Energy Transition Investment Outlook: Energy Sector Insights (KPMG Switzerland)

Summary

• 7 out of 10 energy industry respondents say that investment in energy transition assets is increasing rapidly, based on a survey of 1,400 senior executives from 36 countries and 11 sectors.p.3
• Over the past two years, 65 percent of energy respondents invested in energy efficiency technologies, 55 percent in renewable and low-carbon energy and 54 percent in energy storage and grid infrastructure.p.4
• 69 percent of energy respondents are still investing in fossil fuels.p.5
• Regulatory compliance (40%) and energy independence or security (36%) are the top reasons for investing in energy transition assets.p.10
• 68 percent believe government policy is critical to the profitability of energy transition investments, and 67 percent say an effective carbon tax system attracts investment.p.11
• Regulatory or policy risks (38%) are the top barrier to investment, ahead of technology performance uncertainty (35%) and market volatility (32%).p.12
• Partnerships with financial investors are the most common investment strategy (37%), followed by green bonds and sustainability-linked loans (30%).p.14

Key insights

1. East Asia (54 percent), Europe (51 percent) and North America (43 percent) are the top regions targeted for energy transition investment.p.7
2. Southeast Asia is expected to account for 25 percent of global energy demand over the next ten years.p.7
3. At COP29, developed countries tripled their public finance commitment for developing countries to US$300 billion per year by 2035, with a commitment to work towards US$1.3 trillion per year.p.8
4. 58 percent say government policy related to the energy transition creates unnecessary complications or risks, and 56 percent say it is too slow to adapt to market needs.p.11
5. Methane has a global warming potential more than 80 times higher than CO2 over 20 years, and companies are investing in leak detection and repair and gas capture.p.5
6. JSW Neo Energy announced the purchase of approximately 4.7GW of renewable energy assets from O2 Power on 27 December 2024.p.6
7. Over the next two years, executives expect renewable and low-carbon energy to be the most attractive asset type, cited by 37% of respondents.p.16
8. Public-private partnerships are used by 25% of energy companies investing in energy transition assets, and venture capital by 21%.p.14