As the world steps up its efforts to tackle the climate crisis, UBS Global Wealth Management (UBS GWM) Chief Investment Office believes green energy, green manufacturing, green mobility, and green energy infrastructure are the four main investment themes.
“Global climate goals can only be reached with green technologies as an important enabler,” said UBS GWM Chief Investment Office in its latest report.
“While most of the technologies needed to achieve the required deep cuts in global emissions by 2030 already exist, the net‐zero emissions path in the following decades will rely on the widespread use of new technologies that are not commercially available or in use yet.”
The bank identifies five major opportunities within the next five years: clean energy, energy efficiency and digitalisation, electrification and batteries, bioenergy, and green financing.
Given that clean energy is essential to producing low-emission fuels such as green hydrogen, the International Energy Agency expects 90% of electricity will be generated from renewable sources by 2050, the Swiss bank said, and investing in power generation and grids would be beneficial.
On the other hand, energy efficiency measures in industry, buildings, appliances, and transport are expected to be crucial to curb emissions until other new technologies have a more meaningful impact, said UBS GWM.
With the increasing popularity of electric vehicles, the firm believes that lithium batteries will remain dominant over biofuels and hydrogen-powered fuel cells due to a superior low-cost position and first-mover advantage.
Over the longer term, the wealth manager has preferences for hydrogen and carbon capture, utilisation, and storage.
Sustainability risks
Alongside these opportunities, UBS GWM also reminded investors of the potential disruptions and risks as the world undergoes this transformation.
As demands for energy and electricity grow, it also means reliability and power generation costs will be critical considerations going forward, especially in regions of the world with less favourable renewable economics.
The bank also noted that energy shortages or rapidly rising costs could slow down the energy transition, while some regions may choose to prioritise economic development over sustainability concerns.
The mining process of raw materials necessary for green technology, such as lithium and copper, also raise several sustainability considerations. The process to extract lithium is water-intensive, while there are also human rights concerns over unpaid child labour and serious workplace safety violations in mines, said UBS GWM.
