Energy
Monday, April 22nd, 2024 7:02 pm EDT
Key Points
- BlackRock estimates that the global green energy transition will require $4 trillion annually by the mid-2030s, a figure twice the previous estimate of $2 trillion, emphasizing the need for increased public-private partnerships, especially in the Asia-Pacific region.
- Last year saw $1.8 trillion invested in energy transition projects, up from $33 billion in 2004, yet there remains an $18 trillion gap to bridge by 2030 across various risk classes, from low-risk investments in core energy infrastructure to higher-risk ventures like late-stage venture capital and private equity.
- To address this gap, BlackRock advocates for leveraging green finance, with a focus on blended finance as a key driver, alongside policy changes around energy pricing and deregulation, particularly in emerging markets where around 60% of needed capital is expected to come from the private sector. Additionally, developing talent across different ecosystem areas and adjusting risk frameworks for green project investments are identified as essential factors to achieve global green financing goals.
BlackRock’s latest analysis indicates that the global transition to green energy will necessitate $4 trillion annually by the mid-2030s, a figure twice the previous estimate of $2 trillion. Michael Dennis, head of APAC Alternatives Strategy & Capital Markets at BlackRock, emphasized the pivotal role of public-private partnerships, particularly in the Asia-Pacific region, in meeting this financial requirement. While $1.8 trillion was invested in energy transition projects last year, representing significant growth from $33 billion in 2004, there remains an $18 trillion gap to bridge by 2030. This disparity spans various risk classes, from low-risk investments in core energy infrastructure to higher-risk ventures like late-stage venture capital and private equity. Although the necessary funds are available, Dennis highlighted the importance of aligning government action, corporate initiatives, and community partnerships to translate investments into tangible outcomes in both private and public markets. Notable legislative efforts, such as the Inflation Reduction Act in the U.S., have successfully directed billions of public funds towards greenhouse reduction projects, while policy changes around energy pricing and deregulation are deemed essential, especially in emerging markets where 60% of required capital is expected to originate from the private sector. BlackRock identifies blended finance as a critical investment driver, particularly in emerging markets, enabling the strategic use of development funds to mobilize additional finance towards sustainable development goals. Moreover, enhancing talent across various ecosystem areas and adjusting risk frameworks for green project investments are identified as additional measures needed to achieve global green financing objectives.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/04/22/energy-transition-to-need-4-trillion-annually-blackrock.html
