Investors should note the approaching tipping point for renewable energy
17.06.2019 15:06 - Schroder Investment Management (Switzerland) AG (LUX & CH)
Renewable energy may soon put downward, not upward, pressure on energy prices, prompting a much faster move away from fossil fuels.
The efforts to mitigate climate change may be approaching a tipping point. The wave of support for Green Party candidates in last month’s elections for the European Parliament prompted a plethora of articles highlighting the cost of dealing with climate change and the regressive implications for those on low incomes.
Subsidies to promote renewable energy are felt most acutely by the poorest in society, so the narrative goes. This is a very backward-looking view, largely based on assumptions that no longer stand up to scrutiny.
In the coming decade, we expect a wave of cheap renewable energy to put downward, not upward, pressure on energy prices This in turn will make electric vehicles (EVs) a more affordable option than their polluting combustion engine counterparts.
The common political narrative that a major initiative to tackle climate change is a liberal luxury is likely to be transformed. It will be replaced by a symbiotic set of social and economic policies that will accelerate the transformation away from fossil fuels.
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