Investments in renewables continue to outpace fossil fuels, a BloombergNEF report finds
2 min
Zero-carbon technologies comprised more than 40% of global electricity generation for the first time in 2023, according to a report released Tuesday from BloombergNEF.
Renewable energy sources like wind and solar made up 17% of total electricity generation, and hydroelectric and nuclear power contributed 24%. Fossil fuels including coal and natural gas produced 57% of global electricity last year.
“We’ve consistently seen the penetration of renewables rising every year, and this year we hit quite a few milestones that had felt harder to reach in past years,” said Meredith Annex, head of clean power at BNEF.
One such milestone: Solar and wind represented more than 90% of global energy capacity additions last year, a step up from 2022. Global wind capacity also crossed the one-terawatt threshold. And Brazil, the country with the cleanest power mix of the G-20 economies, hit 88% renewable power generation in 2023.
“It just shows the momentum that the space is having. A lot of that does tie into the investment story, where you’ve got rising—skyrocketing, honestly—investment into solar,” Annex said.
Mainland China accounted for almost a third of total renewable energy output last year. The country recently reached its 2030 target for wind and solar energy six years early, according to a statement from its National Energy Administration, and it has pulled back on permits for new coal-fired power plants. The country’s rapid deployment of renewables has some analysts wondering if it will reach peak fossil fuel consumption this year. Declining emissions in China would signal a turning point because it is the world’s largest polluter, comprising nearly a third of global greenhouse gas emissions, according to the International Energy Agency.
Despite rapid growth in renewables, countries’ current commitments aren’t sufficient to limit global warming to 1.5 degrees Celsius, the goal outlined in the 2015 Paris Agreement, according to the IEA. Advanced economies would need to slash emissions by 80% by 2035 to meet the goal.
At last December’s COP28, a global climate conference hosted by the United Nations, participating countries agreed to triple renewable energy capacity by 2030. BNEF has forecast that achieving this goal would require investments in renewables to increase to 1.6 times 2023 levels from 2024 to 2030.
So far, that increase hasn’t materialised. Global investments in renewables are roughly on par with 2023 levels, at $313 billion in the first half of 2024, according to the new BNEF analysis. “We’re expecting steady growth, but steady growth does not get you to net zero,” Annex said.
The topline numbers obscure bigger changes under the surface. Average spending in the U.S. is up by about 63% compared with levels before the 2022 Inflation Reduction Act, which offers generous subsidies and tax breaks to promote decarbonisation. And while Chinese investment is actually down 4% from the same period in 2023, Annex said the dip is due to cheaper equipment for wind and solar, not a decline in demand.
The second half of this year will be a “defining moment,” for the investment landscape, Annex said. Steady growth “is definitely a positive, and it could be a sign that the industry as a whole is reaching a new kind of status quo, but we need to help expand even faster if we’re going to be in line with net zero.”
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Strong family financial planning can help reduce taxes and support younger generations. From intrafamily loans and asset gifts to inheritance disclaimers, strategic cooperation can create meaningful financial benefits—when families have the trust and structure to make it work.
4 min
Happy is the family whose members—parents, grandparents and grown children—trust each other enough to cooperate on shared goals, especially financial ones. When that is truly the case, Uncle Sam’s tax rules can help as well.
This matters especially now that mortgage rates are above 7%, and many families are looking for ways to help younger members. If the elders have resources and are confident younger ones can cooperate, a family loan could make homeownership possible while providing the elders with a useful income stream.
Other strategies can actually lower taxes, such as when funding 529 plans or Roth IRAs, or when someone inherits a traditional IRA with required withdrawals larger than they will need.
Here are three strategies useful for functional families.
It is perfectly legal for families to lend money to a relative for a down payment or even a private mortgage.
But it is important not to cut corners, says Ryan McKeown, a CPA with Modern Wealth Enhancement in Minnesota. If the loan is for a down payment, be honest with the mortgage provider and have a formal agreement. The lender owes tax on the interest payments received.
