Renewable power is on course to see the largest spend in the global energy industry next year, passing upstream oil & gas for the first time ever amid a “seismic” shift in capital that could underpin $16trn of investments by 2030, said finance giant Goldman Sachs.
The investment bank in a new report says a widening gulf in cost of capital between clean and fossil projects – as high as 20% for long-term oil and as low as 3-5% in renewables – is changing the energy landscape, putting an implied carbon price of $40-80 per ton of CO2 on new hydrocarbon developments.
The lower cost of finance and supportive regulations driven by public-private collaboration is creating a $1-2trn annual investment opportunity in clean-tech infrastructure, the Goldman analysts reckon, spanning renewables, biofuels and associated systems such as power networks and hydrogen.
The clean infrastructure explosion is also on course to create up to 20 million jobs worldwide, it added in the report called Carbonomics.
A total potential of up to $16trn of investment out to 2030 would be consistent with global efforts to keep global warming within 2 degrees, said the study, pouring cold water on claims in some quarters that economic pressures after coronavirus could dampen the dash to decarbonisation.
“Historically, times of macroeconomic downturns have been associated with a deceleration of global decarbonisation efforts, as affordability has taken precedence over sustainability,” said the Goldman Sachs researchers.
“We believe this time will be different, especially for technologies that are now mature enough to be deployed at scale and can benefit from a falling cost of capital and an attractive regulatory framework, unlocking one of the largest infrastructure investment opportunities in history on our estimates.”