick in loyalty programs in the finance world.

Loyalty programs have long been a popular way to keep customers coming back, but they’re usually offered in retail and the food industry.

Now, loyalty programs are practically mandatory, even in the financial services industry. Many believe that they’re only going to get bigger, better, and more competitive.

In August of 2021, an American Banker/Monigle Agency survey of banking customers found that, regardless of financial institution or product, “rewards and loyalty remain paramount to the customer experience”.

Most customers, 80% of millennials and 68% of non-millennials would be willing to sign up for a premium loyalty program offered by their favorite brands.

Repeat customers spend at least 33% more than new customers.

And more than 80% of millennials and almost 75% of baby boomers like to get rewards simply for engaging with their favorite brands, whether or not they make a purchase.

A good example of this is CitiBank’s “thankyou” rewards program, which lets customers earn points by simply using their mobile apps or ATMs.

paid-loyalty-exhibit-min.pngCustomers feel increased loyalty after joining a loyalty program.

A survey conducted by McKinsey & Company showed that consumers who belong to paid loyalty programs are 62% more likely to spend more money on that brand.

Interestingly, when it comes to free loyalty programs, that number is only 30%.

Banks are losing the “tender wars” to companies like PayPal and programs like Buy Now, Pay Later. Offering a good loyalty program may be one of their few remaining options to bring consumers back.

5. Banks Further Embrace The Cloud

Banks were already gravitating towards the cloud pre-pandemic, but the pandemic really sped things up.

As people grow warier of physical contact, the demand for digital services rises, so banks need a way to scale up quickly.

The cloud provides just that.

Market research company IDC estimates that global spending on cloud services will surpass $1.3 trillion by 2025, just three years away.

Banks and credit unions will be a part of that, with heavy hitters like JPMorgan Chase and Arvest Bank already converting part of their core systems to a cloud-native platform.

Jim Marous of The Financial Brand believes that cloud banking is the future, citing the fact that IBM has developed cloud solutions specifically for the financial industry.

Microsoft introduced its own offering last year with Microsoft Cloud for Financial Services.

According to Genpact, banking industry CIOs claimed that updating their applications to function in the cloud helped their companies to adapt in 2021.

Another survey, this one conducted by Harris Poll and Google Cloud, showed that, of the 1,300 financial services leaders polled, 83% of them were using the cloud as part of their primary infrastructure.

MANTL is one of the companies that is focused on the cloud banking market.

undefinedSearch interest in “MANTL” over the last 10 years.

 

The company basically helps traditional banks expand into the digital market.

MANTL does this by developing products that allow banks to automate back-office functions, set up an online presence, and onboard customers digitally.

Overall, the company boasts that its customers can expect to receive four times more account applications with a digital offering powered by MANTL.

Artificial intelligence plays a big role in the adoption of cloud services. Not only does AI provide chatbots, but it can also analyze transactions, monitor suspicious activity, and perform other tasks just as well if not better than human counterparts.

Investing in AI would generally cost more than banks would be willing to consider, but if AI was packaged with cloud services, that would become a very appealing offer.

6. Banks Move Past Overdraft Fees

Overdraft fees have long been a thorn in the side of bank customers everywhere. They’re known for not only being excessive but also having a tendency to snowball and reach absurd amounts.

According to the Consumer Finance Protection Bureau, overdraft and non-sufficient funds revenue totaled $15.47 billion in 2019.

Of course, that doesn’t mean that banks will just up and get rid of them (though Ally Financial did just that last year and Capital One followed suit in January), but multiple institutions are implementing new features designed to help customers avoid fees at all costs.

Bank of America added a feature called Balance Connect, which allows users to automatically transfer money to and from accounts to prevent possible overdraft fees.

There’s still a fee of $12 per transfer, but that’s less than the usual overdraft fee. Plus, there’s less chance of it compounding as dramatically.

PNC is offering a new feature called Low Cash Mode that will let customers change the order in which transactions are processed in order to avoid overdrafts.

