Transforming our Future: Low-Carbon Mega Force

Investment behemoth BlackRock just released a report highlighting low-carbon investment opportunities in 2024, identifying three of the highest-growth sectors: clean energy, electrification, and climate resilience.

When BlackRock talks, the market listens. So, the investment giant’s recent projections for the transition to low-carbon solutions indicates that immense investments in the sector are forthcoming. 

“The transition to a low-carbon economy is set to spur a massive reallocation of capital as energy systems are rewired,” BlackRock asserts. “We see the transition’s speed and shape driven by an interplay of policy, technology, and consumer and investor preferences.” 

BlackRock identified the transition to low-carbon solutions as a mega force that is fundamentally reshaping the economy, with three specific sectors leading the charge: clean energy, electrification, and climate resilience.

Low Carbon Mega Force

Energy for a New Era

BlackRock’s report astutely spotlighted that the continued decrease in battery prices will spur further demand for battery storage solutions and electric vehicles. Battery prices have plunged from $400 per kilowatt-hour to approximately $100 per kilowatt-hour, and they’re expected to plummet to $10 per kilowatt-hour by the end of the decade primarily due to ever-declining lithium prices—a crucial input for lithium-ion batteries. 

As market demand grows and battery technology advances, companies are now utilizing Artificial Intelligence (AI) to discover new battery materials that could lower future costs. 

Beyond battery technology, AI is also being utilized within the energy sector to monitor and reduce power demand, improve the accuracy of energy infrastructure, provide whole-grid views of power supply, and predict system failures—thereby increasing cost-effectiveness, productivity, and dependability.

According to PitchBook, the largest amount of venture capital investment in 2023 went into low-carbon mobility, industry, grid infrastructure, and renewable energy (solar and wind), driven by the combination of ratcheting regulation, high energy prices, and growing demand from consumers and investors. 

And it’s not just venture capitalists that are getting in on the action—oil and gas behemoths are too. As one example, in 2023 Shell invested over $5 billion—approximately 23% of its total capital spending—into electric vehicle charging infrastructurebiofuels, renewable power, hydrogen, and carbon capture and storage technologies.  The company has committed to invest an additional $15 billion into low-carbon energy solutions over the next two years. 

[Want to learn more about Energy for a New Era? Watch RMI CEO Jon Creyts’ session about the topic at our 2024 Sustainability Symposium.]

Election Consequences

If the low-carbon transition that BlackRock predicts is going to occur in real-time, it’s going to take more than eager investors. It will also require aligned regulations and policies that enable and facilitate market transformation. 

Upcoming elections across the globe—from the U.S. to Europe to India—will significantly impact future energy strategies and climate policy.

Many governments are bolstering the growth of low-carbon solutions through subsidies, rebates, and incentives. Election outcomes will determine whether governments will continue to invest in decarbonization technologies or if they’ll roll back support of climate solutions in the name of energy security and affordability. Climate policy and legislation will also be either propelled or thwarted, depending on election outcomes.

According to BlackRock, “In India, the election could result in policy continuity, paving the way for quicker decarbonization and bolstering the country’s efforts to become a bigger clean technology production hub. The U.S. election result could have implications for the Inflation Reduction Act – a 2022 law that has spurred major investment in, and demand for, energy infrastructure and technology. Changes could range from repeal or delays to complementary policy that increases its effectiveness, like land permitting reform.”

Climate Responsiveness

BlackRock also spotlighted a growing appetite for climate-resiliency solutions that enhance our ability to “prepare for, adapt to and withstand climate hazards and to rebuild better after climate-related damages,” such as:

  • Storm, flood, and wildfire monitoring and early warning systems.
  • Demand-side energy management technologies to optimize energy use, lower costs for home and building owners, and reduce grid stress.
  • Water infrastructure, monitoring and purification technologies.
  • Home and building upgrade and retrofit products that will increase the capacity of the built environment to withstand extreme climate events.

“We think markets may underappreciate the prospects for firms creating and adopting resilience-boosting products and services–and see this becoming a more recognized opportunity,” BlackRock states. “We expect demand to grow for products and services that increase resilience and help society assess and manage risks. Some market growth is already evident–and we think policy, regulation, and markets will spur more. We also expect greater spending on rebuilding after climate disasters. As this market grows, we see climate resilience emerging as a new investment theme.”

BlackRock divides climate resilience into three sub-themes:

  1. Assessing and quantifying risks—Investment opportunities include air quality sensors, weather forecasting technology, and early-warning systems that help monitor conditions, predict disasters, and enable swift response.
  2. Managing risk—Investment opportunities include solutions like drought-resistant crops, water treatment technologies, stormwater management systems, and distributed energy micro-grids that help prepare for climate impacts and ensure reliable supply of essentials (like water, power, and food.)
  3. Rebuilding physical infrastructure—Investment opportunities include solutions like weather-resistant materials and onsite water and power generation systems to ensure that the built environment is optimized for resilience. 

Politics at Play

Not everyone agrees with BlackRock’s low-carbon economy forecasts. As one example, the Texas State Board of Education recently withdrew $8.5 billion from BlackRock over its Environmental, Social, and Governance (ESG) investment practices, accusing the firm of advancing a left-wing agenda, undermining traditional energy solutions, and prioritizing social and environmental concerns over economic interests. 

BlackRock has defended its position, reminding the State that it has over $120 billion invested in Texas public energy companies.

The low-carbon transition isn’t immune to wider trends like macroeconomic conditions, high interest rates, slower investment activity, and stalled policy action. However, even with these factors, the transition to a low-carbon economy is inevitable. Many low-carbon solutions, like solar + storage, energy efficiency products, and electrification technologies have already hit price parity with their higher carbon counterparts, driving consumer demand and making the shift an economic inevitability.

Want to learn more about the low-carbon mega force, high-growth opportunities, rapidly advancing innovations, and associated risks? Watch Green Builder Media's 8th annual Sustainability Symposium 2024: Existential Solutions

A heartfelt thank you to Trane Technologies and Whirlpool Corporation for their continued support of our annual Sustainability Symposium, as well as their total commitment to corporate sustainability. 

Publisher’s Note: This content is made possible by our Today’s Homeowner Campaign Sponsors: Whirlpool. Whirlpool takes sustainability seriously, in both their products and their operations. Learn more about building and buying homes that are more affordable and less resource intensive.