The Clean Energy Gold Rush ?
The Transatlantic Post | Love Letter N°34
Welcome to The Transatlantic Post an editorial on innovation and international growth. With occasional British satire. By Kajal
From the late 1840s to 1914 Gold Rushes shaped the course of history. The drive to capitalise on the precious yellow mineral fostered national and global flows of capital, labour, technology, culture and politics. While gold brought with it economic freedom and opportunity, it also ignited social and political tensions.
Mark Twain once described those who rushed for gold as “a driving, vigorous restless population…not simpering, dainty, kid-gloved weaklings, but stalwart, muscular, dauntless young braves”. Is the clean energy transition breeding a new class of stalwarts and dauntless braves?
Clean energy refers to energy that creates little or no greenhouse gas emissions. Many renewable energies, that is energy that can be replenished naturally over time, are considered clean such as wind and solar energy. The journey towards cleaner energy has spurred newer flows innovation, talent and capital and momentum is building.
The golden era of energy….
Fossil fuels (coal, oil and gas) are still by far the largest contributors to greenhouse house gases and carbon emissions (75- 90% of total emissions). Encouragingly, technological forces and government policy are making it easier and more economical to scale up production of traditional renewables. It is now cheaper to build onshore wind and solar power projects than new fossil fuel plants almost everywhere worldwide.1
Our windswept British shores are a good example. The UK has been remarkably successful in offshore wind production which now accounts for almost 30% of total UK electricity generation (enough to power 11 million homes). The UK is one of the top ten countries with the most decarbonised power systems.
Successful offshore wind projects in the UK are in part due to government policies and incentives as well as new technologies enabling the energy transition. Last year, the UK invested $73.9bn in the energy transition, making it the fourth largest clean energy investor globally. In 2023, clean energy investment globally reached $1.8 trillion. 2
Aside from wind and solar, new renewables such as hydrogen are leading the gold rush narrative. The UN Industrial Development Organisation described it as the “fuel of future” due to its versatility and zero carbon emission production. Yet it is still in the early stages of development.
Many of the newer renewables and associated technologies require significant capital to be viable at scale. As countries around the world commit to Net Zero goals, how global capital is deployed for energy as well as the actual (not perceived) commitment from fossil fuel producers may determine just how golden and how speedy the clean energy transition will be.
Perhaps you can intuit your own conclusions from British Petroleum’s eloquently succinct statement “We’re increasing investment into the transition to lower carbon energy. And keeping oil & gas flowing. And, not or. That’s our strategy”. Fossil fuels are not going anywhere for a while but the clean energy push is already positively reshaping global trade, investment and innovation.
Beyond COP28 and funding clean energy globally…
During COP28 held in the UAE last year, nearly 200 countries agreed to transition away from fossil fuels. A global shift towards renewables was further reinforced by the pledge to triple zero-carbon energy capacity by 2030.
The head of the UN’s Framework Convention on Climate Change said finance will be crucial for commitments made at COP28 to be fulfilled and he envisages that more than $2.4 trillion will be needed.
I spoke to Neeha Mujeeb a public sector advisor based in Abu Dhabi and the author of Climate Middle East on the ways to achieve ambitious pledges set out at COP28
“The UAE is already on a journey of being the hub of climate finance and investment especially for the Global South. The launch of Alterra the $30 billion fund for global climate solutions will be a key catalyst for progress”
Encouraging investment to the Global South is a critical piece of the climate change fight. By early 2030s, investment needs to triple to $2.2–8 trillion to meet the region’s growing energy demands in an equitable and sustainable way 3
BlackRock is among the institutional investors backing the UAE’s Alterra fund and aims to raise $250 billion globally by 2030. Given the scale of the fund, effective cross-border collaboration and fund partnerships will be key to its success. Against an ever-complex geopolitical backdrop such global alliances are more critical than ever.
East West Investment and Collaboration….
Recent bilateral R&D efforts, climate tech innovation and funding partnerships between the East and West are for now a bright spot.
Last September, the US and India together agreed to set up a $1 billion renewable infrastructure investment fund. The fund will help to lower the cost of capital and accelerate the deployment of greenfield renewable energy, battery storage, and emerging green technology projects in India. The British International Investment also plans to invest $1 billion in Indian climate-related projects by 2026.
Aside from investments, last year the UK and UAE also signed a Clean Energy Memorandum of Understanding which will help facilitate the sharing of technical knowledge, advice, skills and expertise to open up new channels for cooperation on energy and climate. The UAE also announced a collaboration with the UK-launched Breakthrough Agenda, a commitment to make clean technologies the most affordable and accessible option globally by 2030. 4
Such initiatives are welcome collaborations but more are needed. The top five economies far outpace the Rest of World in energy transition investment according to recent Bloomberg data. (4) The energy gold rush might be underway but unless it is more equitable, we cannot realise its full benefits nor meet the Paris agreement to limit global temperatures to 1.5 C.
Dare to look up……
I distinctly remember watching the film Don’t Look Up a few years ago and its satirical take on global climate denial and inertia was lost on me (trailer below for those that haven’t yet seen it). It warn us of the fatal consequences of inadequate climate action and no doubt the scale of the challenge is daunting.
Yet let’s not forget Mark Twain’s dauntless braves, or Steve Jobs crazy ones that may just change the course of history. Over the past two years in the UK, I felt far more optimistic meeting with numerous energy companies at the forefront of breakthrough innovations Firstlight Fusion, Hiiroc and Octopus Energy to name a few.
As long as there are innovators that reimagine futures, perhaps we can dare to look up. Abraham Lincoln’s quote below illustrates this idea best. How many people in his time might have thought we could truly harness the power of wind and be where we are now ? On that that note, wishing those of you celebrating a Happy Easter this weekend and Eid Mubarak next month.
“As yet, the wind is an untamed, and unharnessed force; and quite possibly one of the greatest discoveries hereafter to be made, will be the taming, and harnessing of the wind.” — Abraham Lincoln
Sincerely, yours, Kajal
t: @kajalnyclon | w: transatlanticpost.com
References and Further reading
1 Amid all the climate gloom, let’s not ignore the good news, Financial Times
2 Global Clean Energy Investment Jumps 17%, Hits $1.8 Trillion in 2023, Bloomberg NEF
3 Financing Clean Energy Transitions in Emerging and Developing Economies, IEA
4 UK and UAE agree to boost energy security and unlock investment, UK Government
About the Transatlantic Post
An editorial on innovation and international growth. With occasional British satire. Written and edited by Kajal Sanghrajka, founder and director of Growth Hub Global Kajal has worked with more than 250 businesses to support their international growth efforts to the US, Europe and MEINA regions. For previous editions go to the Transatlantic Post website. Subscribe below.
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