The writing on the wall is crystal clear when it comes to the longer-term shift away from conventional energy in favor of cleaner alternatives. Yet, that transition is still years in the making, and in the meantime, traditional hydrocarbon-based fuels continue to play an important role in powering economies and generating returns for investors.
There is no denying the massive pullback of capital moving out of the conventional energy sector. Although investors still like the returns that can be found in conventional energy infrastructure, ESG commitments, climate concerns and a focus on decarbonization are pushing many investors to reduce allocations, analyze exit strategies and move cautiously when it comes to new investments in traditional energy infrastructure. The Russian-Ukrainian conflict also has brought the issue of energy security to the forefront and highlighted the harsh reality that Europe is not ready to make the move to renewables. “That really showed the world