Marcus Björkstén’s thoughts on how governments are really picking up the pace regarding the energy transition

Sustainable Europe

2021-04-23

During the past weeks there has been some very important announcements regarding at what pace the CO2 reduction will take place. It seems the pace is even higher than has been anticipated and the bar is being set high. Governments are realizing that things need to change rather quickly and seem to be reacting accordingly.

The EU parliament and member states recently agreed on an actual law under which the bloc will cut its emissions by 55% by 2030. The previous target for the EU was 40%. The reference point is the emission levels from 1990. The EU parliament had pushed for an even more ambitious level, namely 60%.

The US in turn announced, just before the climate summit attended by 40 world leaders on the 22-23 of April, that they will cut emissions by 50-52% by 2030 compared to 2005 emission levels. Biden has earlier stated that electricity in the US will be 100% renewable by 2035 and that the US will be CO2 neutral by 2050. China in turn is sticking to being carbon neutral by 2060, at least so far. Meanwhile in the UK an announcement was recently made that they will cut emissions by 78% by 2035. Brazil announced it will reach its carbon neutrality 10 years earlier than previously communicated.

These targets and initiatives are very ambitious and are most likely very hard to achieve in full. However, it shows that governments around the world are taking these issues extremely seriously and really stepping up their game. It seems difficult to see that this massive energy transition will slow down, rather the opposite. It is likely we will see other countries “tightening” their schedule and showing even stronger dedication. Especially the strong actions taken by the US is likely to “force” others to join.

I have for a few years now seen these ambitious initiatives, and actions taken by governments to achieve them, as one of the absolute key drivers for creating growing and healthy markets for the companies the Fondita Sustainable Europe fund invests in. One could expect European companies that provide tools to reach these targets globally, to enjoy some tailwind in the coming decade.

 

Marcus Björkstén

Marcus Björkstén

Portfolio Manager for Fondita Sustainable Europe

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