The Energy Sector: Recent Trends, Growth Areas and Challenges

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Introduction

  • The aftermath of the Ukraine conflict, escalating tensions in the Red Sea, and the resultant energy crisis underscore a notable shift in the global energy discourse. Key focal points now include energy affordability, security, the imperative for alternative sources, and sustainability and achieving a net-zero carbon future.
  • Opportunities for growth lie in Renewable and Nuclear Energy sources. The commitment to triple renewable power production and double energy efficiency by 2030[1], coupled with the potential decrease in interest rates, signals a pending growth phase.
  • Emerging and re-emerging clean energy sectors like hydrogen and nuclear power are two key areas poised for increased focus.
  • Midstream companies and construction/equipment firms specializing in energy sector infrastructure development are anticipated to benefit due to this energy transition period.
  • A substantial focus on ESG regulation in Europe, the United Kingdom, and the United States has centered around investment funds enhancing transparency and certainty by labelling their investment products as “sustainable” or “green” to counteract the growing trend of greenwashing[2]. These and other regulatory efforts underscore the tangible and impactful nature of ESG risks, which will play a crucial role in shaping investment decisions and assessing the creditworthiness and credit risk of entities operating in the energy development sector.

 

[1]      Source: UAE Consensus at COP28 in December 2023

[2]     Source: Global Greenwashing Regulations: How the World Is Cracking Down on Misleading Sustainability Claims (sustainalytics.com)

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The Energy Sector: Recent Trends, Growth Areas and Challenges

29 Feb 2024

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