Private Funds To Finance Energy Transition, Investors Say

The transition to clean energy will primarily be financed by the private sector as a standardized framework of reporting climate credentials for companies across the globe is established, investors and think tanks said, Divya Chowdhury and Lisa Pauline Mattackal, Aaron Saldanha reported for Reuters.

Photo Insert: Energy transition technologies will need investments of around $131 trillion by 2050, according to estimates.

These investments are likely to come from sources such as funds leveraged through banks and the private sector, institutional investors, debt financing and developed country finance, they told the Reuters Global Markets Forum last week.

The International Renewable Energy Agency (IRENA) estimates energy transition technologies will need investments of around $131 trillion by 2050.

Around 80% of this is expected to come from the private sector, with debt financing growing to a 60% share within that, IRENA deputy director-general Gauri Singh said. Gero Farruggio, head of global renewables at Rystad Energy, believes companies will lead.

Big Tech companies that provide solutions to energy storage and are investing significantly on the technology side, along with corporations that are driving power purchase agreements are ones to watch, Farruggio said.

"Climate change is a systemic risk to all investors," said Karen Wong, head of ESG and sustainable investing at State Street Global Advisors, which manages nearly $3.9 trillion in assets.

A Barclays Private Bank survey of over 300 respondents, on average managing $833 million in assets, expects the share of impact investing within portfolios to reach 54% by 2027, from 41% this year.

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