Tackling The $90T Challenge Of Climate Change by Adam Putz, PitchBook
A new report from the UN concludes that it will take $90 trillion in public and private capital to tackle the worst effects of climate change by 2030—a staggering figure worthy of the staggering problem it describes. But a quiet fact has cut through the noise around climate change: Investment in sources of renewable energy has surpassed fossil fuels.
Global investment in renewable power capacity hit $265.8 billion in 2015, doubling the $130 billion committed to new coal and gas generation last year, according to the Frankfurt School-UNEP Centre and Bloomberg New Energy Finance. And although it accounted for just 10% of electricity output worldwide over that period, increasing renewable-energy use still prevented the emission of a reported 1.5 gigatons of carbon dioxide.
The Odey Special Situations Fund was down 0.27% for April, compared to its benchmark, the MSCI World USD Index, which was up 4.65%. For the first four months of the year, the fund is up 8.4%, while its benchmark returned 9.8%. Q1 2021 hedge fund letters, conferences and more The Odey Special Situations Fund is Read More
So, who do we have to thank for this situation? And just who are the biggest investors in the technologies behind these numbers?
According to data from the PitchBook Platform, here are the investors that have completed the most private equity deals in the fields of renewable energy since the start of 2011:
Although trends in global emissions remain at alarming levels and predictions about climate change are dire, some investors are already doing their part to ensure that global emissions peak at their earliest predicted rates in the late 2020s. Climate change policies enacted at the national level have encouraged greater investment, so has the ever-improving cost-competitiveness of renewables. This combination of government support for and increased profitability of the technologies involved in reducing carbon emissions has represented the best bet for fighting climate change to date.
Now, it’s time for “green finance” to lend a hand and start shoring up that massive funding gap the UN highlighted just in time for Climate Week NYC. As former US Treasury Secretary Henry Paulson pointed out the other day in an op-ed for The New York Times, the latest G20 summit established “a set of principles to govern green finance and recognized its potential for stimulating economic growth.” It’s one thing for cleantech to outcompete fossil fuels with government support. It’s another thing entirely to create an international financial system to support cleantech and a low-carbon future.
For it to work, green financiers should take a page—actually, several—out of a report released last November by Paulson’s former employer, Goldman Sachs, and back the four technologies at the forefront of the blooming renewable energy economy: LEDs, wind power, solar power, and hybrid & electric vehicles. In other words, more efficient lights and cars and less carbon-intensive sources of energy.
Note: Rather than distinguish between PE and VC investments, we elected to group all firms together to gauge how “private financing” is already involved in these verticals.
Top investors in LEDs
Top investors in wind and solar power
Top investors in hybrid and electric vehicles
As summer fades into fall and we all start flicking on the lights earlier in the evening, dialing up the thermostat and driving more often than biking or walking to where we need to go, let’s recall that this summer really was brutal. The hottest on record. The hottest July in the roughly 2,000-year history of the Gregorian calendar’s seventh month.* In short, all the hyperboles. But there’s also plenty of concrete things that we can do about it. And private financing can help.
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* The seventh month of the year, according to the Gregorian calendar, was renamed by the Roman Senate to commemorate Julius Caesar, so “July” really is only some 2,000 years old.