JPMorgan Chase is giving customers more opportunities to restore overdraft balances before they get charged a fee. They’re also letting customers access direct deposited paychecks two days early.

There are two major factors in banks suddenly looking to eliminate or lessen overdraft fees:

One, everyone is doing it, and no bank wants to be the last one charging overdraft fees. In an age where consumers want loyalty programs, going the opposite direction is a good way to go out of business.

Two, with the release of the CFPB report mentioned above, the agency announced its intentions to begin zeroing in on banks that have, as Director Rohit Chopra puts it, “become hooked on overdraft fees to feed their profit model”.

7. More Non-Tech People Get Into Crypto

As of November of 2021, total cryptocurrency market capitalization had topped out at $2.79 trillion.

Venture capitalist firms purchased over $27 billion in crypto in 2021, almost five times more than they spent in 2020.

vc-crypto-investments-min.pngVenture capital firms invested $27.4 billion in cryptocurrency in 2021.

In a move that should signify that crypto is, in fact, getting even bigger, US President Joe Biden recently signed a bill that requires all crypto exchanges to be reported to the IRS.

This sort of oversight wouldn’t be necessary if cryptocurrencies weren’t poised to become even more popular.

The very first Bitcoin ETF – exchange-traded fund – hit the New York Stock Exchange in October, allowing traders to invest in a more conventional way.

Instead of buying crypto, they’re instead able to invest in companies that have a financial stake in crypto. So, they’re still susceptible to its volatile nature, they’re just inserting a middleman.

undefinedSearch interest in “cryptocurrency” over the last 5 years.

Interest in cryptocurrency isn’t limited to the private sector, either.

As of September 2021, the El Salvador government now demands that all of its local merchants accept Bitcoin as legal tender.

This prompted other Central American countries, like Honduras and Guatemala, to begin looking into central bank digital currencies.

This also had an impact on the US, where 27% of Americans polled answered in favor of adopting Bitcoin.

While some countries, namely China, are strongly opposed to cryptocurrency, the vast majority are considering how they can bring crypto into the fold.

Conclusion

Things are definitely moving away from traditional financial practices.

Unsurprisingly, everything is going digital.

Financial services are looking at the cloud and the blockchain, customers are looking at mobile banking, and everyone is looking at crypto. It’s an exciting time to be in the financial services industry.

Energy Trends for 2024: Steering Towards a Green, Digital, and Decentralized Future

The global energy industry and government energy policies are consistently generating news headlines. Top energy trends like the push towards net zero, the transition to electric vehicles, the escalating price of fossil fuels, and even the basic systems that we use to heat our homes are the subject of ongoing – and often contentious – public debate. 

Strategic energy issues have long been in the public eye. A reliable supply of affordable energy is essential for daily life and economic growth, and energy sources have constantly evolved in step with technological advances. Nuclear power, the coal industries, and the oil crisis of the 1970s were all important political issues in their day. Public reactions to current trends in renewable energy are following a well-established pattern, and are based on similar, practical concerns.

The first fundamental difference between the 2020s and previous decades is that trends in renewable energy technology have created new possibilities that previous generations only guessed at. The second key difference is that climate change is acknowledged as a reality (although its causes and implications remain disputed). There is now a major momentum towards abandoning fossil fuels and developing sustainable green energy.

The 3 D’s of Modern Energy Evolution

Emerging trends in renewable energy can be concisely summarized as the 3 D’s: Digitalization, Decarbonization, and Decentralization. This blog post will explore the three pillars of future trends in renewable energy and how they are influencing investments in renewable energy.

Yossi Ron, ICL Group’s VP of Energy and Strategy Projects offers some valuable insights into the 3D’s of the sustainable energy revolution and how ICL is acting to integrate the three core principles into its own global operations and new projects. He also shares his thoughts on how trends in renewable energy technology are likely to create financial opportunities for companies like ICL.

