For the first time ever, renewable energy made up a majority of all new electricity-generating capacity added worldwide in 2015, according to a recent United Nations report.1 Not surprisingly, the developing world – including China, India, and Brazil – accounted for more than half of the $286 billion invested in wind, solar, and other renewable energy sources.
Renewables revs up U.S.
Renewables are also gaining momentum in the U.S., as the nation’s electric power sector is expected to increase by 8.7% in 2016, according to the U.S. Energy Information Administration.2 This forecast includes an uptick in the use of wind and solar power technologies. These figures parallel reports from the International Energy Agency (IEA), which anticipates renewables will be the single largest source of electricity growth through 2020.3
Clearly, there is a major shift in energy taking place. In fact, Deputy Head of Responsible Investing Ladislas Smia and Analyst Emmanuelle Ostiari at Mirova* see renewables as a major component of a worldwide energy-source evolution. Their research suggests that the transition to a lower carbon economy will entail profound changes, particularly in sectors tied to energy – including energy production, transportation, building, and industry – which are responsible for about 75% of global carbon emissions today.4 With the recent agreement by the international community at the COP21 climate conference in Paris to cut carbon emissions to limit temperature rise to 2 degrees Celsius, this energy transition is gaining momentum.
Riding the wave of energy transition
Jens Peers, Chief Investment Officer of Sustainable Equities and Fixed Income at Mirova* – believes companies that are solving for the transition to a lower-carbon-intensive model will be of particular importance in the energy-source evolution. “Wind turbine manufacturers, developers of enabling technologies – including smart grids, energy storage and electric vehicles – and energy efficiency in the building and transportation sectors are interesting areas of opportunity,” said Peers.
8 mega trends changing the world
Jens Peers, believes companies that are solving for the transition to a lower-carbon model are likely to continue to influence the energy sector. According to Peers, these include "wind turbine manufacturers [and] developers of enabling technology – including smart grids, energy storage, electric vehicles, and energy efficiency in building and transportation." These long-term developments, says Peers, “will really affect the way we will live and the way we have to adapt our businesses going forward.” More information on market trends and investor sentiment is available at durableportfolios.com.
Renewable energy is any energy source that is naturally replenished, like that derived from solar, wind, geothermal or hydroelectric action. Energy produced from the refining of biomass is also often classified as renewable. Coal, oil or natural gas, on the other hand, are finite sources.
COP21 refers to the 21st Conference of Parties, an annual United Nations conference on the subject of climate and climate change. It took place in Paris from November 30 to December 11, 2015.
1 United Nations Environment Programme, Global Trends in Renewable Energy Investment 2016. http://fs-unep-centre.org/publications/global-trends-renewable-energy-investment-2016
2 Source: U.S. Energy Information Administration, March 8, 2016. https://www.eia.gov/forecasts/steo/report/renew_co2.cfm
3 © OECD/IEA October 2015, Renewables to lead world power market growth to 2020, IEA Publishing. License: www.iea.org/t&c
4 Mirova, Investing for a Low Carbon Economy, Special Issue for COP21.
* Operated in the U.S. through Natixis Asset Management U.S., LLC.
This material is provided for informational purposes only and should not be construed as investment advice. The views and opinions expressed above may change based on market and other conditions. There can be no assurance that developments will transpire as forecasted.
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