If the loan is for a private mortgage, both sides should have legal representation with a formal written agreement, including payment terms. The lender owes tax on the interest, and the borrower often can deduct it if he or she itemizes.
To avoid IRS trouble, the interest rate shouldn’t be lower than the agency’s Applicable Federal Rate at the time of the loan. Currently that is about 5% for loans longer than nine years; about 4.5% for loans three to nine years; and about 4% for loans three years or less. Currently, traditional mortgage rates are generally above 7%.
In addition, the lender could use the $19,000 annual gift-tax exemption (described below) to forgive some or all of the interest or principal annually. If both lenders and borrowers are married, that is up to $76,000 a year. There is no tax for the borrower on such forgiveness, because it is from a gift.
If you’re going this route, McKeown advises against having a fixed plan to forgive the debt. Instead, do it in one-off letters specifying the amount—and keep careful records. Otherwise the IRS might try to treat the loan as a taxable gift.
Powerful tax-saving moves for families often use gift-tax provisions. Under current law, anyone can give anyone else up to $19,000 of assets annually, free of gift tax. That means a married couple with three grandchildren could give them a total of $114,000 in 2026.
The gifts can be cash or other assets, like stock. For noncash gifts, the cost basis—which is the starting point for measuring taxable gain after a sale—“carries over” to the recipient. So if someone buys $1,000 of stock and gives it away when it is worth $5,000, the recipient’s cost basis is $1,000. If the recipient later sells the shares for $8,000, the taxable gain is $7,000.
Here’s an example showing how gifts could save a family taxes. Grandma is a widow of modest means, while her child and spouse have prospered. The couple has two children, and they want to contribute $5,000 to a 529 college-savings plan for each—but they need to sell stock to do it. Their tax rate on the sale would be 18.8%, and they would need to sell about $11,000 of stock.
However, Grandma’s federal tax rate on the stock sale is 0%. If the couple gives $10,000 of shares to Grandma, she could sell them, pay no tax, and fund the grandchildren’s 529 plans. This saves about $1,000 of tax.
These moves are legal, and they could be used in other ways, such as to help a young person fund a Roth IRA.
But trust among family members is essential: Under the law, givers can’t put conditions on a gift. Grandma could use her stock proceeds to take a cruise, but she makes 529 contributions instead.
Mark Sellner, a retired tax attorney and CPA living in Sarasota, Fla., uses this strategy. His children sell stock he gives them and fund 529 plans for his grandchildren.
The family’s tax savings aren’t huge, but he likes other benefits. The sales by his children don’t boost his adjusted gross income, which in turn could raise his Medicare Irmaa premiums or his 3.8% surtax on net investment income.
Sellner doesn’t worry about his children using the funds for another purpose.
“There can’t be any strings attached to gifts. Of course, it is up to us to decide whether to make them in the future,” he says.
Two caveats: The “kiddie tax” applies to most children under age 24, and it is levied at the parents’ rate on investment income above $2,700 in 2026. Consider this before making gifts to a young person.
Investors who give away stock also forgo the step-up, an important provision that exempts assets held at death from capital-gains tax.
Sellner knows he’s losing a step-up, but says, “The children could use a little more now. Why should they wait 20 years to get it?”
A disclaimer is a highly useful strategy in which one heir renounces an inheritance in favor of another heir. Assuming family members cooperate, this can save taxes.
Here’s one example. Dad died and had a large traditional IRA that he left to Mom. She has enough assets and income to cover her expenses, and she lives in a state with a stiff estate tax. The inherited IRA would put her estate over the threshold.
Also surviving are three young-adult children. If Mom disclaims all or part of Dad’s IRA within nine months of his death, that amount could go directly to the children. They will have 10 years to empty the account, and the family as a whole will likely save estate and income taxes.
Disclaimers have many key details, especially regarding beneficiary documents. Although heirs have great freedom in choosing what assets to disclaim, the rules about who gets disclaimed property are rigid. It is best if the original owner names tiers of heirs so that if one disclaims, the next recipient is clear.
