“Transitioning away from fossil fuels in energy systems”
Story of the month
The 28th Conference of the Parties on Climate Change (COP 28) was held from 30 November to 13 December in the United Arab Emirates. While the exercise is repeated every year, this editionwas particularly important, as the 197 participating countries took stock of the Paris Agreement (2015) and reaffirmed the objective of containing global warming within a range of 1.5 to 2°C. A number of important commitments were made (loss and damage funds, reduction of methane emissions, greater consideration of emissions from agriculture and livestock farming), but the most important element was the historic agreement on the transition away from fossil fuels in energy systems.
A STRONG SIGNAL ABOUT THE NEED TO MOVE AWAY FROM FOSSIL FUELS IN THE LONG TERM
“Transitioning away from fossil fuels in energy systems, in a just, orderly and equitable manner, accelerating action in this critical decade, so as to achievenetzeroby2050inkeepingwiththescience. “Extract from the final press release
With this sentence, the final agreement of this COP 28 is a major and historic turning point in the fight against global warming by putting oil, gas and coal on the same level (only the reduction of coal had been agreed at COP 26 in 2021) and by acknowledging the crucial importance of the coming decade to accelerate the reduction of greenhouse gas emissions. To comply with the Paris Agreement, these emissions will have to fall by 43% in 2030 and 60% in 2035 compared with 2019 levels.
This transition away from fossil fuels will be supported by :
- A target of tripling global renewable energy capacity by 2030, representing average annual growth of around 15%
- A target of doubling the annual rate of improvement in energy efficiency by 2030 (from the current 2% to 4%)
- Accelerating the development of zero or low- carbon technologies, including nuclear, carbon capture and storage, and low-carbon hydrogen production
- Phasing out inefficient fossil fuel subsidies that do not address energy poverty or just transitions.
This agreement therefore enshrines the role (already underway) of renewable energies and energy efficiency in decarbonisation, and should benefit the technologies highlighted in the net zero emission scenarios: solar, wind, batteries, heat pumps, electrification in industry and transport, and low-carbon hydrogen.
ODDO BHF GREEN PLANET IS WELL POSITIONED TO CAPTURE THESE GROWTH OPPORTUNITIES
As a reminder, the ODDO BHF Green Planet fund invests globally in companies whose business model makes a positive and significant contribution to the ecological transition. At the end of December, the fund had around 20% exposure to renewable energies, with companies such as Iberdrola in Europe and First Solar in the United States, and around 39% to energy efficiency solutions, with companies such as Saint-Gobain (France), Hitachi (Japan) and Eaton (United States).
None of the aforementioned companies constitutes an investment recommendation.
Past performance is not a reliable indication of future return and is not constant over time.