US Energy Outlook 2024: Proven Technologies Retake Center Stage, and Hydrogen Investment Booms

Given economic pressures, supply chain woes, permitting obstacles, and a fraught presidential election cycle, the US energy industry in 2024 will likely go back to basics and focus more on hydrogen to address energy supply and emissions reductions.

The sector is already struggling to build the infrastructure critical to the energy transition: major projects—including two offshore wind developments, Utah’s NuScale small modular nuclear reactor, and the carbon-capture Navigator Pipeline—were cancelled this year as companies struggled with rising costs and opposition from local stakeholders. Other large energy infrastructure projects have been delayed or stalled, such as two Massachusetts offshore wind projects and a Connecticut offshore wind project that terminated their offtake contracts and will consider potential rebids next year. On the electric transmission side, projects face strong headwinds and massive building delays, creating what some call a transmission crisis.

The 2024 election will amplify these challenges, put infrastructure projects under the microscope, and stall any further policymaking efforts that could spark additional investment in promising low- to zero-emission energy technologies.

As a result, energy companies aiming to expand their operations in 2024 might do well to look for “under the radar” opportunities to repurpose or grow existing infrastructure in their portfolios, as well as invest in time-tested renewable projects. And while new legislation may be on hold, the Inflation Reduction Act (IRA), which offers more than $360 billion in climate change investment, can still provide ample support.

Traditional centralized renewables, such as utility-scale onshore wind and solar, will continue to grow and will offset some of the offshore wind, small modular nuclear reactor, and carbon-capture pipeline setbacks experienced in 2023. Decentralized solar and storage will see a boost next year given grants and credits offered by the IRA to public entities like schools and local governments.

Hydrogen is also likely to be a bright spot for growth in 2024. The IRA’s subsidies for hydrogen production max out at 30 percent for the investment tax credit and $3/kg for ten years for the production tax credit, depending on the lifecycle carbon emissions of the production pathway. These credits could make hydrogen as an energy source or feedstock very attractive, especially in industries where hydrogen is already produced and consumed, such as refining.

Additionally, use of conventional fuels (save for coal) will increase next year as oil and natural gas remain in high demand. The US is on track to set a record in oil production this year, with the Energy Information Administration (EIA) projecting a total of 12.9 million barrels per day extracted in 2023 and potentially more in the year ahead. Liquified natural gas exports are also likely to expand, with the EIA projecting export capacity to double through 2027 as a number of new export facilities come online.

The continued growth in conventional energy sources is due to growing energy demand along with the challenges low-carbon infrastructure projects face, which limits the supply, storage, and distribution of clean energy in the US. Given these buildout challenges, the US needs new and cost-effective energy sources, pragmatic and technology-neutral energy efficiency measures, and commercialization of long-duration energy storage to reduce emissions effectively in the years ahead. Though these policy decisions are unlikely to come in 2024, only time will tell.