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Investment Management

Decarbonizing the Energy Supply

Luke Tilley ,
Meghan Shue

September 28, 2022

The stakes could not be higher

The politics of climate change are controversial within countries and across the globe. The path forward is highly uncertain and depends critically on the degree to which global governments, businesses, and consumers take action to reduce emissions. What are the inherent challenges and indispensable components of the transformation ahead? And what investment opportunities can be drawn from the decarbonization theme?

Learn how the coming transformation may benefit your portfolio

State of play

Efforts to reduce carbon emissions are most likely to be concentrated in those sectors that use the most coal and petroleum. With 90% of coal demand coming from power generation, and 68% of petroleum coming from transportation, the opportunities in the U.S. are clear.¹

Path to renewables

A crucial element in a decarbonized electricity generation sector is how to provide a reliable, steady source of electricity. Yet, while wind and solar power are proven technologies whose cost efficiency has already surpassed many fossil fuel options, the wind doesn't always blow, and the sun sets.

Investment opportunities

The investment potential of the decarbonization theme transcends economic sectors, industries, and strategies. Market participants should consider assessing the possibilities while staying mindful of the risks, time horizons, policy tipping points, and alluring shiny objects.

¹Intergovernmental Panel on Climate Change 2014.