Transition assets offers investors the unique opportunity to gain attractive returns while contributing towards a more sustainable energy future. In this blog, we will cover how investing in oil and gas transition technologies can bridge the gap between traditional fossil fuels and renewable energies, what it is, and how it reduces existing carbon footprints – all whilst keeping profitability at its core.
Let’s take an insightful look into transitioning our resources today!
Oil & Gas Transition Assets
Transition assets, as defined by Jason Bordoff and Meghan O’Sullivan, point to oil and gas assets that must be operated, maintained, and even invested in before eventually being phased out. These assets will act as a bridge during this wait for renewable energy and other clean energy technologies to reach an adequate scale that meets global energy demands. However, it is critical to note that any premature exit of transition assets may cause significant price fluctuations that could potentially jeopardise both energy affordability and security concerns worldwide.
Listed below are three of the most common transition asset examples.
Carbon Capture and Storage Technologies
Carbon Capture and Storage (CCS) is an established technology that can potentially reduce global warming. Essentially, CCS captures carbon dioxide emissions from industries or power generation, transports it, and securely stores it underground. There are currently 194 large-scale facilities globally, with 30 in operation – a practice that began nearly five decades ago with the first operational US facility in 1972.
Renewable Natural Gas.
Renewable natural gas (RNG) is the future of transportation energy, providing a clean-burning alternative to traditional fuel sources. RNG is derived from biogas gathered by landfills, livestock operations and wastewater treatment plants, conditioned or upgraded to meet pipeline quality standards similar to conventional natural gas. Additionally, this advanced biofuel meets the stringent requirements under the EPA’s Renewable Fuel Standard program for environmental sustainability in transport fuels.
Green Hydrogen
Green hydrogen is becoming an increasingly attractive solution for storing and transporting renewable energy over great distances. Governments, industry leaders, and international organisations such as the United Nations recognise its potential to help achieve net zero emissions by 2050. The Green Hydrogen Catapult has followed suit with a bold increase in their green electrolyser goal, shifting it from 25 gigawatts to 45 gigawatts by 2027. Similarly, both the European Commission and UAE have set ambitious targets ahead of this date too.
Why Invest?
By investing in oil and gas transition assets, investors can benefit from attractive returns while contributing to a more sustainable energy future. From Carbon Capture & Storage (CCS) technologies to Renewable Natural Gas (RNG), Green Hydrogen, and beyond – there is immense potential for diversifying portfolios and driving long-term growth with the rising demand for low-carbon solutions. Not only does this approach make financial sense, but it also aligns perfectly with ESG considerations: enabling companies and individuals alike to work towards achieving net zero emissions by 2050 whilst generating profits along the way.
How to Invest in Oil & Gas Transition Assets?
With the growing demand for investments in oil and gas transition assets, investors have a range of pathways to choose from. One path is direct investing: allocating resources towards companies that specialise in oil and gas operations or infrastructure development – potentially allowing greater returns on investment due to the targeted strategy applied. Investing in ETFs with a diversified portfolio of companies focusing on the energy transition is another safe exploration avenue.
Alternatively, those looking for higher returns might consider investing in private equity funds specialised in low-carbon solutions. Although these may carry greater risk than individual stock picking, they could provide attractive yields over longer investment horizons.
Investing in the future doesn’t always have to come at a cost – staying informed can help investors stay at the top of the game and benefit from developments like venture capital or ESG sector changes, all while contributing towards global issues. Keep your finger on the pulse with today’s news updates and expert insights for an advantage that won’t weigh too heavily on profits.