Decarbonization

From the days of our ancestors burning wood to our modern reliance on fossil fuels, the evolution of energy consumption has been a testament to human adaptability. Carbon emissions surged exponentially during the industrial revolution, but are almost 150 times higher today than they were in 1850.

This alarming increase underscores the urgent need for change. As governments pivot towards sustainable policies, investments in renewable energy are accelerating, with trends pointing to a future of sustainability supporting innovation.

It’s companies like ICL that are playing a pivotal role in enabling the transition to clean energy, with innovative research and development and the development of clean energy storage products. Our commitment to decarbonization, fueled by such advancements, promises a cleaner, brighter, and more sustainable future for generations to come.

Decentralization

One of the most exciting global trends in energy supply infrastructure is the move towards decentralization. The traditional centralized energy model, with its dependence on fossil fuels, though once efficient, inadvertently led to monopolistic structure. Initial investments in renewable energy were fairly tentative, but the exigencies of climate change and public demand for green energy have supercharged both research and investment.

Another unfortunate consequence of (fossil fuel-dependent) centralized energy supplies is the potential for major variations in energy prices. The contemporary shift towards decentralized energy infrastructure signals a hopeful change, promising genuine energy independence and a shield against the volatility of fossil fuel pricing.

Future trends in renewable energy all point towards energy decentralization based on hybrid microgrids that draw on solar, thermal, hydro, wind, and even clean hydrogen energy. Embracing a mix of renewable energy sources and leveraging state-of-the-art technologies, including high-capacity storage solutions such as smart batteries, we’re on the brink of an energy renaissance. This paradigm shift empowers individuals, businesses, and municipalities, heralding a new era of decentralized yet globally impactful energy infrastructures.

Digitization

In an age where we can control our home’s temperature with a voice command, digitization is reshaping our energy experience. The post-World War Two era marked the dawn of computer technology’s significant role in energy and infrastructure management. Today, with leaps in AI, robotics, and other digital tools, we stand at the cusp of an energy transformation.

Digitization offers a spectrum of possibilities, from real-time data management and performance optimization to better utilization of assets and infrastructure and better return on investments. As we seamlessly integrate technologies like 5G and 6G into our daily lives and operations, AI-driven solutions are poised to optimize energy consumption.

The digital wave, when used wisely, has the potential to create secure energy systems that deliver an abundance of universally accessible, sustainable, and clean energy. The potential for economic growth and improvements to the quality of life for humanity is game-changing.

Zooming Into 2024: Energy Trends in Focus

As we set our sights on 2024 and beyond, several energy trends are emerging as game-changers.

Current trends in renewable energy are evolving so rapidly that it’s realistic to think in terms of months and years, as well as decades when we attempt to anticipate new developments and innovations. Looking ahead to 2024, there are definitely some overall global trends in energy development that are worth following closely.

1. The Shift to Renewable Energy Continues

The strategic global shift to renewable energy is continuing, despite disagreements about the pace of change and how to implement new technologies. The volume and scope of R&D in renewable energy technology and government stimulants are creating exciting investment opportunities.

It’s difficult to make accurate projections about the size of the renewable energy market, but the electric vehicle market alone is expected to reach US$1,381 Billion by 2032. When we factor in the manufacture, installation, and maintenance of solar energy plants, wind and tidal power generation plants, hydrogen plants, and upgraded decentralized energy grids, we’re possibly looking at one of the biggest financial opportunities in human history.

2. Electrification of Fossil-Fired Units

It’s becoming widely accepted that fossil fuel-fired units are no longer the future. The volatility in fuel prices following the conflict in Ukraine shattered a generation of complacency in many economies. Companies that can provide solutions or components for the affordable electrification of fossil fuel-fired units are in a growth industry.

The Environmental Protection Agency (EPA) recently proposed a new Clean Air Act that will aim to further reduce greenhouse gas emissions from fossil fuel-fired electric generating units. The proposed legislation is part of a wider trend towards the electrification of industrial boilers, turbines, and household heating units. As with the transition to electric vehicles, cost and convenience are major factors in winning public support. Companies that present viable solutions and products will be at the forefront of a growth market.

