DeepSummary
The podcast episode discusses the 'brown to green' transition, which refers to the shift from a fossil fuel-based economy to a renewable energy-based, low-carbon economy. Olivia Markham, a portfolio manager at BlackRock, explains that this transition requires a significant amount of capital investment in areas like wind, solar, and electric vehicle infrastructure.
Markham highlights that the transition to a green economy will require more metals and materials, such as steel, copper, and rare earth elements, to build the necessary infrastructure. However, the production of these materials is often carbon-intensive, necessitating the development of greener production methods like green steel and circular economy practices.
Markham also discusses the investment opportunities in the low-carbon transition, emphasizing the need for companies with high-quality resources, growth potential, and credible plans to reduce their emissions intensity. She notes that site visits have shown her the ongoing changes and innovations in areas like mining and transportation to support the transition.
Key Episodes Takeaways
- The 'brown to green' transition involves shifting from a fossil fuel-based economy to a renewable energy-based, low-carbon economy.
- This transition requires significant capital investment, potentially in the tens of trillions of dollars, to build renewable energy infrastructure like wind and solar farms.
- More metals and materials, such as steel, copper, and rare earth elements, will be needed to construct this infrastructure, necessitating greener production methods.
- Companies with high-quality resources, growth potential, and credible emission reduction plans present investment opportunities in the low-carbon transition.
- Ongoing innovations in sectors like mining and transportation are supporting the transition to a greener economy.
- Recycling and circular economy practices will play a crucial role in meeting the material demands of the low-carbon transition.
- The transition is a gradual process that will take time, but governments, companies, and investors are increasingly channeling resources to support it.
- The low-carbon transition represents a structural shift in the evolving investment landscape, creating new opportunities and challenges.
Top Episodes Quotes
- “This terminology, in its basic form, it really involves moving from today's economy, which is based on fossil fuels. It's got high carbon emissions associated with it, and we're trying to move towards a green economy which has lower emissions associated with it.“ by Olivia Markham
- “If we can produce these materials in a lower carbon way, we're going to accelerate the transition overall and that's going to have a really big real world impact. Given that the materials sector accounts for around about 17% of global greenhouse emissions today, that real world impact is very significant.“ by Olivia Markham
- “What I always look for is companies that have got high quality resources, they've got growth optionality. Ideally they're being run by a management team with a proven track record of value creation and ideally an attractive valuation.“ by Olivia Markham
Entities
Company
Person
Episode Information
The Bid
BlackRock
2/16/24
The investment landscape surrounding the low carbon transition is poised for change and opportunity. Oscar Pulido explores the brown-to-green transition and the role of mining materials in the transition to a low carbon economy. Joined by Olivia Markham, a portfolio manager from BlackRock's Fundamental Equity Team, together they discuss the changes in the global economy, companies' approach to reducing carbon emissions, and the investment opportunities in the low carbon transition.
Sources:
IEA March 2023; World Resources Institute October 2023, BHP and FE analysis, Sept. 2023; BHP analysis, August 2023; Brown to Green Materials Whitepaper, BlackRock Sept 2023; New Energy Outlook 2022, Bloomberg NEF 2022; Tracking The Low Carbon Transition, BlackRock, July 2023
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