As Wildfire Season Nears, Has Your Company Factored In Climate Risk? (Forbes)
La Nina is on its way back. An atmospheric scientist explains what to expect (PBS)
World’s top climate scientists expect global heating to blast past 1.5C target (The Guardian)
Global temperature record streak continues – April 2024 was the hottest on record (Climate Copernicus)
‘Hopeless and broken’: why the world’s top climate scientists are in despair (The Guardian)
Our research shows higher carbon emissions increase costs for Australian businesses (The Conversation)
Scientists at Berkeley developed a tool to help cities measure carbon emissions (Kosu)
Are we communicating climate change wrong? Here are five ways to improve. (UNDP)
Congressional Guidance for a National Maritime Strategy (WALZ House)
Zero emissions to drive profound change in shipping business model (Seatrade Maritime)
To reach net-zero, shipping will have to challenge the status quo (Riviera)
Green Shipping Could Launch Massive Jobs Boom (Maritime Executive)
ABS, Seatrium extend partnership with three-year decarbonization, digitization deal for offshore industry (World Oil)
Trans-Pacific Ports Unveil Ambitious Green and Digital Shipping Corridor (The Log)
Why realism is key as we balance the energy transition with global growth (We Forum)
Banks have given almost $7tn to fossil fuel firms since Paris deal, report reveals (The Guardian)
Fortescue aims to boost U.S. green energy production with new hydrogen facility in Buckeye (Chamber Business News)
Biden and oil companies like this climate tech. Many Americans do not. (Washington Post)
U.S. Republican attorneys general sue to stop EPA’s carbon rule (USA Today)
Trump asked top oil execs for $1 billion campaign cash in exchange for environmental policy rollbacks, report says (Business Insider)
Hapag-Lloyd and IKEA team up on biofuel use to cut CO2 emissions (Offshore Energy Biz)
To aid the green energy transition, we need to modernize our grid infrastructure (The Hill)
Smart Cities & Smart Grids Empower Urban Energy Transitions (Energy Digital)
One hundred years of energy transitions (Atlantic Council)
Global investment in the energy transition reached a record $1.8 trillion in 2023, up 17% from the previous year, according to BloombergNEF. S&P Global reported $500 billion in private capital investment in the energy transition last year. Despite this growth, there has been a subtle shift in infrastructure investors’ attitudes towards this trend, marked by a sense of urgency and caution. Achieving the Paris Agreement’s target of limiting global warming to 1.5°C is cautiously feasible and in a narrow path, which provokes a tighter focus on scale and tech selection.
Investors frequently cite ‘scale’ as a significant challenge in the energy transition. The International Renewable Energy Agency emphasizes the need for a dramatic acceleration in renewable energy deployment, aiming to increase global renewable capacity from 3,000 GW today to over 10,000 GW by 2030. This requires adding 1,000GW of renewable capacity annually, a steep climb from the 507GW added globally last year, according to the International Energy Agency.
Investment in grid and grid-adjacent technologies, such as battery storage, must keep pace to avoid wasting new renewable capacity. S&P Global estimates infrastructure funding requirements at $5 trillion to $7 trillion per year until 2050, far outstripping the $1.8 trillion invested last year. Governments alone cannot meet this need, and the private sector’s $500 billion contribution must increase significantly.
Current investment in the energy transition is unevenly distributed. Despite hosting only a third of the global population, the U.S., Europe, and China receive 80% of all energy transition investments. In contrast, Africa attracts just 2% of renewable investment. To achieve a balanced global energy transition, significantly more capital must flow into emerging markets.
Achieving net zero presents a multi-trillion dollar investment opportunity, but maintaining this trajectory necessitates a significant shift away from fossil-fuel investments. According to research, for every dollar allocated to fossil energy supply, nearly five dollars must be directed towards low-carbon energy solutions through 2050.
Investors are increasingly discerning about which technologies to back. Green hydrogen, for example, faces skepticism due to infrastructure challenges and economic viability concerns. Despite this, Europe invested nearly $200 billion in hydrogen-related infrastructure in 2023. Nuclear power, tiny modular reactors (SMRs), is gaining traction, with nearly $85 billion in projected capital investment.
Renewable energy technologies heavily rely on raw materials like lithium, cobalt, copper, nickel, manganese, and rare earth elements. As renewable energy adoption grows, so does the demand for these critical raw materials.
Although renewable energy resources are abundant globally, these essential raw materials are concentrated in a few strategic regions. For instance, cobalt and lithium, crucial for the energy transition, are essential for electronics, electric vehicle batteries, and electrolyzers. However, their reserves and processing facilities are highly concentrated, and global demand is steadily increasing.
Australia, Chile, and China are the world’s largest lithium producers, together accounting for approximately 90% of global production. China not only plays a pivotal role in lithium production but also dominates the refining capacity for batteries, holding a 60% share.
Disruptions in their supply can significantly impact the transition to a cleaner energy system, highlighting the importance of securing these resources.
The concentration of production in a few regions creates significant vulnerabilities. Disruptions in the supply chain from these critical regions can lead to economic instability, price fluctuations, and interruptions in electric vehicle production and battery development. These disruptions can slow the transition to cleaner energy sources and hinder the fight against climate change.
Investing in research and development for secure energy supply, diversifying supply chains and reducing trade barriers for international cooperation, strengthening domestic capabilities and prioritizing sustainable mining practices in countries with proven reserves, and removing trade barriers to climate technology to expedite decarbonization are some of the measures countries can take to cope with these commodities supply challenges.
A successful energy transition requires reducing reliance on fossil fuels. While private equity interest in oil and gas resurges in the U.S., many large institutional investors still restrict capital allocation to traditional oil and gas strategies. In 2023, global fossil fuel investments totaled $1.1 trillion, up 9% from 2022. The Institute for Energy Economics and Financial Analysis warns of increased risks and lower returns for investors in coal and gas assets.
The required pace of change is daunting. A 2022 University of Oxford study suggests that a rapid energy transition could save the world up to $12 trillion. Faster investment in decarbonizing the global economy is more cost-effective.
The path to a sustainable energy future involves significant challenges in scaling renewable energy, ensuring balanced investment distribution, and selecting the right technologies. Disparities between the global north and south must also be addressed to ensure a sustainable energy future for all. The urgency to transition away from fossil fuels is clear, but achieving this requires coordinated efforts from both the public and private sectors, substantial financial investment, and a focus on emerging technologies.
Beatriz Canamary is a consultant in Sustainable and Resilient Business, Doctor and Professor in Business, Civil Engineer, specialized in Mergers and Acquisitions from the Harvard Business School, and mom of triplets. Today she is dedicated to the effective application of the UN Sustainable Development Goals in Multinationals.
She is an ESG enthusiast and makes it possible to carry out sustainable projects, such as energy transition and net-zero carbon emissions. She has +15 years of expertise in large infrastructure projects.
Member of the World Economic Forum, Academy of International Business and Academy of Economics and Finance.
