This strategy will support fixed capital investment mechanisms, providing the necessary flexibility to invest in key transition and energy security issues.
More than half of the strategy will initially be dedicated to Europe and then diversified worldwide in the coming decades.
Today, BlackRock announced the launch of a perpetual infrastructure strategy focused on energy transition, aimed at partnering with long-term infrastructure companies.
Building on BlackRock’s infrastructure investment platform, this strategy will focus on sustainable investments in major infrastructure assets, seeking to generate sustainable and inflation-linked returns and boost the real economy. More than half of this strategy will first be deployed in Europe and then gradually diversified around the world over the next decades.
The global transition to a green economy is disrupting all areas of infrastructure and opening up attractive investment opportunities in several areas. This new strategy will promote investments that benefit from certain “megatrends” in the areas of energy transition and security. Investment topics include digital and collective infrastructure, sustainable transport and the circular economy. The strategy will focus on raising capital from companies such as electricity suppliers and renewable energy infrastructure players. It will also invest in assets such as green data centers, grid digitization technologies, battery energy storage systems, and natural gas storage and transmission infrastructure where they are adapted to incorporate hydrogen. Thanks to this investment, BlackRock will actively support the transition of companies to low-carbon business models.
“Convergence of investment topics in the field of infrastructure, on the one hand, and sustainability on the other, is, in our opinion, one of the greatest opportunities in the sector of alternative investments. In addition, recent developments have increased the focus on energy security and increased the need to invest in infrastructure, ”said Edwin Conway, global head of BlackRock Alternative Investors. “Private markets will continue to play a central role in the energy transition, and we are pleased to offer our customers a new strategy that will allow them to integrate the transition into their distributions, as well as facilitate the latter’s progress. . ”
It is estimated that $ 20,000 will be needed to reach net zero worldwide by 2050, of which more than $ 4,000 billion a year, compared to $ 1,000 billion a year today. In addition to financing the long-term transition, the issue of energy security arises in the short term, especially in Europe after the energy shocks caused by the war in Ukraine. According to the BlackRock Investment Institute, the gradual replacement of Russia’s energy sector will accelerate the transition to net zero emissions in Europe in the long run, but the trajectory of this transition will be more different globally.
“BlackRock is an active participant in the energy transition, and to date, more than $ 55 billion has been invested in our infrastructure strategies,” said Anne Valentine Andrews, global head of BlackRock Real Assets. “Our ability to bring together corporate, government and institutional clients gives us unique opportunities to capitalize from investors around the world into real assets that drive energy transition and have a positive social and economic impact on communities and the local economy.
BlackRock Alternative Investors offers a wide range of solutions in private markets designed to facilitate the energy transition. BlackRock’s first investment in renewable energy on behalf of its customers was a wind energy project in Europe in 2012. Since then, the $ 75 billion BlackRock Real Assets platform has evolved as market opportunities evolved through business areas such as Diversified Infrastructure and Climate. Infrastructure”. As such, BlackRock operates one of the world’s largest climate infrastructure platforms and invests in renewable energy in developed markets.
BlackRock has also recently worked with the governments of France, Germany and Japan, as well as several institutional investors and foundations, to create the Climate Finance Partnership, a blended financial instrument dedicated to climate infrastructure in emerging markets. Most recently, BlackRock established Decarbonization Partners, a partnership with Temasek that focuses on venture capital and growth capital in decarbonization solutions.
In addition, BlackRock has recently collaborated with companies and invested in projects that facilitate the energy transition. These include, but are not limited to:
- From a “joint venture” with KX Power, a British company that develops and operates battery storage systems;
- From investing in Kellas Midstream, an energy infrastructure company developing a large blue hydrogen project in the UK;
- From the signing of a memorandum of understanding with Aramco to exploring opportunities in future energy transition projects related to low-carbon energy infrastructure;
- Investment in Calisen, a leading owner and installer of smart meters, providing more than 20% of the UK’s gas demand;
- Investment in Ionity, Europe’s first high-capacity charging network. The investment will allow the company to more than quadruple the number of high-capacity charging points by 2025.
Under the new strategy, BlackRock intends to launch permanent capital investment mechanisms and will look for partners in the second half of 2022. Permanent capital structures will allow you to continuously attract and invest capital throughout the life of the strategy.