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Energy Transition Issues and Renewable Investment Dilemmas

Net Zero: Closer than you Think?

Energy transition is the next big issue for the world to grapple with once  COVID-19 is resolved. The move away from fossil fuels, particularly the use of thermal coal as a source for electricity generation and oil-based transportation is essential with coal-fired electricity generation accounting for 30% of global CO2 emissions, while 72% of global transport emissions come from road vehicles (IEA, 2019). The drive towards renewables and Net Zero may however, have been accelerated by the improvement in air quality experienced during the pandemic. 

Several of the societal, structural and technological considerations faced both by companies and investors in the energy transition process are highlighted in this collection of papers. Determining quite how to take the best advantage of the numerous investment opportunities that exist across the renewables, electric vehicles (EV’s) and energy storage space is an additional challenge for investors, and one which is addressed within several of the articles Savvy Investor has collated. 

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A Just Energy Transition: Impacts on European power producers (Candriam, Jun 2020)

For compliance reasons, this paper is only accessible in certain geographies

As European power companies undertake a 'Just Transition' to renewable energy, Candriam scrutinises the moves these companies are making. In some cases, they find a lack of transparency into the effects the transition process is having on stakeholder interests.

Energy Transition: Electric utilities and climate change (NN IP blog, Feb 2020)

NN Investment Partners plans to intensify and leverage its dialogue with electric utilities using thermal coal, as they are the biggest emitters of greenhouse gases (GHGs).

ESG Viewpoint: A new life for old coal power? (BMO GAM, 2020)

BMO GAM suggests that during 2020, they intend to up engagement with thermal coal-fired electric utilities as it is the most carbon-intensive fossil fuel, aiming to get them to phase out unabated coal-fired power generation by 2030 in developed countries.

How to Replace Coal Power with Renewables in Developing Countries (WEF blog, May 2020)

The World Economic Forum suggests that a key focus for a 'green recovery' would be to acquire and retire coal-fired generating assets, recycling funds to potentially create a triple win of green jobs, improving public health and decreasing the trajectory of carbon emissions.

The Oil and Gas Industry in Energy Transitions (IEA, Jan 2020)

This IEA report focuses on the forces that can bring about accelerated energy transitions to meet the Paris Agreement targets, from society, policymakers, technology, investors or the industry itself, and investigates the implications for the oil and gas industry.

Big Oil and the Energy Transition (S&P Global Platts blog, Apr 2020)

Big Oil is already transitioning into new energy sectors. And with coronavirus potentially reducing demand for both oil and gas demand, S&P Global Platts investigates some of the more recent moves by the giant European and US energy companies.

An Introduction to the Stoxx Paris-Aligned Benchmark Indices (Qontigo, 2020)

STOXX illustrates how it went about creating its new Climate Change aligned indies, based on the Paris Agreement.

Climate change and the winners of the energy transition (NN Investment Partners, 2020)

NN Investment Partners investigates the energy transition sectors, focusing upon networks, renewables and storage. The paper also seeks to identify the companies expected to create the most economic value as the transition period gathers momentum.

Investing in the Global Energy Transition (Schroders, Sep 2019)

The world's third energy transition has now begun, suggests Schroders, but the value chain needs sto be radically transformed. Opportunities for investors, but they need to be wary as non-traditional approaches are likely to identify the winners.

Global Innovations from the Energy Sector 2010-2020 (WEF)

In this paper from the World Economic Forum's International Energy Community in China, they reflect upon some of the most successful innovations from the energy sector over the last decade.

The Rise of Renewables (Factset blog, Jun 2020)

Factset illustrates how thermal coal-powered plants in the U.S. are losing market share to natural gas and renewables. Changes in the economics of supply, coupled with advances in technology for renewables may mean that by 2050, renewables generation could exceed that of natural gas.

Facebook: A renewables case study (IEEFA, 2020)

This paper from the IEEFA illustrates the various impacts that the decision to build a Facebook datacentre has on local communities, but more importantly, how it has positively impacted the production of renewable energy by the state of New Mexico.

Don’t Tell JR, but Texas has ‘Gone with the Wind’ (Robeco blog, May 2020)

Texas is in energy production terms, a contradiction. It is the world's fifth-largest wind power producer; yet still produces 5.5m barrels of oil a day. Given generous state subsidiaries and declining costs for renewables, investors seem to prefer the new to the old?

Investing in U.S. Energy Infrastructure (UBS AM, Dec 2018)

UBS AM investigates the complex opportunities that exist for investors in the energy infrastructure sector across the U.S. Conventional fossil fuel, renewables and clean energy investments afford investors the full spectrum of investment opportunities across the energy sector.

Seven Steps for a Successful Market Model for Electric Vehicles (McKinsey & Company, Jun 2020)

McKinsey and Company investigates how the COVID-19 pandemic might affect the global EV market. China currently uses consumer incentives, purchase subsidies and regulation, while across Europe, the focus is upon producing low emission powertrains.

As Covid-19 Crisis Hammers Auto Industry, Electric Cars Remain a Bright Spot (IEA, 2020)

This IEA paper suggests that despite the shock COVID-19 crisis has given the world economy and the fall in the price of oil, electric car vehicles could reach a record share of the overall car market this year.

Emerging Market Green Bonds Report 2019 (Amundi AM, 2020)

For compliance reasons, this paper is NOT accessible in the United States

Amundi explores the argument that the capital commitment for climate and sustainable commitments will require investment on an unprecedented scale. They suggest that the debt capital markets will play a pivotal role in providing long-term funding for sustainable development.

Energy Storage in EMs: Lessons learned from mature markets (Norton Rose Fulbright, 2020)

In this paper from Norton Rose Fulbright, they consider what could be learned from the operation of mature power markets that might also successfully be transferred to ensure a more effective integration of storage systems in emerging markets.

Real Assets - Hydropower Investments (Aquila Capital)

Aquila Capital makes a persuasive argument for the investment case for a neglected part of the renewables sector-that of hydropower, which for a variety of reasons, remains a rather unloved backwater of the renewables sector.