WG-REQ-1670 FIS Horizons 2025 STAGE 1 AH - copy - Flipbook - Page 18
18
Hogan Lovells
Energy transition
and sustainable
finance
At its core, energy transition involves a fundamental shift from
using fossil fuels, such as coal, oil, and natural gas for energy
production, to renewable energy sources like solar, wind, and
hydropower. By increasing energy efficiency in manufacturing,
industry and products, and replacing fossil fuel-based energy
sources with cleaner alternatives, we can significantly reduce
global carbon emissions to mitigate the effects of climate change.
Investment in energy transition already forms a large part of the global
economy and the International Energy Authority (IEA) has found a recent
significant acceleration in investment in energy transition assets, rising
from about US$1.2 trillion in 2020 to over US$2 trillion in 2024. We expect
increased investment in a broad range of energy transition sectors in
2025, including renewable and cleaner energy sources, energy storage/
grids, digitalization/automation/data, infrastructure, critical minerals,
transportation, battery recycling and carbon capture/storage.
The need for capital to flow into relevant projects will only grow in 2025, as
global demand for energy continues to increase and climate change-related
considerations remain high on the agenda.
For example, the IEA estimates that Asia’s energy demand will increase by
more than 60% by 2040. With Asia accounting for about half of the world’s
carbon emissions, there is a need to transform Asia’s largely fossil-based
energy system into a low-carbon one to power its long-term economic
growth in a sustainable manner.
