Expanding Scope Brings Decarbonisation into Focus
Raj Shant shares his views on why the PGIM Jennison Carbon Solutions Equity strategy’s broad approach offers investors untapped opportunities.
Renewable power generation has grown significantly and has reached scale in many markets around the world. However, this expansion has not been matched in other areas of renewable infrastructure – like power storage and transmission. While energy demand is high and continues to grow, renewable energy supply remains limited and less economical in many areas. While numerous aspects of the energy transition remain unsettled and unclear, one thing is certain – it will take decades, and fossil fuels are not likely to be displaced altogether.
Jennison Associates’ Carbon Solutions Strategy seeks to invest in the decarbonisation mega them and capitalise on the trillions of dollars that need to be invested in order to re-engineer the economy and power’s infrastructure over the coming years.
There are some investors who have excluded any kind of fossil fuel companies from their portfolios; but the problem is that this approach treats all fossil fuels exactly the same. Indeed, when you look at where the carbon emissions of the world are coming from, coal is public enemy number one. But one could argue that you cannot ask countries, like India and China, who use much less energy per capita than Europe or the U.S., to forsake energy intensity because it involves more coal.
In this video, Jennison Associates’ Raj Shant argues that a gradual phase out of fossil fuels is a more pragmatic approach to reducing carbon emissions. By investing in the right kind of gas companies, coal’s importance in the global energy stack should diminish. In so doing, coal will start to become irrelevant to these nations, and gas will become the fuel that needs to be replaced. But by then, as Raj suggests, there may be more renewable energy infrastructure in place and far better battery technology, to smooth out the output from renewable energy.
Until that point comes, and that point is several years away at least, this approach should keep making progress towards the overall goal of decarbonisation. View the video in full, or read PGIM’s latest whitepaper, which outlines investing across the global energy landscape.
Raj Shant shares his views on why the PGIM Jennison Carbon Solutions Equity strategy’s broad approach offers investors untapped opportunities.
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