Expert: Graeme Baker, Portfolio Manager, Ninety One Facilitator: Darshita Gillies, CEO & Founder, Maanch
Headlines:
- Current state of climate finance - Around $1.7 trillion is being spent annually on climate finance globally, moving in the right direction but more capital needed to reach net zero goals. Estimates of $5-10 trillion per year needed by 2030-2050.
- Drivers of decarbonisation - The key drivers are regulation, technology advancement, and consumer behaviour change. All three are required to check the necessary boxes for progress.
- Key themes and sectors - Major themes of decarbonisation are renewable energy, electrification of transport/industry, and resource efficiency improvements. This expands the investable universe beyond just energy transition. Sectors include smart grids, EVs, green hydrogen, recycling, agriculture, etc.
- China's importance - China represents 40% of the defined decarbonisation investment universe and is a leader in R&D and clean tech. However, market pessimism has impacted Chinese equities.
Discussion:
The summary discusses an overview of decarbonisation and the investment opportunity around it. It noted the current $1.7 trillion being spent on climate finance globally is moving in the right direction but more is needed to reach net zero.
Key drivers of decarbonisation are regulation, technology, and consumer behaviour. Major themes are renewable energy, electrification of transport and industry, and resource efficiency.
China represents a significant part of the decarbonisation investment universe due to being a leader in clean tech. However, market pessimism has impacted sectors like China equities and renewable energy stocks.
Re-engaging clients by focusing on continued evidence of growth in areas like EVs and wind power is noted, despite the challenging market environment.
Regarding investment opportunities, crop rotation and regenerative agriculture have potential to address emissions from agriculture. Emerging technologies like bio-based fertilizers and food inputs using synthetic biology/enzymes also show promise.
Overall, there is continued momentum and a need to bring emerging market countries more into the fold, not just China and the West.
Key takeaways:
- Research companies developing bio-based fertilizers or food production inputs using synthetic biology or enzymes
- Analyse opportunities in regenerative agriculture, crop rotation, and carbon sequestration
- Assess low carbon solutions for developing countries with high emissions growth
- Evaluate electric vehicle demand growth globally as a talking point with clients
- Review wind and solar power cost curves and technology improvements as a counter to market pessimism
