Laurent Denize, Global Co-CIO, ODDO BHF AM.
“There’s no need to look only to the United States or Asia for green gems – there are plenty of them in Europe! … and the timing is perfect: GO for Green!”
Since the peak in January 2021, the performance of of renewables should represent between 38% (with Lower rates are historically favorable for equity markets, sustainable funds and investments linked to the ecological transition has been disappointing. However, as they encourage borrowing and investment. the investment needs to meet the current roll-out policies) and 57% (to follow a trajectory < 2°C) of the energy mix in 2030. The most rapid development is in solar energy (lower objectives of the Paris Agreement have not production costs, ease of deployment), with diminished, on the contrary. Capital requirements are estimated at 5,000 billion dollars per year in a 1.5°C scenario, which represents a threefold increase on investments made in 2023. This context highlights the need for increased support for decarbonisation initiatives to meet global climate ambitions and drive responsible growth. Our aim is to see green investment as an opportunity rather than a constraint. With much more attractive valuations and more mature companies, revisiting the theme makes sense. Here we provide you with some investment ideas for the coming years, and to identify the sectors that stand to benefit from this age-old growth theme.
Clean electrification at the heart of the green rebound
Today, around 70% of greenhouse gas emissions come from energy production and consumption. Clean electrification is therefore at the heart of the process of decarbonising the economy, and is based on 3 pillars:
1. An increase in the share of renewable energies in power generation: around 30% today, the share estimated growth of 18% to 24% per year by 2030. In comparison, the expected (de)growth of fossil fuels in power generation should sit between -5% and -6% per year until 2030.
2. A need for power grid development: after several decades of under-investment in electricity networks, the acceleration of electrification is leading to a sharp increase in capex for transmission and electricity distribution infrastructures. With an average infrastructure age of around 30 years in North America and Europe, annual investment of around $400 billion is required, split between replacing the most obsolete assets (19%), upgrading existing assets (40%) and developing new infrastructure (41%).
3. An increase in power demand: With demand for electricity soaring, we need to turn to cleaner sources. Buildings (30%), industry (30%) and transport (27%) currently account for the majority of electricity demand. The rapid development of data centres (a key challenge for the green energy sourcing of artificial intelligence) is expected to further increase electricity demand in the coming years.
