The global march towards net zero carbon emissions by 2050 is not just a environmental necessity, it’s an economic opportunity that’s already attracting significant investments. Despite the policy fluctuations in the US, the rest of the world is pressing ahead with a remarkable surge in renewable energy infrastructure investments.
Schroders’ recent report puts a figure on this momentum: energy transition infrastructure reached €2tn (R38.9tn) in 2024. Let’s unpack that. This isn’t just about wind turbines and solar panels; it’s about grid modernization, energy storage solutions, and hydrogen projects. It’s about building an entirely new energy system from the ground up.
Since 2018, renewable energy has accounted for more than half of global infrastructure deal volume. This isn’t niche; it’s the new normal. Every day, more investors are waking up to the potential of renewables. But here’s the catch: even with these trillions pouring in, the sector remains significantly underfunded. That’s according to Minal Patel, global head of infrastructure at Schroders Capital; James Samworth, co-head of energy transition at Schroders; and Paul O’Donnell, partner at Schroders.
So, what does this mean for markets? Firstly, expect a boom in green jobs. The International Renewable Energy Agency (IRENA) estimates that the renewable energy sector employed 11.5 million people worldwide in 2019. That number is set to skyrocket as investments increase.
Secondly, prepare for a shift in geopolitical power dynamics. Countries rich in renewable resources and rare earth metals ( crucial for clean tech) will gain influence, while those dependent on fossil fuel exports will need to adapt or face economic turmoil.
Thirdly, this investment gap spells opportunity for innovative financing solutions. Green bonds, currently a niche market, could become mainstream. We might see more public-private partnerships, or even crowdfunding initiatives to plug the gap.
However, let’s not ignore the elephant in the room. The transition to net zero will create stranded assets in the fossil fuel sector. Companies and countries that fail to anticipate and adapt to this risk facing economic turmoil. The wise ones will diversify and pivot towards renewables.
But make no mistake, the net zero transition is not just an environmental imperative, it’s an economic one too. Those who recognize this will prosper; those who don’t will be left behind.
The coming decades will see a monumental shift in how our world is powered. It’s an exciting story, and as an energy journalist, I can’t wait to tell it. But it’s not just a story about technology or politics; it’s about money. And right now, there’s not enough of it. So, who will step up and fill the gap? That’s the trillion-dollar question.
