San Lie: Bright spots after hottest year on record
San Lie: Bright spots after hottest year on record
This column was originally written in Dutch. This is an English translation.
By San Lie, Director of ASN Impact Investors
One thing is certain: 2025 will be a year full of change. Across the board, it does not look pretty. But we should not hang our heads too much. We must keep looking for bright spots. Because they are there.
I try to look mainly at positive changes, because they are there. From companies, from investors and from consumers, because they - and all of us - are the deciding factor in breaking with negative trends.
Regarding the latter, the balance sheet for 2024 was sad. On average, for the first time, global temperatures were more than 1.5 degrees higher than in the pre-industrial era. That is exactly the temperature rise from the Paris Climate Agreement, the limit we set to contain global warming. For the record, the 1.6 degree recorded last year is not ‘final’ until it is measured over a series of years. So there is still time for change.
More renewable energy than fossil
Positive change, then, preferably, and there are happy bright spots. Indeed, 2024 was also the year when, for the first time, more than half of all electricity generated in the Netherlands came from renewable sources. Whereas in 2023 the ratio was just fifty-fifty, last year an average of 54% of power was green, with a peak of 68% in the month of April. A telling tipping point.
Much more importantly, it is also a signal that we need to start investing seriously this year in how we distribute and harness all that renewable energy. That's what I talked about in an earlier column, the so-called second phase of the energy transition.
Infrastructure needs to shake up
If the Netherlands had invested more in options to store energy, for instance in batteries or hydrogen, the share of green power in the energy mix could have been even 2.5% higher, according to the National Climate Platform.
The variable nature of green power and the full use of supply requires a drastic redesign of our infrastructure, with more flexible, smarter power grids, more local storage options and the use of (green) hydrogen as an energy carrier. In 2024, a total of over 3 terawatt hours of electricity was lost due to plants being turned off, three times more than in 2023.
Task for investors
All this implies an urgent task for society, with good opportunities for investors. If they select the best propositions, tailored to local needs, they put money into future-proof projects with predictable, long-term returns.
Attractive investments in the second phase of the energy transition will find them not only in the supply or distribution of renewable energy, but also around the demand for it. That includes industrial companies electrifying their processes to ensure they remain successful in a sustainable future.
The demand side of the energy transition
While The Hague negotiates support for the very largest CO2 emitters in the Dutch business world, most are working on their own transition plans. The business case underneath often requires substantial investments, for which companies will undoubtedly call on the market. Indeed, the same investors who can also drive the energy transition engine on the demand side.
Let us hope that by 2025, we will be up to speed in the second transition phase. Because, 2024 also taught us that, only if we ensure sufficient, clean, affordable and reliable energy can we stop the creeping de-industrialisation that has been going on for some time. Then we will keep the companies with a future, contributing to prosperity and innovation in an independent and sustainable Europe.
That seems like a positive change.