The energy transition has become a significant investment opportunity in the infrastructure sector, accounting for more than half of closed transactions in the past decade.
To address climate change, a substantial investment of around USD 175 trillion will be needed by 2050, with a significant portion allocated to renewables and transport.
Investing in transportation can have a higher impact return compared to renewables, especially in regions with clean electricity grids.
Grid decarbonization, primarily through renewable energy sources, has led to a reduction in carbon intensity and enabled broader electrification initiatives.
The transport sector has received the largest investment within the energy transition.
The introduction of the Impact Return Metric allows investors to evaluate the CO2 equivalent avoided per dollar invested.
Electrified transportation can outperform renewables in countries with clean grids, but wind power investments can have a higher impact return in regions with higher grid emissions.
The characteristics of vehicles and their use cases significantly influence the energy savings and emissions reductions achievable through electrification.
Investors should focus on applications with favorable duty cycle characteristics, particularly in countries with low grid emissions.
The growth of renewable energy is crucial for grid decarbonization and supporting electrification efforts.
Transportation presents a significant investment opportunity in the energy transition, allowing investors to make a meaningful environmental impact.
The financial sector plays a vital role in driving this transition, with innovative metrics and a clearer understanding of impact empowering investors to navigate the complexities of the energy transition.