Global energy transition will require $4 trillion annually by next decade, BlackRock says

BlackRock estimates that the world's green energy transition will require $4 trillion annually by the mid-2030s, calling for more public-private partnerships, especially in Asia-Pacific.

The forecast comes from BlackRock's latest "Investment Institute Transition Scenario," which analyzes how the low-carbon transition is most likely to play out and its potential impact on portfolios. 

The $4 trillion figure is double previous expectations of $2 trillion annually, and will require increases in both public and private sector capital, according to Michael Dennis, head of APAC Alternatives Strategy & Capital Markets at BlackRock.

"APAC is really at the center of the energy investment opportunity, and we see this in multiple areas, both in developed markets and emerging markets," said Dennis, speaking at Singapore's annual Ecosperity Week last week.  

Last year, $1.8 trillion was invested into projects related to the energy transition, up from $33 billion in 2004 with about $19 trillion invested to date, according to data compiled by BlackRock. 

"That rate of growth and the amount of capital being invested is in the right direction," said Dennis, who is responsible for BlackRock's alternatives business in the region, including across infrastructure, hedge funds and private equity.

"However, while the investment has grown, there's still an $18 trillion gap to get to where we need to by 2030," he added.

The capital gap exists across different risk classes: from low risk investments in core energy infrastructure, to higher risk endeavors like late stage venture capital and private equity.   

According to Dennis, the funds to meet this gap are out there.

A BlackRock survey of 200 institutional investors last year found that 56% plan to