PI Partnership – Edmond de Rothschild
Energy transition across sectors
The energy and environmental transition is most obviously associated with renewable energy sectors. However, transpor- tation (green mobility), public services (modernisation and a gradual exit from fossil commodities), digital and social infra- structure (energy efficiency) are also an integral part of the transition and offer investors a broad investment universe. The energy transition will foster maturation and reliance on new technologies, which we refer to as the second-generation energy transition. As a result, a wide range of sub-sectors and technologies are emerging: – Off-shore wind farms with the development of floating structures
– Battery storage – Biomass using technologies enabling substantial cuts in CO₂ emissions
– Hydropower – Geothermal power
Funding these projects is essential if we are to support the pol- icies of developed and emerging countries wishing to reverse their energy mix, by making substantial cuts to their use of fos- sil resources and maximising the share of green energy. – Transport infrastructure is undergoing a major transforma- tion. For example, the Trans European Network, a linchpin for the construction and interconnectivity of European infrastructure over the past decades and written into the
Juncker investment plan for Europe, includes priority initi- atives for the implementation and operating of charging sta- tions for electric vehicles.
– In social infrastructure we are seeing the development of sustainable buildings, able to report on clear energy efficiency indicators in sectors such as healthcare or education.
– Public utility services are also undertaking their energy tran- sition, by modernising installations, reducing CO₂ emis- sions and gradually exiting fossil raw materials within ambi- tious timeframes.
– Resulting smart cities will be a convergence point for the development of infrastructure enabling the energy and envi- ronmental transition.
Institutional investors have a key role to play However, this calls for humility, a sense of realism and a long- term mind-set. Whilst it is essential to usher in the energy transition as early as possible, asset managers and institutional investors may also play an active role in supporting the trans- formation of existing infrastructure projects. It is important we give ourselves the means needed to achieve carbon neutral and climate change targets. It is comforting and promising that political leaders, regulatory authorities, infrastructure developers and operators, plus pub- lic and private funders, are aligning their interests and actions to speed up the much needed energy and environmental transition.
The figures, comments, opinions and/or analyses contained in this document reflect the Edmond de Rothschild Group‘s view of market trends based on its expertise, eco- nomic analyses and the information in its possession at the date of preparation of this article and may change at any time without notice. They may no longer be accurate or relevant at the time of publication, particularly in view of the date of preparation of this document or due to market developments. This article is intended solely to provide general and preliminary information to those who consult it and should not be used as a basis for any investment, disinvestment or holding decision. The Edmond de Rothschild Group shall not be held liable for any investment, disinvestment or holding decision taken on the basis of such comments and analyses.
December – January 2023 portfolio institutional roundtable: Infrastructure
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