In focus - Markets

How do you invest in the global energy transition?

Over the next 30 years, the world’s energy system will shift from one based on fossil fuels to one dominated by renewable electricity. We examine the investment opportunity.

19 Sep 2019

Mark Lacey

Mark Lacey

Head of Commodities

Alexander Monk

Alexander Monk

Global Renewables Analyst

Felix Odey

Felix Odey

Global Renewables Analyst

Contributes to
Unstructured Learning Time

CPD Accredited

Energy transitions are long-term structural transformations in the way energy is produced, distributed and consumed. They are caused by new technologies, superior economics and changing social trends.

For example, in the 1800s, we burned wood for energy, then the shift to coal revolutionised the pre-war industrial period. The change in power generation facilitated the boom in railways and a wave of economic development followed.

The next shift started in the early 1900s with the discovery of oil. This transition not only had an impact on the energy system but also on the adoption of automobiles, transforming everyday lives.

The world’s third energy transition, from fossil fuels to renewables, has now begun. It is only going to accelerate from here as governments, consumers and investors recognise that switching to more sustainable energy is not only essential to stop climate change, but makes sound economic sense too.

Achieving this transition will require significant investment. Between now and 2050, it is estimated that $120 trillion will need to be invested. The entire value chain for how energy is generated, stored, distributed and used will need to be radically transformed.

This will result in unique investment opportunities across different industries and sectors, but traditional approaches to stock market investing will fail to reap the benefits.

Please find the full paper as a PDF below.