How will USD 140tn of investment be allocated across the energy supply chain?

‘Energy Transition’ is the process of shifting the world’s energy system from one based on fossil fuels to one based on clean energy. There is no shortage of literature demonstrating that the world is not on track to meet the Paris climate goals, but one thing is clear – this energy transition is underway and gaining momentum. The world wants to get to net zero emissions, and we expect a significant shift in investments to retool the world's existing capital base to run on clean fuels. This report, the first of a series looking at the investment required to get the world to net zero, focuses on decarbonising the energy supply. We estimate that converting the energy system alone will require cumulative investment of $120-160 trillion between now and 2050.

Energy transition is also about providing energy security and access, and facilitating economic growth and development, while limiting the carbon emissions associated with these activities. This means that a successful energy transition will need to be driven by science and innovation, involve a variety of solutions developed by a broad coalition of public and private sectors, and overcome a host of technical, economic and political challenges. The impact on industry will be ubiquitous and profound. This report represents a collaboration involving over 20 UBS analysts across the globe, leveraging more than 60 UBS reports as well as expert interactions and UBS Evidence Lab datasets.

To achieve net zero, clean fuels will have to increase from the current 15% of total energy consumption to 55% or higher by 2050 or earlier. A switch to clean fuels will go a long way to reducing emissions, but difficult-to-decarbonise sectors are likely to continue to emit CO2 and consequently, will need a carbon-capture industry which is currently capturing only 0.01% of today's emissions. Using our interactive model, we can gain some insight into how much investment is needed to decarbonise the energy system, and how the investments could shift over the next 30 years.