BlackRock Doubles Estimate for Global Energy Transition Investment to $4 Trillion Annually by Mid-2030s

BlackRock doubles its estimate for annual energy transition investment to $4 trillion by 2030s, highlighting the scale and urgency of the global shift to renewables, with Asia-Pacific at the forefront.

author-image
Geeta Pillai
Updated On
New Update
BlackRock Doubles Estimate for Global Energy Transition Investment to $4 Trillion Annually by Mid-2030s

BlackRock Doubles Estimate for Global Energy Transition Investment to $4 Trillion Annually by Mid-2030s

BlackRock, the world's largest asset manager, has revised its estimate for the global energy transition, projecting that it will require $4 trillion in annual investment by the mid-2030s. This figure is double the firm's previous expectations of $2 trillion per year. The Asia-Pacific region is expected to be at the center of this investment opportunity.

Last year, $1.8 trillion was invested in energy transition projects, a significant increase from $33 billion in 2004. However, there is still an $18 trillion gap to reach the 2030 goals. A BlackRock survey found that 56% of institutional investors plan to increase their transition allocations in the next 1-3 years, with 46% saying steering through the transition is their top investment priority.

Why this matters: The revised estimate highlights the scale and urgency of the global energy transition. Mobilizing the necessary capital will require alignment between government action, companies, and partnerships with communities, particularly in emerging markets where 60% of the needed funds are expected to come from the private sector.

Achieving the energy transition goals will require a serious acceleration of current trends and expanded policy measures. Renewable energy installations reached record highs in 2023, growing at their fastest pace in decades, with 510 gigawatts added worldwide. However, experts say this is not enough to reach global climate goals, and a tripling of global renewable energy production capacity by 2030 is needed.

The capital gap exists across different risk classes, from low-risk investments in core energy infrastructure to higher-risk endeavors like late-stage venture capital and private equity. Factors like blended finance, developing better talent, and shifting risk frameworks for green project investments are vital for reaching the world's green financing goals.

The transition to clean energy represents unprecedented market opportunities for equipment manufacturers, service providers, and developers aligned with renewables. Australia, with its abundant sunlight, wind, and vital minerals, has significant advantages in this transition. The government is working to unlock private sector investment through initiatives like Hydrogen Headstart and Solar SunShot.

In conclusion, BlackRock's revised estimate underscores the massive investment required for the global energy transition, with the Asia-Pacific region at the forefront. Achieving the 2030 goals will necessitate a concerted effort from governments, companies, and communities to mobilize the necessary capital and accelerate the shift towards renewable energy. As Mark Wiedman, Head of International and of Corporate Strategy at BlackRock, stated, "Achieving the global energy transition will require alignment between government action, companies, and partnerships with communities."

Key Takeaways

  • BlackRock estimates $4T annual investment needed for global energy transition by 2030s.
  • Asia-Pacific region expected to be center of this $4T investment opportunity.
  • Renewable energy installations reached record highs in 2023 but still not enough.
  • Capital gap exists across risk classes, requiring blended finance and shifting risk frameworks.
  • Achieving 2030 goals requires alignment between government, companies, and communities.