World’s most important transition into green energy

One of today’s most pressing challenges is reaching net zero emissions by 2050. The investments made to reach this goal and turn our world into a green world are reaching $100 trillion (£83 trillion). These investments will be principally for developing regions of the world that need more investment in order to reach the goal of net zero.

More precisely, an increasing number of investments will be needed in Brazil, Russia, India, China, and South Africa (the BRICS) more importantly than in G7 countries (Canada, France, Germany, Italy, Japan, the United Kingdom and the United States) where the US and the UK will still receive one-third of investment.

China has been retained as the country that needs most investment:

‘First, the country is large and already accounts for more than 15% of global GDP.’

‘Second, it is expected to grow faster than most economies between now and 2050 and more investment, including green investment, will be needed to support this growth.’

‘Third, a higher-than-average share of electricity production in China comes from fossil fuels and the country also has an above-average CO2 intensity of GDP’.

Moreover, it is paramount to focus on emerging markets since the impact of green investment will be more significant.

Countries like India, China and South Korea have an extremely rapid development pace and are expected to grow faster than the global average and their use of coal for electricity could be detrimental, hence the importance to invest in developing countries.

Also, some sectors will need more investments than others, such as energies, utilities and airlines face the most drastic costs to reach the goal of net zero.

Others such as firms that produce battery storage, grid infrastructure and piping will see huge benefits from receiving green investments and will participate immensely in the green hydrogen transition.

There will be the utility transformation of current gas power and pipeline infrastructure that will adopt hydrogen as new fuel and new means of electricity storage will evolve.

Also on a smaller scale, individuals’ lives will be impacted by this transition into green energy since spending on things like electric cars and low-carbon heating systems will be increased.

‘While most of the heavy lifting will be done by the private sector, policymakers have a vital role to play in overseeing the transition: setting clever and reliable policy can encourage private sector investment’, commented Brian Davidson, Head of climate economics at Fathom Consulting.

(Source: BNY Mellon)

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