Green Investing: The Core to a Sustainable Energy Future

Green Investing
Tom Foley, GHD’s Future Energy Executive Director for the UK, Europe & Middle East, discusses the green investment gap and de-risking the energy transition

When it comes to green investing — a form of socially responsible investing in companies that support or provide environmentally friendly products and practices — there are a plethora of benefits, including carbon reduction, biodiversity conservation and natural resource management.

Through green investing, new technologies that support the transition from carbon dependence to more sustainable alternatives turn from concept to reality, and this could not be more applicable to the energy sector.

Green investing plays a pivotal part in ensuring a sustainable future. The International Energy Agency estimates that around US$2.8tn was invested in energy in 2023 alone, more than US$1.7tn of which funnelled into clean energy such as renewable power, nuclear, grids, storage, low-emission fuels, efficiency improvements and end-use renewables and electrification.

The body also highlights how clean energy investment is extending its lead over fossil fuels, a change boosted by energy security strengths, with solar anticipated to eclipse oil production for the first time.

This shows that green investment is essential for transitioning away from fossil fuels, reducing greenhouse gas emissions and combating climate change.

Tom Foley, Executive Director for the UK, Europe & Middle East in Future Energy at GHD is an experienced energy leader with a firm belief that green investments are at the core of the energy system’s long-term sustainability — both in terms of dealing with demand and environmental impact.

“Building a resilient energy system alongside the rise of renewables is essential,” he begins. “We need a smarter approach that is centred on investing in sustainable solutions, such as advanced energy storage technologies and improved grid flexibility.”

The importance of green investments

Resilient energy systems rely on investments in intelligent grids, armed with advanced data analytics and real-time monitoring capabilities to allow for flexible management of renewable energy and distributed energy resources.

This, Tom explains, all significantly hinges on addressing the current infrastructure deployment challenges and policy gaps. 

“The right incentives can enable the development of essential flexible low-carbon technologies, which remain a crucial priority for the government alongside renewable and nuclear projects,” says Tom.

This however is tainted somewhat by the green investment gap, a shortfall in funding needed to reach climate goals. This is apparent in the UK, for example. Climate Change Committee (CCC) research states that in order to meet its 2050 net zero target, the UK will have to increase its low-carbon investment from £10bn (US$12.5bn) per year in 2020 to around £50bn (US$62.4bn) per year by 2030. The challenge of which has been exacerbated by Brexit, however, Europe is facing similar challenges. The Foundation for European Progressive Studies (FEPS) showcases that the European Commission’s modelling of required investment needs is “overly optimistic” as the EU faces an investment gap of €11.7bn (US$12.5bn) to €16.3bn (US$17.4bn) between 2020 and 2050.

“The gap between current investment levels and what's needed to meet net zero emissions is significant,” Tom says.

“A major barrier is the private sector’s lack of green investments due to large upfront costs and potential uncertain returns. Public investment banks are crucial in providing ‘patient capital’ for long-term projects — but they have limited resources and capacity, which hampers the potential speed of the transition to net zero.

“Ensuring clearer policies are in place and fostering relationships with the private sector to build a team of solution providers will be key to unlocking these strategic investments.”

De-risking the energy transition

The next hurdle to overcome for Tom and GHD is de-risking the energy transition, something integral to meeting net zero commitments and targets. Although the transition from fossil fuels to renewables is crucial to this as well as addressing climate change as a whole, this shift doesn’t come without its risks.

This is apparent from GHD’s SHOCKED report, which reveals 94% of energy leaders believe the current energy crisis is unprecedented in severity. 

Off the back of this research, GHD recommends companies explore a multifaceted approach that looks at five factors: unlocking capital to accelerate financial decisions for energy projects, enhancing engineered solutions through R&D, managing supply chains and resources effectively, securing community support and social acceptance and ensuring a just and fair transition.

“De-risking the energy transition is essential to mitigate these potential pitfalls,” Tom explains. 

By leveraging its expertise, GHD is actively working with clients to de-risk this transition, one of note is the Scottish town of Grangemouth, a key industrial centre aiming for net-zero emissions by 2045. Working in partnership with the Scottish Government, the partnership focuses on a fair and inclusive transition, enhancing the area's economic, environmental and social value. 

And it doesn’t stop there: GHD is also supporting Australia's transition to net zero emissions by aiding CSIRO in assessing hydrogen refuelling infrastructure as well as assisting the Los Alamos National Laboratory in relocating equipment to monitor air quality in Tasmania. These efforts inform evidence-based decisions for government, industry and research agencies, contributing to global climate resilience.

The future of addressing the world’s biggest energy challenges

With net zero only in reach if low-carbon energy is both affordable and secure, collaboration is key to tackling energy challenges — including the barriers to green investments — head-on.

Tackling this by employing a problem-centric approach for open and collaborative discussions aimed at enhancing outcomes for communities and environments while balancing costs, GHD has a number of strategies, which include:

  • Cost reduction through optimising project design, identifying potential financing and adopting long-term strategies to scale sustainable solutions for economies of scale. For example, GHD is supporting National Grid with innovation funded projects, including optimising the connection arrangement for hydrogen electrolysers to distribution networks.
  • Technology and Innovation are pivotal and, by exploring their benefits, GHD can identify more ways to support the de-risking of the transition while managing costs. GHD works closely with LAVO in developing their novel HEOS hydride technology for hydrogen in response to a market need for long-term energy storage.

These are integral to ensuring green solutions are accessible, risk free and as beneficial as possible.

“Addressing the world’s biggest challenges in energy is no easy feat, but we are committed to addressing global energy challenges by working closely with our clients to ensure long-term, sustainable strategies are implemented in every project,” Tom concludes. “We firmly believe our efforts provide valuable solutions that advance sustainability performance and contribute to a more sustainable and resilient future for everyone.”

 

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