Global businesses push forward on energy transition with refined investment criteria amid strategy-aligned selectivity

• Shifting investment focus – 87% of respondents have changed their investment strategy in the past 12 months, as businesses closely examine the appeal of competing clean energy projects.
• Continued internal pressure – the greatest pressure to cut emissions is coming from corporate boards and competitor activity, a common theme over the past five years of Ashurst’s research.
• Sustained investment in renewables – 77% of senior business leaders see renewable energy investment as crucial for strategic growth.
• Ongoing appetite for solar investment – solar has remained the most popular renewable energy source to invest in over the past five-year period.
• P2X technologies generating interest – 80% of respondents plan to increase investment in P2X over the next five years.

Businesses are increasingly factoring cost-competitiveness and overall investor returns into their decision-making as they push forward with their energy transition investments, according to new research by global law firm Ashurst. As businesses continuously update strategies at what is a pivotal juncture of the global transition movement, businesses must evaluate a broader range of factors to support energy transition investments.

The report, Powering Change: A New Era for the Energy Transition, is now in its fifth year and captures the views of nearly 2,000 business leaders from across the G20 economies. This year's report also analyses trended data from the past five years of its energy transition research, revealing how attitudes towards the global transition to cleaner energy have evolved since 2019.

Although corporates remain committed to driving change, they are taking a more considered approach to energy transition investments. The vast majority (87%) of respondents said their investment strategy has changed in response to the energy transition over the last 12 months. The shifting attitudes can be explained by business leaders refining investment criteria, while also balancing parallel challenges, such as geopolitical tensions and energy security.

Investment sentiment for renewables remains strong. This year, over three quarters (77%) of respondents viewed renewable energy investment as essential to their strategic growth, with solar remaining the most popular renewable energy source to invest in over the five-year period, rising from 52% in 2019 to 59% today. The overall success of solar can be seen as an example of how original government support can help growth and lead to a reduction in real costs of technology.

In this context, the responses suggested that many businesses are eyeing Power-to-X (P2X) technologies as one potential route to realising at least part of their transition plan ambitions. Corporates have real confidence: 80% of respondents plan to increase investment in P2X over the next five years. However, key challenges identified by respondents included cost of technology (56%), integration with renewable energy sources (49%) and transportation and storage (48%). As businesses assess the viability of projects, regulatory certainty, a more developed subsidy regime and significant investment will be essential for realising the potential of P2X technologies.

Michael Burns, Global Co-Head of Energy at Ashurst, said: "Businesses remain committed to clean energy, but as they respond and adapt to ever-evolving market conditions, they are continuing to strategically assess what their energy transition journey looks like. Inevitably, in some cases this may mean becoming more selective about clean energy investments. Navigating this next – and crucial – stage of the global energy transition will require a careful balance of aspiration with economic alignment."

Dan Brown, Global Co-Head of Energy at Ashurst, added: "At this critical point in the global energy transition, businesses are now examining the bigger picture once more, in order to take a larger leap forward. This approach will allow businesses to position themselves more confidently in the long-term. Increased scrutiny will be crucial for more clarity on investment plans, particularly in order to overcome the various obstacles which are currently slowing the implementation of the journey."

Read the full report.