Note:The following is a redacted version of the original report published February 25,2024 [52 pages].Goldman ResearchEQUITY RESEARCH 25 February 2025 5:21AM CETSachsCarbonomicsTariffs,deglobalization and the cost of decarbonizationOur updated Carbonomics cost curve considers >100 different applications for decarbonization tech across key emitting sectors,reflecting technological innovation and a growing push for local supply chains and tariffs.Our four key conclusions:Innovation delivers,butis two-speed this year:Technological innovation continues to lower the decarbonization cost curve asthe lower half of the cost curve moves down on average by 7%yoy.However,more-expensive technologies in hard-to-abatesectors are becoming more expensive.This is our fifth Carbonomics cost curve,and technological innovation has delivered acumulative 45%decline for the lower 50%of the cost curve since 2019.Batteries,solar and biofuels drive decarbonization costs down;decarbonizing industryremains most challenging:Batteries see the most cost improvement,lowering the cost ofdecarbonizing passenger transport and the cost of solar paired with battery storage by 30%+.Standalone solar power generation costs have fallen 12%yoy,while biofuels have become 40%cheaper.Conversely,we see little progress in industry,mostly on a lack of progress withhydrogen-dependent technologies.Deglobalization could add 30%to decarbonizationcosts:Some clean technologies are manufactured locally(bio-energy,grids,electrolysers),but others have adominant,global,low-cost supplier (solar,batteries)that02continues to gain cost competitiveness,raising questionsover the benefits of local manufacturing vs.imports.Weflex our Carbonomics cost curve,measuring the cost ofdecarbonization based on the lowest-cost globalsupplier,vs.local production in the US/Europe.Thisshows that a 115%/55%average import tariff is neededfor Western clean tech production to be competitive insolar panels/batteries,and would result in a 30%rise inthe Carbonomics cost curve.Lower gas prices would foster de-carbonization andlower the power Carbonomics cost curve by 20%:Inview of growing LNG supply from 2026 and a potentialrestart of Russian gas flows lowering gas prices,we findthat the benefit of accelerated coal-to-gas switchingmore than offsets the negative impact on renewableeconomicsMichele Della Vigna,CFAAlberto Gandolfi+39028022-2242+39028022-0157michele.dellavigna@gs.comalberto.gandolfi@gs.comGoldman Sachs Bank EuropeGoldman Sachs Bank EuropeSE-Milan branchSE-Milan branchGoldman Sachs does and seeks to do business with companies covered in its research reports.As a result,investors should beaware that the firm may have a conflict of interest that could affect the objectivity of this report.Investors should considerthis report as only a single factor in making their investment decision.For Reg AC certification and other importantdisclosures,see the Disclosure Appendix,or go to www.gs.com/research/hedge.html.Analysts employed by non-US affiliatesare not registered/qualified as research analysts with FINRA in the U.S.The Goldman Sachs Group,Inc.Contributing AuthorsMichele Della Vigna,CFAAlberto GandolfiNikhil Bhandari+39028022-2242+39028022-0157+656889-2867michele.dellavigna@gs.comalberto.gandolfi@gs.comnikhil.bhandari@gs.comGoldman Sachs Bank EuropeGoldman Sachs Bank EuropeGoldman Sachs(Singapore)PteSE-Milan branchSE-Milan branchBrian Lee,CFAYulia BocharnikovaAnastasia shalaeva+1917343-3110+9714214-9957+9714214-9908brian.k.lee@gs.comyulia.bocharnikova@gs.comanastasia.shalaeva@gs.comGoldman Sachs Co.LLCGoldman Sachs InternationalGoldman Sachs InternationalQuentin MarbachCarly DavenportAjay Patel+44207774-7644+1212357-1914+44207552-1168quentin.marbach@gs.comcarly.davenport @gs.comajay.patel@gs.comGoldman Sachs InternationalGoldman Sachs Co.LLCGoldman Sachs InternationalCO: