The pace of global energy innovation is only increasing, fueled by technological advances, increased public and private investment and a shifting geopolitical landscape. Last month, the International Energy Agency released a report entitled “The State of Energy Innovation.” The report assesses recent progress and emerging challenges in energy technology innovation and analyzes trends in public and corporate research and development spending, venture capital flows and technology demonstration efforts.
The authors identify several broad trends within the global energy innovation landscape. Firstly, tech developers are increasingly focused on producing smaller, modular technologies, but different regions are taking different approaches. China has been the largest energy technology producer since 2021, when it surpassed Japan and the United States. Roughly half of China’s energy patenting and 90 percent of its venture capital funding for energy is geared toward mass-manufactured and modular technology. In Europe, roughly 50 percent of energy patenting is for smaller technologies, but the region is also engaged in large engineering projects. The venture capital markets in the United States have invested more equally across modular, fossil fuel and large-scale energy technologies.
The report estimates the total value of the VC market for low emissions technology will reach more than $2 trillion by 2035 under current policy, but between 2023 and 2024, the market declined roughly 20 percent due to inflation and policy uncertainties. AI is the exception to the trend: The booming niche doubled its fundraising efforts in 2024. Most AI successes are still in the early stages of development, but the report states that “Applying AI to accelerate energy innovation can reduce search times for new energy materials, including for cathodes, electrodes, CO2 capture, bioenergy and synthetic fuels.”
One AI project to watch comes straight from the Marvel Universe (where Tony Stark discovers the new element he needs to power his suit) in the reported identification of a new solid battery electrolyte by researchers from Microsoft and a U.S. government laboratory. It’s probable most of the research work will incorporate machine learning, large language models or other AI techniques soon – possibly by the end of this decade.
Another focus area is battery technology, including diversifying the supply chain of minerals needed to power battery development. Houston-based Endolith, which we recently covered in the Enspired newsletter, is using AI to bolster microbe efficiency in extracting copper and lithium, hoping to improve efficiency and reduce environmental impact during raw material extraction. For projects such as this, the report notes that “Continued support for solid-state and lithium-sulphur battery research is needed, alongside creation of markets for new sources of lithium and clarity on recycling standards.”
A third focus area is carbon dioxide removal. Technology and market progress in this area are encouraging. During the past five years, the corporate landscape has grown from just under 30 startups with a few kilotonne-scale pilot projects, to more than 140 startups, some of which are commissioning 15- to 40-kilotonne-scale facilities. These startups are investigating 13 different ways to remove CO2 from the atmosphere and prevent re-emission, but the vast majority of market spending has focused on direct air capture and bioenergy with CO2 capture and storage.
The report also honed in on 18 significant milestones that the IEA believes tech companies could achieve before 2030. Among these are: the first repeatedly deployed nuclear small modular reactor, the first solid-state cooled building, the first large-scale, long-duration storage battery, and the first large-scale multi-source CO2 hub to begin operations.
It’s worth noting that the first company to develop a technology often has an inherent advantage, but first doesn’t necessarily mean best. Blackberry was the first phone to include e-mail capabilities and a full keyboard, but the company became obsolete after iPhone came out with the first touch screen. Companies that were once cutting-edge risk falling behind quickly in today’s fast-paced world. That being said, these innovation milestones may help pave the way for future improved iterations.
The state of innovation globally is shifting, as is the role in which we find ourselves as geoscientists. Many of us feel ever more pushed out of oil and gas, for various reasons, and we need to keep our eyes on the horizon so we know where our skillsets will be needed next. Our skills are key in all three focus areas, from finding, optimizing and removing materials, to powering these revolutions toward finding, analyzing and monitoring reservoirs for carbon storage.