Explore emerging opportunities in energy transition

Outlook 2024Explore emerging opportunities in energy transition

The past year saw unprecedented interest in new technologies and approaches to the energy transition, with a focus on decarbonization. In the US, the energy transition remains a major theme, and the Inflation Reduction Act has positioned the US as a global leader in clean hydrogen, battery storage, electric vehicles, carbon capture, related infrastructure, and more.

We believe these areas present attractive investment opportunities. In addition, certain asset classes, like infrastructure, have potentially attractive risk-return profiles that can provide defensive characteristics such as inflation mitigation.

Our world in 2050: Evolving energy demand

Several notable trends underpin the need for increased investment to support the energy transition. Globally, we expect to see greater energy consumption stemming from population growth and rising individual demand. In addition, we anticipate the energy mix moving toward cleaner sources in line with net zero ambitions.

9.7b global population  icon

9.7b global population

up from 7.7b in 20191

3x increase in power consumption icon

3x increase in power consumption

based on projected electricity demand2

50% of energy mix icon

50% of energy mix

to come from electricity, hydrogen, and synthetic fuels2

1 Estimated population in 2050 from United Nations, World Population Prospects (2019). 2 McKinsey & Company, “Global Energy Perspective 2022” (April 2022).

Shifting global energy landscape

The result of these trends is an unprecedented opportunity for investors, with a wide range of investment opportunities across public and private markets. In recent years, we’ve also seen meaningful increases in clean energy investment, outpacing fossil fuels. While this is likely to continue, there are ample opportunities for investment in both clean energy and fossil fuels.

In addition, we expect regulatory stimulus and decarbonization objectives, among other factors, to accelerate growth in global energy investment.

Annual global energy investment (2015–2023)

Taxable-equivalent yield: Current vs. historical chart

Source: IEA, Global energy investment in clean energy and in fossil fuels, 2015-2023, IEA, Paris, https://www.iea.org/data-and-statistics/charts/global-energy-investment-in-clean-energy-and-in-fossil-fuels-2015-2023, Licence: CC BY 4.0.

Note: 2023 values are estimated.

Listen to our podcast

Economist Derek Hamilton tackles the macroeconomic outlook at mid-January 2023. Will the fed be cutting by year-end? How much will inflation fall? Has it fallen? What roles will consumer and investor sentiment have?

Outlook 2024 webinar

Hear from our panel of investment experts as they discuss actionable investing ideas that can help investors navigate the uncertainty and capitalize on opportunities in the months ahead.

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