Discover the cost of reaching net-zero and the themes that are shaping progress towards a low-carbon global economy.
The sweeping climate, healthcare and tax bill is estimated to provide more than $390 billion of energy and climate spending over a 10-year period, according to the US Congressional Budget Office, with about $270 billion of that coming in the form of incremental tax incentives for businesses and individuals to pursue and invest in cleaner and more efficient energy sources.
Rising concerns over climate change are spurring investments into clean energy to help bring the world closer to net zero. But where are we in that transition? And how is that path to decarbonization affecting investments in traditional oil and gas projects? In this episode of Exchanges at Goldman Sachs, Michele Della Vigna, head of natural resources research for Goldman Sachs in EMEA, explains the impact of higher fossil fuel prices on the low-carbon transition and the investment that is required to get to net zero.
Russia’s invasion of Ukraine has upended the European energy playbook. To better understand the current situation and future possibilities for the continent’s energy needs, we asked senior leaders throughout Goldman Sachs for their analysis.
GS SUSTAIN: Green Capex - Accelerating the Energy Transition - Stimulating Capital and Return on Capital
In this report, Goldman Sachs Research highlights where capital is needed, what investors are rewarding and strategies/vehicles to stimulate investment with a case study on China decarbonization strategies. To stimulate greater capital towards the Energy Transition and broader sustainable development goals, GS Research analysts believe stakeholders such as investors, managements and policymakers should deploy the three Cs: collaboration, comprehensive focus, and corporate returns clarity.
GS SUSTAIN: Green Capex - US Inflation Reduction Act - What's Transformational, What's Supportive, What's Underappreciated
The Inflation Reduction Act (IRA) — signed into law by President Biden on August 16 — provides about $386 billion in energy and climate spending over 10 years, with related tax incentives up about $265 billion from the prior run rate. With annual investment needed globally this decade to be on path for Net Zero by 2050 +$1.8 trillion vs. the annual run rate in 2016-20, the IRA is helpful but not an immediate panacea to put the world on track. Goldman Sachs Research Analysts see the IRA as a catalyst to accelerate investment in longer-term carbon capture utilization and storage projects. GS Research Analysts also see the IRA as supportive for solar, electric vehicles, residential clean energy and nuclear energy.
Goldman Sachs Research analysts update their Carbonomics cost curve and arrive at three key conclusions. Overall, ‘the revenge of the old carbon economy’ keeps driving a disjointed de-carbonization process that is both inflationary and inefficient. However, GS Research analysts see some clean tech green shoots, with clean hydrogen at the cusp of a regulatory and economic breakthrough.
Goldman Sachs Research analysts see fibre and 5G as critical technologies necessary to reducing the Information and Communications Technology (ICT) sector's overall carbon footprint and enabling low-carbon technologies across the broader economy.
The tensions between Russia and the rest of Europe over natural gas flows have underscored the unsustainability of the continent’s energy system. But with the right mix of infrastructure investment, Europe can emerge from the upheaval with a system that is cheaper, achieves the continent’s net-zero carbon emissions goals and is more secure.
Can Europe strengthen its energy independence in the face of the Russia-Ukraine crisis without compromising its climate change goals? Goldman Sachs Research uses its Carbonomics framework to model the evolution of Europe’s energy system towards a lower cost, lower imports, lower carbon system.
Green Capex will be the dominant driver of global infrastructure over the next decade and will be critical for achieving Net Zero, Infrastructure and Clean Water goals. In this report, Goldman Sachs Research analysts explore rising capex and R&D expectations, and consider government commitments to increase or stimulate Green Capex.
After years of declining investment in fossil fuels, capital expenditures in the energy industry are set to climb as the war between Ukraine and Russia causes a global reset in how the world produces energy. “We believe that the recent focus on energy security, resilience and diversification will drive a new era for energy investments,” according to the Carbonomics team in Goldman Sachs Research.
The Russia-Ukraine conflict is a turning point for the energy sector, according to analysis from Goldman Sachs Research. One that is similar to, and potentially greater than, the Fukushima nuclear accident and Libyan civil war concurrence in 2011. In this report, analysts examine this Return of Energy Capex and draw five key conclusions.
Ever-increasing demand, component shortages and rising raw material prices are now challenging the long-standing consensus that battery prices will continue to decline in the coming decade. To assess the impact of this “Greenflation” and potential supply chain bottlenecks ahead, Goldman Sachs Research introduces a proprietary battery pack price and cost curve model, supply-demand models across battery components and a bear case battery TAM scenario.
In this report, the seventh installment of our Electric Vehicles: What’s Next series, analysts from Goldman Sachs Research outline their new forecast for a slower pace of decline for automotive battery prices through 2025, and they consider the outlook for the EV and automotive battery markets under three scenarios (bear, base, and hyper-adoption).
With his new book, Speed & Scale: An Action Plan for Solving Our Climate Crisis Now, venture capitalist John Doerr talks to John Goldstein, head of the Sustainable Finance Group, about his plan to arrest climate change sooner rather than later.
