Reported by Wu Bin, a 21st Century Economic Reporter, from Shanghai
Finance is becoming a key force in building a sustainable future together. From October 21st to 22nd, the 2023 Shanghai Suhe Bay Conference of the Global Wealth Management Forum was held in Shanghai. Ed Northam, Global Core Renewable Energy Leader and Asia Pacific Regional Leader of Macquarie Asset Management Green Investment, stated that how to provide financial support for global energy transformation and achieve future sustainable development? This topic is one of the most important challenges facing the world today, and it is also a major trend in the development of the global asset management industry.
(Ed Northam, Global Core Renewable Energy Leader and Asia Pacific Regional Leader for Green Investment at Macquarie Asset Management, provided by the organizer)
Northam has been working in the field of energy project financing and development for over 25 years. He has collaborated with the UK government to establish the Green Investment Bank, which has promoted renewable energy financing in the UK and provided key support for the development of offshore wind power in the UK. He has also led Macquarie's investment projects in core renewable energy technologies such as solar energy and waste power generation.
In Northam's view, private capital can also contribute to the green transformation of the entire society and jointly build a more sustainable future. Taking sustainable development risks and opportunities as a consideration throughout the entire investment cycle will effectively improve operational performance and enhance risk resilience. Importantly, this can also achieve long-term value creation.
The speed of energy transformation is far from achieving climate goals
The future energy transformation still faces enormous challenges. Northam stated that there are currently some positive signs, such as investment in renewable energy surpassing investment in fossil fuels. However, the global pace of this transformation is far from what is needed to achieve climate goals.
Northam has learned through its clients and network that investors are very interested in investing in this area. Bloomberg New Energy Finance data also shows that in the first half of 2023 alone, the global new investment in renewable energy reached a record high of $358 billion. This increase is attributed to the maturity of renewable energy technology, with investment in solar power generation technology reaching $239 billion in the first half of this year, an increase of 43% compared to the same period last year. China is the main force behind this growth, with about half of the global solar energy investment coming from China.
This trend will continue in the future, and Wood Mackenzie predicts that investment in mature renewable energy technologies in the Asia Pacific region will reach $1.6 trillion over the next 10 years.
Due to the impact of the COVID-19, the supply chain level of mature renewable energy technologies has also been affected. Northam stated that in this regard, China and Chinese companies have played a crucial role, and through their efforts, mature renewable energy technologies have always been deployed at a certain speed and scale. At least 60% of the manufacturing capacity required for global renewable energy mature technologies is in China. At present, China's manufacturing capacity is sufficient to meet the production demand of most of the global solar energy market until 2030.
Therefore, Macquarie Asset Management has established deep cooperative relationships with many Chinese suppliers, such as Jing'ao Solar, Trina Solar, Longji Green Energy, and Yuanyuan Energy. Northam stated, "We regularly communicate and discuss our portfolio company's pending channel projects, as well as collaborate on how to deploy the latest and most cost-effective technologies. It is this close collaboration that ensures that we have been able to continuously and systematically deploy solar and wind power projects
Global needs to fully utilize capital
To accelerate the promotion of green transformation, Northam believes that the world still needs to fully utilize capital and overcome numerous obstacles. Firstly, it is necessary to accelerate the deployment of technologically mature climate solutions, such as solar and wind energy, which are currently the cheapest power generation methods in almost all regions of the world. Therefore, the urgent task must be to achieve the large-scale production of mature renewable energy technologies as soon as possible, expand their scale, and provide the required clean electricity for various regions.
In terms of eliminating regulatory and licensing barriers, there is still a lot of work to be done. Northam stated that in many countries, the connection to the power grid has limited the development of renewable energy. However, progress has been made in these areas, and some governments are taking measures to simplify the licensing process. For example, the European Union has set targets for several projects to be licensed within a year. At the same time, countries are also taking measures to transform their power grid access.
Although the scale of wind and solar power projects urgently needs to be expanded, relying solely on mature renewable energy technologies is not enough. Therefore, Northam believes that the second focus of promoting green transformation is to promote and support climate solutions and commercialization of emerging renewable energy technologies, and deepen the decarbonization process. Various industries need to invest heavily in new infrastructure, especially in the development of CCUS (Carbon Capture, Utilization, and Storage), how to renovate existing pipeline networks to transport clean energy, and so on.
To make these investments truly happen, Northam stated that on the one hand, the government needs to develop detailed plans, policies, and supporting measures to encourage the rapid formation of emerging solutions. On the other hand, after the corresponding market framework is in place, the private sector will cooperate and invest with the government to achieve cost reduction and efficiency increase through large-scale costs and technological innovation.
When it comes to partnerships, Northam stated that this is the third priority in promoting green transformation, which requires collaboration with clients and portfolio companies to achieve decarbonization operations while adapting to future trends for business transformation. The corporate commitment to net zero emissions is an important action signal, and the private sector will begin to transform to fulfill this commitment, while continuing to create long-term value for customers, businesses, and communities in the coming decades.
Looking ahead, Northam emphasizes that net zero is not a solo operation, transformation requires scale, and cooperation is the right path. The world is facing unprecedented challenges and extremely high levels of investment demand, and the private and public sectors need to work closely together to ensure the achievement of ambitious climate goals. The forms of cooperation are not unique, but they are committed to calmly addressing many future challenges, such as accelerating the deployment of mature low-carbon technologies, promoting the commercial application of emerging climate solutions, and supporting the energy transformation of existing enterprises. The financial community will play a crucial role in this regard by providing the resources and expertise needed for transformation.