December 2, 2021

Beyond Going Long

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Shifting to cleaner energy will require billions of dollars in investment, and money isn't the only problem

Shifting to cleaner energy will require billions of dollars in investment, and money isn’t the only problem

The crisis caused by the coronavirus pandemic has brought new motives and tasks to the energy sector as well. The challenge for the European Union’s immediate future is to move towards a low-carbon, zero-emissions economy. The problem with going green is that the decision about it is a political one and will be more of a challenge to meet in a time of crisis, disrupted supply chains, and rapidly rising inflation.

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Pressure for change is mounting

It is generally understood that the term “energy conversion” includes Moving from fossil fuels to a cleaner energy economy, from high carbon density to low carbon density and From the fragmented energy sector to the sector, where there are several interrelated elements, such as oil and gas, renewable energy sources, transportation, heating and others.

“This transformation has been going on for the past decade, but for 18 months now Change the pressure on the frequency of these changes. The impetus for change is constantly increasing. Thanks to that, he has Transition to a low carbon economy Essential for businesses, but also for governments and consumers,” says Michel Huan of CMS Slovensko.

billion investments

The International Energy Agency (IEA) expects in its report for the month of May this year that Investment in oil and gas extraction will drop to about half the level in 2030which was expected in the next decade.

According to a CMS report, the oil and gas sector is responding to this challenge. While it was in 2018 Investments in corporate energy conversion increased 2.9%, in the year 2020 actress up to 4.2%.According to the optimistic scenario, It could triple in the next decade Reaching value by 2030 up to 28 billion dollars. On the contrary, the most pessimistic scenario speaks of investments of $ 10.4 billion.

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The main players in the clean energy markets as well as in the transportation market are oil and gas companies. They are looking for different investment opportunities all over the world in order to Help diversify your investment portfolios. “Many players in the industry have already reshaped their businesses Adapts to the expectations of the sector in the future. They bring renewables and sustainable energy from the edge to the center of their business. Svoju They see the future in integrated energy, not just based on clean oil and gasM adds. that is.

When ambitions outweigh possibilities

Decarbonization and green transformation are essential, but according to some analysts, the current range of technologies does not yet make economic sense. “The main problem is that The material world is too small to fit the aspirations and visions of our politicians and environmental movementsSteen Jacobsen, chief economist at Saxo Bank, describes the situation.

As he says, the greater the pressure to remove carbon in its current form, The more minerals the economy needs. For example, with 30 percent of electric cars, they will be needed by 2030 10 to 20 times more minerals than at present.

However, supply chains are not flexible enough Due to the lengthy permitting procedures as well as the lack of capital. Today, capital prefers to go to ESG (Environmental, Social and Governance), which so far lacks transparent and logical rules,” says the analyst.

Let it cost what it costs

The ESG agenda is likely to be dominant in the coming period. Bloomberg Intelligence expects By 2030, the size of ESG will be about twice the size of business as the annual GDP of the United States.

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“We just knew that global commitment in style,Let it cost what it costs?. The result will be, among other things Inflation as evidence that the material world is unable to provide muchHow much does it take to order,” says Jacobsen.

This will also be reflected in lower economic growth and labor productivity. “For investors, that means turning to assets that can handle this situation. These are mainly green investments and commoditiesthinks the analyst.