A Global Challenge Needs a Bold Response: My Thoughts on Funding the Energy Transition

$35 trillion for global energy transition? In my view, that’s conservative.

Here is why. Despite reaching record levels of energy investment—$2.8 trillion in 2023—this is only a fraction of what’s needed. Even at $3 trillion annually, we’re looking at about $75 trillion by 2050—far short of what we require to build a resilient, climate-secure future.

In my estimation, we need to aim closer to $200 trillion by 2050.

Sector-by-Sector Breakdown: To limit global warming to 1.75°C, Bloomberg NEF outlines ambitious targets:

• Power: 93% reduction in emissions by 2035, with renewables tripling by 2030 and an 80% share of electricity by 2050.
• Transport: All new passenger vehicles to be electric by 2034 and a fully electric fleet by 2046.
• Hydrogen: A 4x increase to 400 million tons of clean hydrogen by 2050.

This scale-up demands action now. At Avaada, we’re making strides with solar, wind, storage, and hydrogen. But let’s be real—without regulatory support, low-cost financing, and supply chain development, progress will remain incremental.

The ESG Backlash: How We Can Respond

The ESG landscape is shifting. With ESG fund launches down and rising scrutiny around greenwashing, we’re seeing a new kind of skepticism around sustainable investments.

What’s driving the backlash?

• Financial & Political Concerns: Inflation, interest rates, and energy stock performance have all impacted ESG returns.
• Transparency Issues: Greenwashing has hurt investor trust, particularly in markets like Europe.

Our Solution at Avaada:

1. Showcase Performance: ESG-focused companies often outperform in the long run. We’re building a track record to demonstrate this.
2. Improve Transparency: With better reporting and clear metrics, we aim to enhance investor trust.
3. Engage Stakeholders: From customers to regulators, we foster trust by listening and adapting.
4. Focus on Education: ESG’s long-term value goes beyond labels, and we’re committed to showing stakeholders its positive impact.

Accelerating Private Sector Investment in Green Tech

To scale investments, policy reliability and streamlined support are essential. But we also need big ideas—think:

• Open-sourced tech: Standardized definitions for green tech like hydrogen can lower costs across regions.
• Global collaborations: Initiatives like “One Sun, One World, One Grid” could channel renewable energy from resource-rich areas to high-demand regions.
• Innovative financing: First-loss guarantees, fair PPP models, and carbon pricing can make private sector participation viable, especially for the Global South.

At Avaada, innovative financing and public-private partnerships have been key to our growth. By advancing international cooperation, especially through initiatives like the Paris Agreement's Article 6.2, we aim to make clean tech funding accessible to all.

The Path Forward for Hydrogen and the Power of Collaboration

Green hydrogen is a must for sectors that can’t rely on electrification alone, such as heavy industry, shipping, and aviation. Learning from solar’s rapid expansion, early incentives—such as feed-in tariffs—could similarly reduce costs for hydrogen.

At Avaada, we’re leveraging our renewable experience to accelerate green hydrogen adoption through strategic partnerships and innovative financing.

The energy transition requires both the agility of newer clean-energy companies and the scale of traditional energy players.

Let’s combine forces for the future we all need.