Show Notes
Allowing capital flows consistent with a net zero and resilient global economy will require a transformation of the financial system. Since 2016, investments in decarbonisation have been growing at a rate of 5% per annum. At this rate, the 2050 net zero targets will be missed by 20 years. In this episode of The Next Five, we’re talking about financing the transition to net zero, how capital can be moved towards clean energy, and how industry and government need to collaborate for the world to hit climate goals. Tim Gould, Chief Energy Economist at the International Energy Agency explains where capital is flowing into the global energy market and how much needs to be going into clean energy transition investments to hit climate goals. Eirik Waerness, Senior Vice President, Chief Economist and Head of Global External Analysis at Equinor talks about the need for collaboration between industries and governments and offers a global solution to the carbon pricing debate. Nick Stansbury, Head of Climate Solutions at LGIM, also extols the importance of putting an effective price on carbon as well as calling for a smarter way of managing transition investing. Our sources for the show: FT Resources, Swiss Re, OBR, OECD, UK Government resources, European Council, US Treasury Department. This content is paid for by advertisers and is produced in partnership with the Financial Times' Commercial Department. Hosted on Acast. See acast.com/privacy for more information.
More from The Next Five
Throughout history, statecraft was defined by borders, battlelines, and territory. In the 20th century, global power shifted to financial capital and energy reserves. Today, with the digital revolution well underway, does real authority now belong to those who control our data and code?
Imagine it’s 2006, not 2026. You’re an automobile factory manager, looking at combustion engine vehicles moving through the assembly line. A sight that has been seen since the Model T Ford, a century earlier. Today, you’re still watching legacy internal combustion engines roll off one side but high-voltage battery packs drop into electric chassis on the other. Electric vehicles could account for just over a quarter of global new car sales this year and as much as half of light vehicles sold worldwide by 2035. 5 years ago, it was just 9%. Across the industry, the ground is shifting under automakers' feet. Yet the rumbling is being felt much more in some countries than others. The map of ICE (Internal Combustion Engine), EV and autonomous dominance is being rewritten.
Supply and demand. The foundational backbone of market economies. And we’re in the AI era, where demand and supply is being rewritten. Behind this AI revolution, sits a monumental physical buildout and energy demand. Globally, data centre power consumption will double by 2030 toward 945 terawatt-hours, consuming more power than the entire nation of Japan. In some regions the strain is already visible: data centres accounted for more than a fifth of Ireland's national electricity consumption in 2022 and predicted to reach nearly a third this year. Stateside, in 2023, when less powerful models existed, roughly a quarter of electricity use in the US state of Virginia was sucked up by data centres. And yet, McKinsey estimates that there will still be $7tn in global data-centre infrastructure investment by 2030. Then come the Hyperscalers, Alphabet, Amazon, Meta, Microsoft and Oracle who are expected to spend around $670bn on AI-related capital expenditure this year alone, and nearly $800bn next year. The nine largest AI companies have collectively forecast $4.1tn in capital expenditure through to 2030, a trillion dollars more than the total 2025 Capex of all US non-financial companies combined. So looking at systems being rewritten, are we witnessing the greatest industrial re-tooling in human history, or is it all too much to handle?
It’s Q3 2026, the systems that form the global economy are currently being rewritten by the digitally led, fourth industrial revolution and the geopolitical repositioning of power. You’re an investment banker, a portfolio manager or a retail investor looking at trading screens flash red and green. There’s a hive of activity. But what to make of it.The indicators continue to flash, but the signals are conflicting.
Sovereignty, by definition, is being updated. Sovereignty 2.0. Under geopolitical tensions, supply chain dependencies and competing regional regulations, the discussion around digital sovereignty is shaping where you're allowed to build, what models you’re allowed to train on, and who's allowed to see the results.