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Industrials
We delve into the implications for the global capital goods sphere, and potential opportunities and threats that energy transition could spell for the sector.
Capital investment will have to rise threefold through 2050
As the energy transition continues to gain momentum, we expect a significant shift in investment to retool the world's existing capital base to run on clean fuels. We see the capital goods sector as a key enabler of the energy transition, as most companies here are well placed to pivot in order to service the green economy. In this report we take an in-depth, top-down and bottom-up look at the opportunities and risks that the energy transition means for global capital goods. Our analysis (leveraging input from over 25 ÃÛ¶¹ÊÓƵ analysts in 16 research teams, and more than 20 ÃÛ¶¹ÊÓƵ reports/ÃÛ¶¹ÊÓƵ Evidence Lab studies) suggests that the overall investment requirement is likely to be much higher than generally assumed, potentially driving incremental capex of cUS$2.5-3tn p.a. through 2050, a threefold increase versus the past.
Clean energy generation is one of the clear winners…
Decarbonising the energy sector is of course one of the key drivers of emissions reduction, pushing increasing reliance on electricity (supply to increase by 3-5x), and within this a shift towards more renewables (to c75% of generation). Overall we think this shift will drive a 2-3x increase in investment to US$1-1.5tn p.a. Wind energy (>15% CAGR in GW installed) and solar (>25% CAGR) are likely to be the key beneficiaries here, as well as hydro. While investment in some areas (oil & gas, fossil-fuel generation) will decline, this should be more than offset by the above growth drivers.
...but energy transition is about more than just the energy sector
The energy transition is no longer just an energy problem: decarbonising the world's economy will require meaningful investment across multiple industries. We look at four other key areas besides energy which are the most relevant for capital goods: