The following article was first published at Net Zero Analysis and is available with footnotes and references at the following web address: https://netzeroanalysis.com/further-reading-and-resources/articles-and-white-papers/

IREI has been hosting virtual roundtables throughout the COVID-19 pandemic, and the meetings during the past month have provided another opportunity for i3 board members to discuss issues and trends in the market. The discussions over the past month have focused on supply chains, the energy transition and the fundraising market, in particular.

The GLIO Index of infrastructure companies gained 6.6 percent in October, clawing back losses from September. Year-to-date, the GLIO Index remains up 11.4 percent.

While much attention has been paid to the “energy transition,” other sectors, such as transportation, are experiencing their own transformation. With the recent passage of the historic $1 trillion infrastructure bill, which dedicates billions of dollars to roads and bridges, public transit, electric vehicles (EVs), and airports, now on its way to the desk of President Biden, the sector appears to have the ammunition it needs to make long-awaited strides, bringing about new opportunities for infrastructure investors.

Soaring government debt levels have led to decreasing public investment and widening social infrastructure gaps, calling for financing methods outside the traditional public scope. Private investors must step in to fill this gap. While public-sector investment will likely remain the primary source of social infrastructure financing, increased investments from the private sector could significantly transform the sector. Institutional investors’ vast assets pool, coupled with their strong appetite for longer-term, low-risk assets, render them particularly well positioned to increase their asset allocation toward social infrastructure projects.

When the Texas power market went into a deep freeze earlier this year, it was not the first red-flag event U.S. power and utility markets had experienced. PG&E in California famously experienced its own wildfire-driven problems that resulted in bankruptcy. Utilities in Texas also suffered during the freeze, as prices for fuels skyrocketed. Globally, the story is the same, as more frequent severe weather and natural disasters are putting power and utility markets to the test.

Though renewables are seen by some as the only option for a sustainable future, investors need to recognize the realities of global energy demand and the long-term role natural gas assets will play in delivering on economic, societal and environmental goals.