3. Waste to Energy

Circular economies are increasingly viewed as financially beneficial, as well as an ethical imperative. Any practical solution that allows the reuse, recycling, or safe conversion of waste to clean energy is likely to find a receptive market. There is great potential for scalability from household level up to industrial plants or regional waste management sites.

An excellent example is the ICL Amsterdam Phosphate Recycling Unit. The plant takes phosphates from sewage sludge ashes and bone meal, recycling it into viable ingredients for high-quality phosphate fertilizers. Other waste-to-energy technologies that are attracting investors include pyrolysis for converting waste plastics into fuel and plasma arc gasification that can produce hydrogen and carbon monoxide for fuel cells.

4. Energy Storage

The planned transition to electric vehicles has highlighted the need for localized energy storage solutions. Individual workplaces, residential associations, or even entire neighborhoods are likely to start taking responsibility for energy storage and distribution via hybrid microgrids or energy hubs. These will be enabled and managed by smart technology.

The smart battery market is expected to double by the end of the decade, with a predicted value of US$ 64.34 Billion. There’s now unprecedented research into battery technologies and the applications of smart batteries are likely to grow as the technology develops. One exciting scenario is that homes will generate their own electricity via PV panels during the day and store it for nighttime use. Blockchain technology will enable the sharing or transfer of stored energy via local microgrids.

5. Heat Pumps for Residual Heat

Heat is both an energy and an asset that is often generated as a byproduct of other processes. The majority of residual heat is either lost or underutilized. Heat pumps and any other technical innovations that can capture, channel, or store residual heat are expected to become standard requirements in future design and planning.

The UK government is actively promoting a £450 million Boiler Upgrade Scheme. It is keen to persuade householders to upgrade their fossil fuel boilers to heat pumps that (increasingly) run on clean electricity. Existing heat pump technology is better suited for milder temperate climates. As heat pumps become more popular, we’re likely to see research into technologies that make heat pumps viable in colder climates. A combination of domestic PV panels, smart batteries, and heat pumps may replace air conditioning units that currently place enormous strain on national grids during heatwaves.

ICL: Setting Trends in Renewable Energy

ICL Group. is a global leader in the field of specialty minerals. With decades of focus on sustainability, ICL is no stranger to groundbreaking initiatives. From the Green Sdom project to developing hybrid microgrids and exploring hydrogen energy, their commitment to a cleaner future is evident.

ICL is one of the world’s major suppliers of bromine and phosphate derivatives. The company is currently building a brand new $400 million dollar plant in the US to supply materials for LFP battery manufacturers. Smart batteries are essential for the transition to electric vehicles and for the development of hybrid microgrids. ICL is at the forefront of research and development into clean energy products.

Yossi Ron is optimistic about ICL’s own role in developing sustainable energy.

“Energy efficiency and energy conservation are going to be key to everything we do in ICL. Green Sdom is a flagship project but it’s just part of the picture. We run an initiative called the ACE program. The ACE program is an energy efficiency and decarbonization program. We’re working to take carbon out of our energy equation – that means building our own microgrids where feasible and using AI for smart energy production and conservation. 

We’re studying how to install our private microgrids – grids that will power entire industrial sites and ultimately sell surplus energy to the national grid. It’s really exciting and we’re creating a template that other businesses can follow in the future.”

Embracing Future Trends in Renewable Energy

ICL is leading the private sector in the development of renewable energy by transforming its own operations. Very few companies are attempting creation of an independent microgrid and implementing circular economies that are not only effective but profitable.

Through its new plant in the US, ICL is poised to become a major force in the supply of LFP battery materials. The company will be a direct contributor to the development of viable electric vehicles and a decentralized energy grid. ICL is continuing to allocate substantial resources to R&D across the spectrum of sustainable energy and is enthusiastically embracing a future defined by genuine energy independence and security.

