Climate solutions generated USD 1 trillion in revenue last year
Reflections from our Research Director, James Leaton:
Having just returned from the UN PRI in Person conference in Toronto, it is clear that most investors continue to be occupied by how they position their portfolios for the energy transition. SDI AOP and BCI hosted a discussion with a mix of asset owners and managers who are exploring how they can get exposure to the opportunities around climate solutions.
Recent analysis of the products and services identified in the SDI revenue data shows that climate solutions now contribute around USD 1 trillion in revenue per year. This includes the broader value chain and direct enablers related to energy technologies that people are seeking to understand. Our application of AI allows us to identify renewables components and emerging technologies in places others cannot reach. This holistic view transcends traditional sector labels and provides transparency on the information sources.
Distribution of USD 1 trillion in climate solutions revenues across products/services
Note: Based on most recent annual reported figures for the SDI universe of c10,000 public markets entities. Revenues associated with utilities and renewable generation not included.
The type of revenues identified include:
- Electric vehicles along with batteries, components and critical minerals required to produce them.
- Renewables components such as photovoltaic film, wind turbine blades, hydro equipment.
- Infrastructure related services such as design, construction, energy storage, smart grid technologies.
- Alternative technologies relating to energy efficiency, Hydrogen, heat pumps and biofuel.
There is always a debate around whether policy or technology comes first. I like the analogy that they are 2 legs on the same person, and they step in turn to move forward, jointly providing support. Discussions in the North American context have the backdrop of the US Inflation Reduction Act (IRA) passed two years ago which very closely maps to the technologies identified above. Analysis by MIT/Rhodium Group quantifies the investment in these technologies in the first 2 years of the IRA at 71% higher than the preceding two years, totalling US3billion. This demonstrates how regional policy can combine with global cost reductions to stimulate growth.
The technologies we include in our analysis are driven by the research done by SDI AOP’s founding asset owners and shared by our community of users. This enables us to get ahead of future revenue streams and ensure we are tracking a range of technologies. If you are interested in finding out more about how SDI can help you identify opportunities around climate solutions, please get in touch
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