![]() ![]() ![]() This suggests that there may be variation between companies that are decreasing their energy generation related emissions by replacing fossil fuels with renewables, and those companies which may just be increasing their generation capacity through the incorporation of renewables, and therefore still increasing their emissions. The IEA states, despite 2021 being a record year for renewables, it is not sufficient to cover the rise in electricity demand and predicts global CO 2 emissions in 2021 are on track for their second-largest rise in history. In particular, investors have the opportunity to align their financing with the transition by identifying top performers in terms of absolute emissions reductions in the EGU sector. Financing the shift from fossil fuel to renewable generation presents opportunities for the investor community, alongside the need to manage risks. Thus, Electric, Gas & Utilities (EGU) companies can play a crucial role in the transition to a low-carbon economy and they also face particular transition risks that can lead to risks for investors. The electricity sector was responsible for 36% of global CO 2 emissions in 2021, which is more than any other sector. Considering coal is the largest source of electricity generation worldwide, the increase in electricity demand will further challenge energy supply decarbonization. Equally, electricity demand, across the World Energy Outlook (WEO) scenarios, is expected to grow between 30-36% by 2030 compared to 2020. However, energy demand is expected to rise due to population and economic growth and increased access to energy. According to the 2022 Renewables Global Status Report, investment in renewable energy and fuels rose for the fourth consecutive year, reaching USD 366 billion, and a record increase in global electricity generation led to solar and wind power providing more than 10% of the world’s electricity for the first time ever. ![]()
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