$1T opportunity in emerging markets' transition
Getting countries around the world on board with the energy transition is a $1 trillion opportunity, a new Moody's report found.
Why it matters: Navigating the transition in an equitable way is tricky when considering the risk exposure in some emerging markets.
Details: Moody's estimates that investors will need to deploy $1 trillion globally to finance the energy transition.
- A majority of that investment will come via debt financing and bond issuance, the report states.
- Lenders will need to hedge the increased risks that come with economies based on carbon-intensive industries like oil and gas or heavy construction.
State of play: That risk varies widely across emerging markets.
- That variation could set up an unequal rate of investment in countries that equally need the capital to transition away from carbon-emitting industries to other forms of energy.
- "Among emerging market issuers, Latin American electric utilities and Asia-Pacific refiners have the strongest positioning within their respective sectors," the report states.
The bottom line: No single country operates in a vacuum, and any delay in one country has global impact for mitigating the effects of climate change.