Publications

- November 1, 2019: Vol. 6, Number 10

Power shift: Goldman Sachs expects Big Oil and utilities to play major role in converting energy systems to low-carbon production

by Mike Consol

The push to curb climate change is reshaping the energy industry. With a shift to a low-carbon economy under way, Goldman Sachs Research has estimated that limiting global warming may require up to $30 trillion in clean-energy infrastructure investments by 2040, promising to be one of the largest infrastructure investments in history.

What role will oil and utility companies play in the transition to a low-carbon economy?

While the energy sector currently accounts for more than two-thirds of greenhouse-gas emissions, and with more than 40 percent of those attributed to the power generation industry alone, Big Oil and utility companies are positioned to play a key role in the transition to clean energy, Goldman reports. By drawing on their experience in the global energy market, Big Oil can play a leading role in power supply, biofuels, electric mobility, carbon capture and coal substitution.

Major utility companies are poised to benefit from the clean-energy investment in infrastructure and will likely focus on high-growth areas such as regulated power generation and power networks.

In Europe, this transformation is already under way, where oil companies are spending 50 percent of their capital expenditure on low-carbon activities. By 2030, Big Oil and utility companies will account for a combined 30 percent of the renewable energy market in Europe.

As emissions targets become increasingly ambitious, Goldman Sachs Research says it expects major oil and utility companies to be at the forefront of decarbonizing the global economy.

 

Mike Consol (m.consol@irei.com) is editor of Real Assets Adviser. Follow him on Twitter @mikeconsol to read his latest postings.

 

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