Investment Themes 2025: Energy Transition & Climate Action
The global response to climate change presents an opportunity.
The energy transition has created a vast, evolving world of investment opportunities across all industry sectors. A diverse set of participants are driving the growth in these opportunities, including the traditional energy industry, financial investors, governments and regulators, as well as new energy developers, and energy-intensive businesses.
Corporate investment in renewables is expected to increase over the long term, regardless of the shifting stance of the US towards expanding oil and gas production. The total global investment into the energy transition in 2024 was around $2.1 trillion USD (an 11% increase from 2023), largely derived from four key areas, energy efficiency, renewables, storage/grids and transportation.
Alongside energy investment, global energy consumption has increased every year of this century, as demonstrated below through to 2023 (2024 estimates suggest demand once again increased, although comprehensive data is not yet available). The two years where it did not increase were 2009 (post Global Financial Crisis) and 2020 (during the Covid-19 pandemic), however, both years there were strong rebounds.
The growth in renewables consumption (dark blue) relative to the total growth in global energy consumption (light blue) underscores both the importance of the transition to more sustainable energy sources, but also the need to ‘keep the lights on’ in the meanwhile.
This is reflective of our approach to investing within the space. We focus on companies which have significant investments in or existing clean energy generation developments like Contact Energy, Meridian Energy and Mercury NZ domestically. Internationally, we favour First Solar, Enphase Energy and Vestas Wind Systems.
The portfolios remain well diversified, targeting blue-chip stocks, while focusing on the benefit from four to five long-term structural themes like the energy transition and climate action theme above. Amid the noise of the market, remember to focus on your goals and if you ever need to consult someone, our team of financial advisers are available to talk.
