The energy transition – resetting investors’ expectations for equity value
Opportunities and risk for investors in the energy transition are driven by increased energy demand, a changing energy mix and the need for energy-efficient solutions to address climate change.
With 36% of demand for crude oil today coming from light-duty vehicles and other vehicle categories susceptible to electrification, and a further 5% from power generation, the oil industry has never before in its history faced the kind of threat that renewable electricity in tandem with electric vehicles poses to its business model: this is a competing energy source that:
- has a short-run marginal cost of zero
- is much cleaner environmentally
- is much easier to transport
- could readily replace up to 40% of global oil demand if it had the necessary scale.
As this infographic illustrates, if we were building out the global energy system from scratch today, the economics alone would dictate that at a minimum, the road-transportation infrastructure would be built up around electric vehicles powered by wind and solar-generated electricity.
In our view , the economics of oil for petrol and diesel vehicles versus wind and solar-powered electric vehicles are now in relentless and irreversible decline, with far-reaching implications for policymakers, the oil majors and investors.
 Click here to read our research paper on the topic: Wells, Wires, and Wheels – EROCI and the Tough Road Ahead for Oil
This article appeared in The Intelligence Report – 18 September 2019
The transition to a global sustainable finance system is gaining pace. Speaking at the first PRI Sustainable Finance Policy Conference in September, BNP Paribas Asset Management CEO Frédéric Janbon explained that while sustainable finance is moving up the agenda for policymakers, regulators and investors, much work remains to be done. We set out the key points in this edition of The Intelligence Report.
Investing in businesses that are active in (the transition towards) the circular economy can pay off in the long term. Sébastien Soleille, head of the energy transition at BNP Paribas, and Bertrand Alfandari, ETF & Index Solutions, BNP Paribas Asset Management, explain in this edition of The Intelligence Report.
“We need to accelerate the rate of change... move to radical change, and fundamentally revisit the way we think about risks and opportunities” - “PRI in Person” conference attendee
Here’s reflation, well, for now
Recent geopolitical news has caused financial markets to trade in a reflationary fashion, shrugging off weak data and concern over structural Sino-US tensions, even if the economic slowdown may evoke memories of Q4 2018. Are the similarities actually there?, we ask in this issue of The Intelligence Report .