AICL

Economic outlook for 2024

Key Points

  • Americans are hopeful the Federal Reserve can achieve a so-called soft landing for the U.S. economy in 2024.
  • The Fed projects U.S. GDP growth of 1.5% next year.
  • Inflation is trending steadily lower but will likely remain above 2% in 2024.

The Federal Reserve has made significant progress in bringing down inflation while maintaining growth in the U.S. economy in 2023. However, while inflation has trended lower recently, interest rates are historically high. Economists anticipate the economic fallout from the Fed’s tight monetary policy measures may intensify in 2024.

Investors are hopeful the Fed will be able to navigate a so-called soft landing for the U.S. economy and avoid a severe recession in 2024. Unfortunately, inflation remains well above the Fed’s 2% long-term target, and experts are divided on whether the Federal Reserve may have simply delayed an inevitable recession.

The Federal Reserve itself projects its monetary policy tightening measures will weigh on U.S. economic growth in 2024.

Fortunately, the Fed recently modified its economic projections and no longer anticipates a U.S. recession. While the risk of a severe recession has declined in 2023, economists and analysts anticipate interest rates will remain higher for longer than optimistic Americans had hoped.

Investors looking ahead to 2024 should consider taking a cautious approach to their finances given the potential for a slowdown in gross domestic product growth, sticky inflation and a delayed negative economic impact from the Fed’s aggressive rate hikes.

Economic outlook for 2024

There’s no question the U.S. economic outlook has improved throughout 2023, but that doesn’t necessarily mean the economy is in the clear heading into 2024.

The U.S. recorded 2.2% GDP growth in the first quarter of 2023 and 2.1% growth in the second quarter. As for its latest projections, the Fed expects the economy to roughly maintain that growth pace in the second half of 2023, forecasting full-year GDP growth of 2.1%. The Fed predicts GDP growth will slow to just 1.5% in 2024, a modest but positive pace.

The labor market also remains resilient heading into the end of the year. The unemployment rate has risen to just 3.8%, and the economy has averaged more than 250,000 jobs created per month over the past three months. The Federal Open Market Committee projects the U.S. unemployment rate will average a healthy 4.1% in 2024, still well below its long-term average of around 5.7%.

Unfortunately, some economists are skeptical that the U.S. can maintain economic growth with interest rates so high. The Conference Board predicts U.S. GDP growth of just 0.8% in 2024, including a “shallow recession” in the first half of the year. The nonprofit research group said wage growth is slowing, pandemic savings are declining and U.S. household debt is spiking.

The COVID-19 pause on student loan payments ended in October, placing an additional financial burden on millions of Americans. As a result, The Conference Board projects real U.S. consumer spending will drop 1.1% in the first quarter of 2024 and decline 1% in the second quarter annually. The firm said softening consumption, coupled with rising interest rates, will also weigh on U.S. business investment in early 2024.

The Fed’s inflation target

The FOMC has been aggressively raising interest rates since March 2022 with one goal: controlling inflation. So far, the Fed’s policy measures have worked extremely well, but its job still needs to be finished heading into 2024.

Core inflation

The Federal Reserve’s preferred inflation measure is the core personal consumption expenditures price index, or core PCE. The core PCE measures U.S. shoppers’ prices for goods and services, excluding volatile food and energy prices.

The Fed has a long-term core PCE inflation goal of 2%. But core PCE inflation surged as high as 5.3% in February 2023. As of August 2023, annual core PCE inflation was down to just 3.9%. That said, it remains nearly double the Fed’s 2% target.

Looking ahead to 2024, the FOMC projects core PCE inflation will continue to improve and average just 2.6% next year and 2.3% in 2025.

Soft landing

Inflation is typically a symptom of an overheating economy, so the Fed has been raising interest rates to bring down inflation without cooling the economy so much that it begins to contract.

Brad McMillan, chief investment officer at Commonwealth Financial Network, said the Federal Reserve deserves credit for its performance up to this point.

“With job growth strong and other data supportive, those higher rates seem to be bringing inflation down successfully without tanking the economy,” McMillan said. “This is the elusive soft landing that everyone has been hoping for but which very few thought would really happen. Of course, we are not there yet.”

