The world is in the grip of
an energy crisis.
Especially in Europe,
businesses and consumers
are struggling with energy prices
that have risen sharply since mid-2021.
The run-up in prices began
as the global economy
reopened from COVID lockdowns.
In 2022, Russia's near-cessation
of natural gas exports
to Europe caused a further spike,
triggering higher inflation,
weaker growth,
and greater deprivation.
In response, many countries are taking emergency steps,
such as unprecedented subsidies
and ramping up coal-fired production.
But what does this crisis mean for the transition
toward clean energy sources such as wind and solar?
At Citi Global Wealth Investments,
we see the case for moving toward renewable energy
as having become even more compelling.
Europe's dependence on Russian gas is undermining growth
while complicating its response to the war in Ukraine.
Generating cost-efficient clean energy locally
can help mitigate these vulnerabilities,
strengthening both economic and national security.
Above all, the transition is vital
to cutting the carbon emissions
that are contributing to climate change.
We therefore expect
an even greater drive
in Europe and beyond to move
toward renewable energy.
Over the coming few years, for example,
global renewable electricity
capacity is projected
to almost double from 2021 levels.
Amid this ongoing transition,
we believe there will be further opportunities
for investors.
Accelerating the transition
to clean energy
will involve a wide variety of companies.
These include specialists in
renewable energy technology,
energy storage, electric vehicles and heat pumps,
sustainable materials, and carbon capture.
Since 2021, the publicly traded
green infrastructure sector
has sold off, underperforming
infrastructure investments
more generally.
Looking further ahead, however,
we believe green
infrastructure can generate
portfolio returns as well as
sustainable power.
In the meantime, we recognize that liquid natural gas
can serve as a transition fuel.
New and existing supplies of this fossil fuel
will be key to helping meet European needs,
representing another kind of opportunity for investors.
In the long term, clean energy can be more secure energy.
Is your portfolio wired for the transition?