Investing toward a net-zero energy system is a must

Zeroing out carbon dioxide (CO2) emissions from the global energy sector is not only possible, it is now a reality, given the road map provided by the International Energy Agency (IEA), according to Calvert Research and Management.

The company said it believed that security valuations across the global energy sector remained skewed by greenhouse gas externalities while the recent IEA report highlighted the growing investable opportunity inherent in the dichotomy between a current energy system and that the ystem needed to achieve global climate change ambitions.

“For Calvert, this approach confirms decades of ESG investment research,” John Miller and Cheryl Wilson, both ESG senior research analysts at Calvert Research and Management, said.

“It remains core to our ESG-centered investment outlook that the energy transition is happening, both along a faster overall timeline and at a faster velocity than currently reflected by the market.

“We believe that the regulatory and policy framework necessary to properly incentivise a road map similar to that presented by the IEA is likely - sooner or later - with the UN's COP26 this November serving as a near-term catalyst.”

Although, according to the IEA, current technologies achieved more than 80% of annual emissions savings needed to achieve interim 2030 objectives and nearly 50% of the total 2050 pathway target,

Calvert's ESG research identified that continued collaboration between companies and stakeholders is required to rapidly scale available zero emissions technologies.

Following this, the firm said it remained underweight heavy industries such as steel, chemicals, and cement --which together accounted for more than 20% of global greenhouse gas emissions -- owing to the unfavorable economics of zero emission feedstocks.

While electricity production and networks were identified as the winners in a decarbonized energy system, the IEA’s report also called for no new oil, gas, or coal field development beyond those already committed.