In a new report released this week, Goldman Sachs highlights that a move away from fossil fuels, and towards those four technologies, will provide more energy to a global supply while drastically reducing carbon emissions.

The report states: “We believe investors should focus on this set of front-runners with the potential to shift emission trajectories and reshape competitive dynamics on a five- to 10-year view.

“As they benefit from growing regulatory pressure and cost reductions, these technologies are taking market share in lighting, power generation, and autos. In the process they are not only delivering emission reductions at the Gigatonne scale, but also changing competitive dynamics, with ripple effects across our coverage.”

Collectively, these four technologies make up the bulk of potential low-carbon investment, which Goldman Sachs values at a total of $600bn a year.

The report forecasts a huge shift in investment of wind and solar within the next five years. By 2020, the two technologies could produce the oil equivalent of 6.2 million barrels each day, which Goldman Sachs states would create more global supply than American shale producers have since 2010.

The report also expects the four technologies to become mainstay power supplies across a variety of utilities. LED lighting, as well as power from solar and wind is expected to account for 69% of the global lighting market share by 2020 compared to 20% today. Electric vehicles will also see a rise of just under 20% by 2025 compared to its current market share of 3%.

Solar and wind installations are now worth $200bn a year while Goldman Sachs predicts electric vehicle sales growing from $12bn in 2015 to $88bn by 2020, and $244bn by 2025. As well as producing more energy, solar and wind could eliminate 5 gigatonnes of CO2 annually by 2025 as the countries attempt to get rising temperature levels down to the 2C ‘safe-zone’.

Green banking

Goldman Sachs report coincides with the news that many Wall Street banks are pledging to cut funds to the coal industry. Morgan Stanley (MS) and Wells Fargo (WFC) became the latest to withdraw from bankrolling coal industry products.

MS will decline any deal that involves new or expanded coal-fired power generation plans across developed countries unless there are procedures and technology in place to capture carbon emissions, a pledge that Goldman Sachs has also backed.

Overall, more than 70 financial institutions from across the globe have pledged to scale-up energy efficiency investments in an attempt to tackle climate change.

Last month, Goldman Sachs announced it will leverage $150bn into clean energy financing and investments by 2025 as it aims to become the first US investment bank to be carbon-neutral across its operations.

Goldman Sachs Report

Matt Mace

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