Energy Transition 2050

The Russian invasion of the Ukraine three weeks ago has highlighted the need for the west to remove its dependence on oil and gas from Russia or face a period of extremely expensive energy and inflation in the West.

The UK is extremely fortunate in that only 4% of it’s gas is sourced from Russia with 50% from the North Sea and 33% from Norway.

The problem we face is that only around 40% of our total energy mix now is from renewable sources.

Renewables are no longer that expensive compared to hydrocarbon sources. In some instances, like offshore wind, renewable energy can now be cheaper compared to traditional sources like gas and coal.

Post COP26 in Glasgow the world has pledged a rapid shift in favour of low-carbon energy and to do this the world needs to electrify. Solar and wind are set to become the dominant replacement. Renewable sources have grown from 0.2 per cent of the world’s power generation mix in 2000 to 7 per cent in 2017, and this could grow to 80 per cent by 2050.

With the world now increasingly focused on the question of how to address climate change, it is imperative that new technologies are found that will both reduce our dependence on hydrocarbons but also reduce our dependence on the vagaries of a global oil price that is controlled by Russia and the Middle East.

Regent Assay believes that with an estimated $800bn per annum required to meet the COP26 targets the M & A space will be extremely and interesting with enormous capital required for the development of new technologies. We expect that Hydrogen and Battery Storage will be the drivers in the next few years with many new technological developments including Agricultural soil management programmes coming on stream in the next decade.

We will be tracking this sector and updating our clients with analysis of the deals in our regular sector reports.