The transition from carbon-based energy to renewable energy will require an investment of $275 trillion by 2050. And potential returns will be just as big, says Garrett Norman, executive director and investment specialist at JP Morgan Asset Management.
“Given the opportunities at hand to invest in Microsoft, Apple, Samsung, etc. in the early days of the technology revolution, we see similar opportunities in the climate space,” Norman said on the Soundbites podcast. “We need to find ways to meet our energy needs in cleaner and more sustainable ways. And this is where the investment comes in.”
A dramatic breakthrough in meeting the Paris Agreement goal of net zero greenhouse gas emissions, as world population is projected to grow by 2 billion by 2050 and energy demand is projected to increase by 50% by then He said it was clear that without energy technology.
Achieving the goals also requires public-private partnerships to produce financially meaningful solutions.
“I think it’s good that altruism and capitalism come together,” he said.
Norman acknowledged that the challenges ahead will be uneven for both countries and businesses.
Some industries, such as those heavily dependent on fossil fuels, will almost certainly face stranded assets, regulatory headwinds, and the potential for higher costs. Conversely, some industries are poised to take advantage of the changing paradigm immediately.
Geopolitically, Norman believes the impact of the transition will be mixed as well.
“Russia, India, South Africa, Canada, Australia, Brazil, etc. that have very carbon-intensive domestic economies, are currently large net exporters of fossil fuels, or are home to large energy companies of countries added that Australia and Canada have the financial headroom to ease short-term pain by taking on more debt, but not Brazil, Russia, South Africa and India. .
Norman said carbon transition readiness can be assessed using up to 60 factors, including scope 1, 2 and 3 emissions. water and waste management; existence of physical and reputational risks; Following data disclosure is an important piece of the puzzle.
“The data and disclosure side of things is evolving rapidly,” he said. “When we launched our carbon transition strategy in the United States, [less than] 40% of the Russell 1000 companies disclosed their greenhouse gas emissions. That was just a few years ago. More than two-thirds of Russell 1000 companies disclose their greenhouse gas emissions, a significant improvement in disclosure. ”
Norman believes that replacing fossil fuels with clean energy technologies or improving energy efficiency alone will not be enough to stop or reverse climate change.
“Carbon removal will be required, which is driving the expansion of carbon markets where offset credits are created,” he said.
Carbon pricing initiatives now cover 25% of global emissions, up from just 5% in 2010. And that number continues to grow, he said.
“We expect the overall growth of the carbon market to continue to develop,” he said. “And whether we are talking about carbon taxes or carbon pricing through emissions trading systems, there is room for different schemes around the world and ultimately the methodology and how to validate them. and really bring together public policy and private or corporate behavior.”
**
This article is part of the Soundbites program sponsored by Canada Life. The article was written without sponsor input.
