In order to counteract anthropogenic global warming, severe measures are necessary. But the envisioned decarbonisation of the economy does not necessarily just involve foregoing certain things – it could also become an ongoing driver of growth. The analysis shows what these expectations are based on and where attractive areas of investment can be found.
Since industrialisation and the almost unstoppable combustion of fossil fuels, more and more greenhouse gases such as carbon dioxide (CO2) have become concentrated in the atmosphere (see chart below). With far-reaching consequences: meanwhile, the global climate is 1.3°C above the pre-industrial average; extreme weather events are just one indication of this development. Anthropogenic global warming now needs to be counteracted with a rapid reduction in CO2 emissions. According to the ambition of politics and the economy, no more greenhouse gases may be emitted into the atmosphere worldwide by 2050 than can be extracted by natural or technical means. This would achieve the net zero target.
Cutting CO2 emissions, i.e. decarbonisation, affects almost all economic sectors and most United Nations Sustainable Development Goals (SDGs), which include, for example, affordable and clean energy (SDG 7) and life on land (SDG 15), which aims to restore endangered ecosystems. Decarbonisation can count on some powerful drivers. The European Union's Green Deal, for example, is pursuing the ambitious goal of making Europe the first climate-neutral continent by 2050. Added to this is the technological progress and entrepreneurial awareness of climate change.
This creates corresponding economic potential. For example, the International Energy Agency estimates that from 2030, depending on the scenario, decarbonisation could result in annual investments of between USD 2.3 trillion and USD 4.5 trillion. The effective solutions for coping with climate change are numerous and the technology has in many cases already been established. In the analysis they are divided into four fields: renewable energies such as solar and wind power (see chart below), as well as the energy efficiency achieved with heat pumps, for example. In addition, there is the transition to sustainable mobility, which can be achieved with electric vehicles and public transport, for example. Finally, the area of resource efficiency is important, such as with the transition to a circular economy. These four fields correspond to the main investment areas we have identified for investors.
This is what our analysis says: we expect continuous growth in renewable energies, sustainable mobility (e.g. in electric vehicles) and in the area of energy and resource efficiency. In the meantime, demand for fossil sources of energy is likely to decrease. However, as this future theme is such a highly complex and dynamic issue, funds actively managed by experts can offer great added value. Swisscanto has many years of in-depth expertise in sustainable thematic funds.
