By 2030, twice as many natural resources will be needed as the Earth can regenerate. Three promising areas are therefore open to investors.
Man is consuming the Earth’s resources at such a rate that the Earth can no longer keep up. This results in both opportunities and risks for investors. On the one hand, excessive consumption of raw materials essential to health and quality of life represents a risk for many sectors and companies. Costs are rising, supply chains are disrupted, regulations are hampering growth, and investors are being hit hard.
On the other hand, people, governments and innovators are working to resolve this urgent situation, which creates opportunities in the area of resource efficiency. This excessive burden placed on systems essential to sustaining life on our planet can be countered by directing capital and assets towards optimizing the sustainable use of limited resources – which will benefit everyone.
Semiconductors are essential to the green transition
In many ways, semiconductors are the “brains” of energy efficiency. They are essential enablers of green and digital economies. The future of “Smart Everything” will require increasingly faster and more compact chips to be integrated into smaller devices, offering more features and capable of processing huge volumes of data reliably, all this while consuming less electricity.
But dependence on semiconductors also reinforces the increase in energy consumption, and it is essential to implement solutions to improve their efficiency. To pave the way for a cleaner future, chip developers must design products that work more efficiently. Thus, chip designers play an important role in protecting our planet’s vital resources.
As with renewable electricity generation, a resilient distribution network is another essential piece of the successful transition to sustainable energy.
Ecomobility reduces CO2 emissions
The growing appetite for electric vehicles is one reason for the growing need for power semiconductors. Current forecasts suggest that the share of electric vehicles in global passenger vehicle sales will jump from 14% in 2022 to already 30% in 2026, approaching 44% in 2030. An increasing number of semiconductors are needed for production of electric vehicles and the number of power semiconductors per vehicle will therefore increase exponentially.
The investment thesis for eco-mobility is simple: the number of countries that want to reduce their carbon footprint is increasing. Promoting clean vehicles is an easy way to achieve this. In fact, many countries offer attractive tax incentives to first-time buyers. The infrastructure around electric vehicles is also interesting in terms of investment. The electric vehicle sector has strong potential to reduce carbon emissions and improve air quality, while also providing financial benefits to its users and investors.
Without smart grids, no resource efficiency
As with renewable electricity generation, a resilient distribution network is another essential piece of the successful transition to sustainable energy. However, the traditional power grid, designed for centralized energy production and distribution, faces challenges posed by the intermittent nature of renewable energy sources.
Current global investment in networks falls far short of meeting the needs to achieve carbon neutrality. Annual network investments will need to more than double by 2030 to stay on track. Currently, action and funding plans around the world are accelerating and supporting this transition. We can cite the Regulation for a “Net Zero Emissions” Industry and the IRA Law on Reducing Inflation
Companies that specialize in energy distribution are at the forefront of resource efficiency, providing technical solutions that will redefine the world of electricity distribution and production. Companies that enable the connection of renewable electricity sources to the broader grid via transmission lines and substations are vital to the development of this area. Order intake is accelerating, order books are growing like never before and signs of project progress are accumulating, all in a market that seems to underestimate growth and profitability: the investment scenario tells us looks promising for 2024.
A healthier, more prosperous future depends on the green transition, with sustainability no longer the sole driver of change. The economic logic behind investments in resource efficiency solutions has become clear and provides a rich investment opportunity in a diversified portfolio.
Companies whose products and services help leverage existing wealth and improve efficiency are particularly suitable, as this is the most economically logical path to successfully reducing emissions and to reduce energy consumption.
Additionally, the climate investment trend is expected to continue for decades, as no one can predict the end of environmental innovations, the rise of proven technologies, or their global adoption.
