The ‘clean energy revolution’ and you
There’s a clean energy revolution happening across the globe, but perhaps not as fast as we need. And each of us, in our own small way, can help accelerate it.
Climate change, and more recently, Russia’s invasion of the Ukraine highlighted how urgent our path to a clean-energy future has become. With the world’s reliance on fossil fuels posing environmental, health, social and political dangers, the time has come to shift gear to the green economy. And as we’ll see shortly, this transition can’t be possible without significant investments in all the right places.
That’s also why we launched our Clean Energy Fund, which allows Kiwis to make a difference with their own KiwiSaver. Saving the planet while you build your financial future – what could be better than that? Click here to learn more about this opportunity or read on to delve deeper into the clean energy revolution.
The long road to decarbonisation starts here
In human history, the world has witnessed three energy transitions: coal replacing wood, oil replacing coal, and now, renewable energy replacing fossil fuels. That’s the end game, we think. But the road to decarbonisation is anything but short and linear.
According to a 2022 study published in Frontiers, since 1950 the world’s population has grown by 2.5 times, while energy demand has increased by seven times over the same period. And we’re predominantly quenching our insatiable thirst for energy with fossil fuels, accounting for 85% of the total primary energy consumption globally.
All the while, temperatures continue to rise: as NIWA reported earlier this year, New Zealand temperature extremes are happening five times more often than expected; our glaciers continue to shrink; and rains keep setting national rainfall records. Yes – it’s not a comfortable place to be in, and what’s more, it’s a predicament of our own making: research shows that climate change is caused by increased concentrations of greenhouse gases in the atmosphere, which are largely a by-product of human activities.
It's easy to see why decarbonation is one of the greatest and most important challenges we face right now. The question is, what does a sustainable energy transition look like? And are we on track?
How much does the world need to ‘go green’?
Energy transition essentially means three things: energy savings, generation efficiency, and renewable energy investments. The goal is to manage climate change, keep it under control. But while almost every nation in the world has committed to the 2015 Paris Agreement, and pledged to achieve net-zero carbon emissions by 2050, different countries are approaching it in different ways.
First, the good news: overall, global investment in the energy transition is accelerating. Commitments are, indeed, rising. According to BloombergNEF’s Energy Transition Investment Trends 2022, in 2021, global investments hit a new record at $755 billion, with renewables being the largest sector in investment terms.
The not-so-good news is that only around 10% of the benchmarked nations in the most recent ‘2021 World Economic Forum’s Energy Transition Index’ have made consistent progress. And this means we’re not moving fast enough. A progress report from the International Energy Agency (IEA) revealed that renewables deployment needs to accelerate significantly for the world to be on track. The agency also estimates that the transition to a net-zero economy by 2050 requires an annual capital investment of US$5 trillion per year over the next 30 years (US$150 trillion in total).
So, where to from here?
To quote a global Bank of America report, to achieve the target of net-zero emissions, “a transition to clean technology in all sectors at an unprecedented pace would be required, with the steering of governments and willingness of society.” In other words, it’s an ambitious goal, but that doesn’t mean we should throw in the towel: “It can be done, with technology, economy, markets and ESG joining forces.”
We need to turn pledges into actions, and many experts agree that this is the last decade to act. According to IEA estimates, to stay on target for 2050, by 2026 our global renewable energy capacity needs to be 80% higher than what it is right now. And while US$150 trillion may seem like a hefty price tag, but at the end of the day, converting to green technology is likely to be cheaper in the long term than continuing to rely on fossil fuels.
Like to build a better future, for yourself and the planet?
Here at kōura, we believe in giving Kiwi investors choice. And if that means helping them invest in a brighter future for the planet – even better.
It’s in this spirit that we launched our new Clean Energy specialty fund, which allows KiwiSaver members to invest their money in companies that are helping realise the transition to a green, and more sustainable economy.
So what does our Clean Energy fund invest in?
Our fund includes companies that operate in industries like advanced materials, energy intelligence, renewable electricity generation, renewable fuels, and energy storage and conversion. We do this by investing in a managed fund that’s listed in the US and invests in companies in the industries below:
Advanced Materials - Nanotech, membranes, silicon, lithium, carbon capture and utilization and other materials and processes that enable clean-energy technologies.
Energy Intelligence - Conservation, automated meter reading, energy management systems, smart grid, superconductors and power controls.
Renewable Electricity Generation & Renewable Fuels - Solar photovoltaics, concentrating solar, wind, geothermal, and ethanol, biodiesel, biofuel enabling enzymes.
Energy Storage & Conversion - Advanced batteries, hybrid drivetrains, hydrogen, fuel cells for stationary, portable and transportation applications.
As we said, the global economy is moving away from fossil fuels and $150 trillion is the estimated amount required to fulfil the vision of a carbon neutral world. So, every contribution matters. kōura gives you the option for you to invest up to 10% of your KiwiSaver plan in clean-energy innovation, so you can help move the ball forward.
Click here to learn more and don’t hesitate to contact us if you have any questions.