In Focus: Megatrends  

Investors have everything to gain from fast-tracking shift to clean energy

Giles Coghlan

Giles Coghlan

For now, one concern looms large. Although the conflict in Ukraine will probably speed up Europe’s move away from fossil fuels, it could boost greenhouse gas emissions in other corners of the world, as well as pushing the clean energy transition further into the future.

Indeed, billions in fossil fuel investment will be required in the near-term to fill the supply gap left behind by Russian oil.

Asset managers and investors are acutely aware of the problems at stake. Recently, BlackRock warned that it will not support most shareholder resolutions on climate change throughout 2022, because they have become too prescriptive, crucially adding that the Russia-Ukraine conflict meant that more short-term investment in traditional fuel production would be required to boost energy security.

This is not to discount the opportunities that clean energy brings. First and foremost, the renewable energy transition will require the investment currently funding fossil fuel companies if it is to fully take shape.

Likewise, accelerating the development of technologies that facilitate cleaner and renewable energy will more quickly chip away the value of fossil fuel companies. 

One area of particular interest for investors in the pivot towards EVs and clean energy technologies should be the likes of copper, nickel, cobalt, lithium, and rare earth.

In particular, Lithium demand is expected to double between 2020 and 2030 and depending on exactly how the emerging green tech tracks, there could be a significant increase in demand for all these metals in the medium to long-term.

Ultimately, while the road ahead remains uncertain, investors have everything to gain from putting their collective might to the test and fast-tracking the shift to cleaner energy.

Giles Coghlan is chief currency analyst at HYCM