Alternatively, a hard landing for the economy would likely be bad news for stock prices and U.S. workers.

For example, when the FOMC raised fed fund rates to more than 19% in 1981 to combat inflation, it triggered a severe 16-month recession. Subsequently, that launched a nearly two-year bear market for stocks and sent unemployment up to 10.8%.

Are more rate hikes expected in 2024?

Since March 2022, the FOMC has raised its fed funds interest rate target range by 5.25% to its current level of between 5.25% and 5.5%. Interest rates are now at their highest level in 22 years.

The bond market is pricing in more than a 40% chance of another rate hike by the end of 2023 and a more than 25% chance the Fed will cut interest rates below their current level by May 2024, according to CME Group.

Bill Adams, chief economist for Comerica Bank, said surprising increases in housing prices could fuel further shelter inflation in 2024. But rising long-term U.S. Treasury yields could help make additional Fed rate hikes unnecessary.

“Either way, the path is clearer for the Fed to pivot to rate cuts in mid-2024 with wage growth slowing, core inflation head(ing) lower and gasoline futures prices at year-to-date low(s),” Adams said.

Looking further into the future, the FOMC projects the fed fund rate will fall to an average of 3.9% in 2025 and 2.9% in 2026. But investors shouldn’t rely too heavily on these extremely long-term projections given how much economic circumstances could change between now and then.

Can we expect a recessionary environment in 2024?

While there is no official government definition for an economic recession, economists typically consider at least two consecutive quarters of negative GDP growth to be a recession. The Fed is no longer forecasting a prolonged U.S. recession, and economists from Bank of America agree.

But the ratio of the 10-year yield to the 2-year yield curves in U.S. Treasurys has been inverted since mid-2022, and an inverted yield curve has historically been a strong indicator a recession is likely.

The New York Fed’s recession probability model suggests a 56.12% chance of a U.S. recession by September 2024.

Richard Saperstein, chief investment officer at Treasury Partners, said the positive performance of the stock market in 2023 may have lulled Americans into a false sense of economic security heading into 2024.

“There are elevated expectations for a bullish slowdown where the economy slows enough to bring down inflation but not enough to trigger a recession,” Saperstein said. “Stocks are facing headwinds from higher interest rates and the uncertainty of how higher rates will affect economic growth and earnings.”

Americans concerned about a potential recession in 2024 should continue monitoring the Labor Department’s monthly jobs reports, typically released on the first Friday of each month. As long as the economy continues adding jobs, GDP growth will unlikely drop into negative territory, experts say.

While a growing number of economists are optimistic about a potential soft landing in 2024, there are plenty of risks to the U.S. economy in the next 12 months.

The most obvious risk is the one the FOMC identified, and it’s made targeting inflation a top priority for nearly two years.

If it becomes clear at any point that inflation is no longer trending lower in 2024, the Federal Reserve will likely have no choice but to respond with even more interest rate hikes. And that would put additional pressure on corporate earnings and economic growth. Higher interest rates increase borrowing costs for consumers and corporations, reducing spending and investment and slowing economic growth.

But even if inflation continues to trend lower, the FOMC will need to time its pivot from rate hikes to rate cuts perfectly to avoid either a rebound in inflation or a sharp drop in economic growth that could lead to a recession. The Fed is attempting to thread the needle and achieve a soft landing. But even one major misstep by the central bank could be enough to send the economy spiraling.

Financial pressures such as student loan repayments, slowing wage growth and rising household debt may negatively impact consumer spending in 2024, especially if Americans completely burn through their pandemic-era savings. Rising credit card debt levels when interest rates are already at multidecade highs could also hurt consumer sentiment and spending.

Finally, geopolitical risks are always a wild card for the economy, especially in a U.S. presidential election year like 2024. The ongoing conflict in Ukraine and the recent outbreak of war between Israel and Hamas in the Middle East could have a significant impact on international financial markets and the global economy.

USA Today