Vendors Secure Optimal Advantage
The global transition towards net-zero emissions is driving significant changes in investment trends and opportunities across utilities, energy, industry, and basic materials sectors. This transformation, shaped by regional variations and sectoral challenges, presents both risks and opportunities for companies and investors alike.
### Utilities and Energy Sector
Global energy investment is on the rise, with an estimated USD 3.3 trillion forecasted for 2025. Clean energy investments are outpacing those in fossil fuels by approximately two to one. The focus is on expanding electricity infrastructure, with solar power becoming the largest single investment category, surpassing oil production. Other priorities include renewables (solar, wind, small hydropower), nuclear, energy storage, grids, and electrification.
Increasing electricity demand and national energy security concerns are central to this capital shift towards electricity-based solutions. However, regional variations exist. Developed markets like the EU benefit from policy frameworks such as the European Green Deal and institutional initiatives that ensure transparency and alignment with climate goals. Emerging markets, such as India, Brazil, and South Africa, face a more complex landscape where fossil fuels still play a dominant role in economic growth and energy supply, requiring tailored financial and technical support to leapfrog to clean energy.
### Industry and Basic Materials
The net-zero drive goes beyond power generation, significantly impacting industrial processes and raw material production. One notable challenge is the critical mineral supply chain concentration, especially for minerals essential for clean energy technologies like batteries and solar PV. China and Indonesia dominate mineral refining, raising energy security and supply risks.
However, decarbonizing industry—such as steel, cement, and chemicals—presents opportunities for innovative technologies, efficiency improvements, and new low-carbon materials. Investments in digital infrastructure, skilled labor, and energy storage further support the transition.
### Regional Dynamics
The transition towards net-zero is a global endeavour, with each region facing unique trends and challenges. Developed markets like the EU and the US lead with stable policies and established investment frameworks, early adoption of renewables, grid modernization, nuclear, energy efficiency technologies, and transparent net-zero aligned portfolios.
Emerging markets, such as India, Brazil, and South Africa, require targeted support to overcome fossil fuel dependencies and capitalize on clean energy opportunities. These markets face a more complex landscape, with growing energy demand and less policy stability, but they also offer potential to leapfrog fossil-based infrastructure via international finance and risk-sharing.
Global supply chains also present challenges, with concentration of mineral refining in China and Indonesia, risks in critical materials supply, and rising demand for minerals. Investments in supply diversification, recycling technologies, alternative materials, and regional mining capabilities are necessary to mitigate these risks.
### Investment Frameworks and Support
The Net Zero Investment Framework (NZIF) aids institutional investors by setting clear portfolio and asset-level decarbonization targets, increasing transparency and accountability. Policy stability and enforceability are essential for sustained climate finance flows, with global collaboration needed on supply chains, energy efficiency incentives, and infrastructure resilience.
### Summary
The transition towards net-zero is marked by massive capital shifts into clean electricity and related infrastructure, with utilities and renewable energy at the forefront. Industry and basic materials sectors face distinct challenges with mineral supply chains and decarbonizing processes, creating investment prospects in new technologies and efficiency.
While utilities and industrial companies are trying to mitigate job losses through early retirement programs or retraining, there is a lack of information provided on the potential job losses and measures to mitigate them in the energy and raw materials sectors. Every second company requires its board to consider ESG criteria in general, and utilities are increasing their share of renewable energy through long-term contracts, which strengthens their credit profile and lowers financing costs.
Chinese companies have been increasingly setting emission reduction goals and associated investments since China's leadership announced its aim for climate neutrality by 2060. However, opinions vary on whether the goals for climate neutrality by 2060 are set correctly, with around 30% of analysts in China believing the goals are correct, and the global average being around 50%, indicating that half of the analysts think companies need to adjust their goals upwards to achieve net-zero greenhouse gas emissions.
- The science of climate-change and environmental-science necessitate significant investments in the renewable energy sector, as clean energy investments are outpacing those in fossil fuels, with solar power becoming a major investment category.
- Businesses in the industry and basic materials sectors are presented with opportunities and challenges, as the net-zero drive impacts industrial processes and raw material production, with a particular focus on the critical mineral supply chain for clean energy technologies.
- As the transition towards net-zero is a global endeavour, finance and investing play crucial roles in supporting emerging markets, like India, Brazil, and South Africa, to overcome their fossil fuel dependencies and capitalize on clean energy opportunities.
