Investment giant BlackRock has outlined a number of key developments it expects to impact investment opportunities and risks related to the low-carbon transition in 2024, including falling battery prices, upcoming elections and rising physical climate risks, in a new report released by it insights and market commentary unit, BlackRock Investment Institute.
The new report follows BlackRock's identification of the low-carbon transition late last year as one of a few key "mega forces" expected to drive "massive investment opportunities" throughout 2024, highlighting specific areas related to infrastructure, including clean energy and electrification, with a “massive reallocation of capital” expected to be driven by the need to reconnect energy systems, as well as investment opportunities in climate resilience, or preparing for and adapting to climate hazards and rebuilding after related damage with the climate.
One of the key “potentially market-moving developments” highlighted by the new report includes the continued long-term reduction in battery prices, with factors including an 80% drop in lithium prices, intense competition and technological advances expected to drive higher prices. even more pronounced. polite. BlackRock notes the potential for lower battery prices to influence the final purchase prices of clean technologies such as grid energy storage systems and electric vehicles.
The report also records a series of elections in 2024, including in the US, the EU and India, the results of which have significant policy implications as governments often balance competing goals such as decarbonisation, energy security and affordability. energy, which will likely impact areas including cleaning technology, as well as “the low-carbon transition path more broadly.”
Additionally, the new report highlights the potential for physical damage resulting from extreme weather events – highlighting the World Meteorological Organization's record of 2023 as the hottest year on record – to drive increased interest in climate resilience as a new topic. of investment. Examples of areas of opportunity mentioned in the report include “early flood monitoring systems, air conditioning to deal with heat waves, or retrofitting buildings to better withstand extreme weather conditions.”
In the report, BlackRock said:
“Bottom line: We believe falling battery prices could boost the electric vehicle and energy storage industries this year. Much depends on the direction of global transition policy following key elections, as we assess transition-related investment opportunities and risks. As physical climate risks increase, we believe climate resilience could come to the fore as an investment theme.”
Click here to access the BlackRock Investment Institute report.
