INVESTING IN CLIMATE SOLUTIONS: THE IMPORTANCE OF INFRASTRUCTURE INVESTMENT IN THE ENERGY CRISIS
Posted on January 27th, 2025
Keeping the lights on, powering factories, heating homes, driving cars: as development picks up pace around the world, so too has demand for oil and gas. With the success of the energy transition hanging in the balance, we examine the outlook for infrastructure in the context of renewable solutions to the climate crisis.
Global energy consumption has increased by at least 1% every year since 1966. Between 1990 and 2020, global energy consumption jumped 60%, and, if predictions prove to be right, by 2050 it will rise a further 50%.
To date, most of the energy we have used has come from relatively cheap and abundant fossil fuels which are also the largest contributors to greenhouse gas emissions and a leading contributor of climate change. Despite the recent withdrawal of the US from its climate commitments, most Governments worldwide remain focussed on reducing carbon emissions whilst meeting the energy requirements of their citizens. As a result, there needs to be a change in the way the world produces, distributes and consumes its energy.
This shift cannot happen without crucial investment in infrastructure. As the backbone that enables the development of technology to support the production, integration and storage of renewable resources and the transmission of clean energy, such investment is crucial in the battle to contain the worst effects of climate change.
A successful energy transition hinges on the infrastructure that enables the transportation, storage and distribution of transition solutions and ultimately clean energy. Energy system operators are likely to lead the way, collaborating with private and public stakeholders to address concerns about resource intermittence, energy security, and sustainability.
“The energy transition is probably the most important theme for private infrastructure investors today…”
They will also develop energy and capacity solutions that meet the rising demand for transition solutions and clean energy. Many market commentators believe that most of the capital required to build the energy system of the future will come from private markets.
Source: Copyright. Bloomberg Finance L.P. Note: 2023 shows actuals. Excludes investment in fossil-fuel processes and power and conventional energy, and spending on ICE vehicles. CCS is carbon capture and storage
The energy transition is probably the most important theme for private infrastructure investors today, who find themselves with a long-term opportunity to deploy significant capital into sustainable assets across the risk-return spectrum. However, the market is dynamic, so choosing the right technologies, geographies and tariff regimes to invest in at the right time will be critical.
Recent market developments such as Brookfield and Microsoft’s framework agreement to deliver 10.5 gigawatts of new renewable energy capacity highlights the opportunity, with large corporates increasingly focused on securing green energy supply to address their own net zero ambitions.
Infrastructure strategies provide a range of investment opportunities within the renewables and energy transition market, from the acquisition of existing assets, development, construction and repowering opportunities, through to the development of vertically integrated independent power producers.
Back to all News & Insights