Global energy transition and climate investing
 

Efforts to curb climate change are driving the demand for clean energy. This, alongside geopolitical tension and global supply chain concerns, is intensifying the need for independent and stable sources of energy, food and other essential resources.

To respond, many governments are now rallying, even competing, to put incentives in place to increase production and adoption of companies that can work toward reducing our dependence on fossil fuels. For example, at this year’s World Economic Forum in Davos, Switzerland, European Commission President Ursula von der Leyen announced the EU’s ambitious plans to challenge China and the United States in the race to lead the clean technology revolution.

Public policy is also reshaping the marketplace. Consider that 78% of global GDP is now influenced by environmental initiatives such as the Paris Agreement¹ and the U.S. Inflation Reduction Act of 2022²—which seeks in large part to transform the approach to climate change in the United States.³

 According to United Nations article, “For a livable climate: Net-zero commitments must be backed by credible action … a growing coalition of countries, cities, businesses and other institutions are pledging to get to net-zero emissions. More than 70 countries, including the biggest polluters—China, the United States, and the European Union—have set a net-zero target, covering about 76% of global emissions.”

Such pledges are increasingly popular as the price tags attached to some of the most significant technological solutions have dropped drastically. For example, solar energy costs have fallen 73.2% since 2014.⁴ Governments are making technological adoption even more enticing by adding perks such as tax incentives.

There are already attractive investment opportunities, from clean power generation to electric car companies, to software companies that connect renewable energy providers with consumers. And, as governments and businesses look to accelerate their transitions to “net zero,” more opportunities will likely emerge.

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Your J.P. Morgan team is ready to discuss these private equity impact opportunities, and how you can invest for the future.

¹Paris Agreement, the United Nations https://www.un.org/en/climatechange/paris-agreement.

²Inflation reduction act guidebook, the White House https://www.whitehouse.gov/cleanenergy/inflation-reduction-act-guidebook/.

³“Path to net-zero: Stakeholders demand action on ambitions as pledges swell,” S&P Global Market Intelligence, December 2021.

⁴Lazard, LAM Research, Illumina. Date as of October 2022.