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Equity
Matt Reynolds
On 4 November 2016, 196 parties came together at the United Nations Climate Change Conference (COP21) to sign the Paris Agreement - a legally binding international treaty on climate change. Hailed as a monumental milestone for humanity’s battle against climate change, a key objective of the agreement was to reduce greenhouse gas emissions by 45% in 2030 (interim goal) and reach net zero by 2050.
But despite vast amounts of money funnelled into shifting towards a low-carbon future, with a record US$1.8 trillion spent in 2023 alone, achieving the 2030 goals will require annual global investments to average US$5.4 trillion from 2024 to 2030, essentially tripling the current pace1.
If governments stay dedicated to attaining net zero emissions, the significant capital investment required to bridge the energy transition spending gap could revolutionise companies and investors alike.
This paper analyses how the energy transition cuts across multiple facets of the global economy and why it is important for investors to look beyond the obvious beneficiaries as both ‘new’ and ‘old’ economy companies can potentially benefit from this powerful wave of change.
2023 energy transition investment versus required annual levels
Data as at end 2023. Source: Bloomberg NEF. Note: Future values are obtained from the New Energy Outlook 2022, except electrified transport, which is from the Electric Vehicle Outlook 2023 Net-Zero Scenario. The 2023 figure excludes investment and spending for clean shipping and fuel cell vehicles.
1. Energy Transition Investment Trends 2024. Source: Bloomberg NEF
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