The rocky road to net zero - Newton Investment Management

Newton Investment Management assess how the pandemic has sharpened the focus of energy companies on the low-carbon energy transition.

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Key points :
  • The impact of the pandemic on the oil sector was unprecedented, with oil demand collapsing in 2020 in the wake of global travel bans.
  • Newton Investment Management witnessed a change in mindset, with energy-company management, especially in Europe, committing to energy-reduction targets and increasing spending on renewables and the energy transition.
  • They are seeing some companies looking to spin off separate energy-transition businesses, while others firmly believe greatest value lies in continued integration.
  • They believe more than renewable power alone will be required to achieve net-zero status: capture solutions, natural sinks, efficiency solutions and renewable fuels such as hydrogen all have a part to play. It is sometimes hard to remember what life was like before Covid-19. For over a year, many of us have converted our homes into personal offices, while our travel habits are a mere shadow of those in our pre-pandemic lives. It is also difficult to imagine another scenario that could have blurred the lines between work and personal life – and sent shockwaves across both – as much as COVID-19 has done. But the pandemic has had a profound impact on the energy sector too, sharpening the focus on the low-carbon energy transmission.

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