The Adviser Issue 12 | Page 43

MARKETS & INVESTING
Taken together , the three Ds are reshaping the investment landscape .
• Accelerating the energy transition : This new regime shift is likely to cause an acceleration in the energy transition , feeding the decarbonisation trend . Geopolitical tensions have accelerated the need for countries to end their dependence on traditional energy sources and strengthened their appetite to make real progress on the energy transition .
2 . Decarbonisation
As countries around the world accelerate their response to climate change , we are amid a transition from an overwhelming reliance on fossil fuels to greener energy sources . This energy transition will be expensive and drive inflationary tendencies , particularly given the amount of investment needed to bring innovation to scale . The shift to Net Zero emissions represents a new key structural trend for the global economy as it will require a radical change in the energy system and in other key sectors of the economy .
Key takeaways
• More change to come : Response to climate change has accelerated in recent years , but there is more change to come as economies face larger physical damages due to higher temperatures .
• Growing momentum to drive change : Policymakers around the world are using legislation , subsidies and taxes to force through change , with growing momentum towards carbon pricing .
• Geopolitical tensions : Geopolitical tensions have accelerated the need for countries to end their dependence on traditional energy sources and strengthen the appetite for action on the energy transition .
• Greenflation will complicate the energy transition : Key minerals like cobalt , nickel and graphite are needed for clean energy technologies . But the limited quantities of these
# 12 | Winter 2024 | 43