The European Union is aiming to slash greenhouse gas emissions by 55% by the end of this decade compared to 1990 levels, a goal that GS Research says requires a major – and urgent – push to electrify industries from transport to manufacturing. We sat down with Alberto Gandolfi, head of European Utilities Research, to discuss the steps European economies need to take now on their path to net zero.
The EU Taxonomy is ramping up to become the “common green standard” used to credentialize companies’ green revenue and capex as well as investors’ green investments. With the initial climate phase having taken effect, Goldman Sachs Research sees 2022 becoming a critical period of experimentation and engagement between investors and corporates around disclosures and alignment-estimation models leading up to full Taxonomy application from January 1, 2023.
While previous Goldman Sachs Research has focused on the 2050 net zero end game, here they explore a more immediate, more tangible topic; one that is poised to revolutionize European economies and our everyday lives: the urgency of electrification.
Even as oil prices climb higher, the flow of money into new oil and gas projects has stalled as investors increasingly avoid industries that produce fossil fuels and heavy carbon emissions. That breakdown between energy prices and capital expenditures is likely to prop up the cost of a barrel of oil, but it could also help support the transition to low-carbon energy. We spoke with Michele Della Vigna, head of natural resources research in EMEA at Goldman Sachs, to discuss the firm’s outlook for commodity prices as investors increase their focus on climate change.
In part 5 of our special miniseries, host Kara Mangone talks to Sarah Lawlor, Chief Operating Officer of the Sustainable Solutions Council in the Global Markets Division about the tools available to ESG investors and how they can find and access opportunities in a Net Zero future.
In part 4 of our special miniseries, host Kara Mangone talks to John Greenwood of our Investment Banking Division and Ahmed Saeed of the Asian Development Bank on the role public-private partnerships will play in the drive to Net Zero.
Part 3 of our special miniseries: Host Kara Mangone talks to Peter Kelly and Lisa Williams from the AIMS Imprint investment vertical in Goldman Sachs Asset Management about nature based solutions in the world of sustainable finance.
Part 2 of our special miniseries: Host Kara Mangone and Michele Della Vigna, head of Natural Resources Research in EMEA, discuss the role capital markets, public policy, and technology will play in moving toward a sustainable future.
In the kickoff episode of our new sustainability miniseries, Accelerating Transition, John Goldstein and Kara Mangone of Goldman Sachs’ Sustainable Finance Group discuss what it will take from both the private and public sectors to achieve the climate goals necessary for a sustainable future.
In this report Goldman Sachs Research examines how capital markets' deep engagement in sustainability is driving de-carbonization through a divergence in the cost of capital of high carbon vs. low carbon investments.
Carbonomics: Taking the Temperature of European Corporates - An Implied Temperature Rise (ITR) Toolkit
In this report Goldman Sachs Research leverages their Carbonomics Net Zero Paths to gauge the implied temperature rise of corporate de-carbonization through the lenses of >110 corporates in the 15 most carbon intensive sectors of the European market.
COP26 is a historical opportunity to accelerate the de-carbonization pledges laid out by COP21 (the Paris Agreement) in 2015. In this report Goldman Sachs Research analyzes five key themes of change they believe can drive progress.
Goldman Sachs Research presents modelling for two paths to net zero carbon, with two global models of de-carbonization by sector and technology, leveraging the team’s proprietary Carbonomics cost curve.
China’s pledge to achieve net zero carbon by 2060 represents two-thirds of the c.48% of global emissions from countries that have pledged net zero, and could transform China's economy, starting with the 14th Five-Year Plan.
Goldman Sachs Research hosted its first Carbonomics conference in London on November 12, focused on the de-carbonization trends and technologies currently transforming all major industries. The virtual conference convened approximately 5,000 investors, company managers, regulators and industry experts, with speakers and panelists including 30 CEOs of leading corporates and key policymakers.
Net zero is becoming more affordable as technological and financial innovation, supported by policy, are flattening the de-carbonization cost curve. Goldman Sachs Research updates its 2019 Carbonomics cost curve to reflect innovation across c.100 different technologies to de-carbonize power, mobility, buildings, agriculture and industry, and draw three key conclusions.
Green hydrogen looks poised to become a once-in-a-generation opportunity: Goldman Sachs Research estimates it could give rise to a €10 trillion addressable market globally by 2050 for the Utilities industry alone.
Clean hydrogen has a major role to play in the path towards net zero carbon, providing de-carbonization solutions in the most challenging parts of the Carbonomics cost curve - including long-haul transport, steel, chemicals, heating and long-term power storage.
Clean tech has a major role to play in the upcoming economic recovery. Leveraging our Carbonomics cost curve, we estimate that clean tech has the potential to drive US$1-2 tn pa of green infrastructure investments and create 15-20 mn jobs worldwide, through public-private collaboration.
Climate change is re-shaping the energy industry through technological innovation and capital markets’ pressure.