BNEF, net zero, financing, green energy, public and private, investment, power supply, electrification

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The search for clean and secure sources of low-carbon power — including fossil fuel-fitted with carbon capture technology — may present as much as a $45.8 trillion investment opportunity by 2050, a new BloombergNEF study said.

The amount would comprise 97% of all power generation spending.

The study considered Net Zero Scenario (NZS) and Economic Transition Scenario (ETS) to make its estimates.

Wind and solar technologies will significantly transform the power sector to net zero, taking the top spots and accounting for $26.8 trillion and $13.7 trillion in capital spending by 2050 in the NZS and ETS, respectively.

The report said that the deployment of solar and wind supply would need to grow more than three and six times compared to current annual rates in the NZS.

Investment in batteries and other low-carbon power sources, such as geothermal, biomass, and nuclear, are set to total $6.2 trillion combined by 2050.

Fossil fuels also have a place in a net-zero future, supplemented with carbon capture and storage (CCS) abatement technologies.

In the NZS, generation capacities for coal and gas with CCS would grow by over 1 TW by 2050, with investment requirements of $3.7 trillion and $6.2 trillion, respectively by 2050.

In NZS, BNEF anticipates that $21.4 trillion of the investment will be required for grids as sectors like road transport electrify. This, in turn, will reduce the reliance on fossil fuel processes.

The investment in 2050 will be expected to fall to $175 billion, compared with $778 billion in 2021.

In the ETS, an assessment of how the energy sector might evolve because of cost-based technology changes alone when is considered a different investment mix materializes.

Without abatement technologies, fossil fuels will continue to play a large role. Oil, gas, and coal will collectively lead capital spending to 2050, at $23.9 trillion, 42.5% of the overall energy supply share.

In the absence of a carbon constraint in the scenario, no investments will be made either in carbon capture or storage and hydrogen technologies will still not be cost-competitive.

Capital Flow Needs Boost

Based on the net zero scenario annual spending on renewable power will need to average $1.4 trillion between 2022 and 2030 which is far higher than current levels, the report said

Both public and private entities as well as financing bodies will need to cooperate in creating an enabling investment environment, especially in developing nations and emerging markets where electricity demand will accelerate over the next decades.

Currently, multiple initiatives have emerged to mobilize capital in these regions, with some nations establishing Just Energy Transition Partnerships (JETP), mobilizing funding from public and private sources.

Recently, the World Economic Forum (WEF) launched a fundraising vehicle to unlock $3 trillion of financing needed each year to reach net zero, reverse nature loss, and restore biodiversity by 2050. The vehicle would focus on attracting philanthropic resources toward the net-zero targets.

At the 53rd WEF Annual Meeting 2023, Chancellor Olaf Scholz said Germany’s renewable shift is well on track despite setbacks and has accelerated post the Russian invasion of Ukraine.