Bill Rogers is the head of CPP Investments Sustainable Energies group
The energy transition is a defining test of our time—one that no single government, investor, or company can meet alone. Addressing surging global demand for energy while reducing emissions hinges on the expertise and creativity of players across the energy spectrum working as one united sector.
This is the dual challenge we face: accomplishing the global energy transition, whilst ensuring a reliable and affordable energy supply.
Global energy demand is projected to grow between 11% and 18% by 2050, according to McKinsey’s 2024 Global Energy Perspective, with much of that demand driven by urbanization and a growing middle class in developing economies and increasing electrification and data centre growth in developed economies. The picture is further complicated by the expectation that more coal assets will retire—some early—creating an even larger gap to be filled.
An undertaking of this scale requires a multiplicity of technologies, projects, and participants.
That’s why we created our Sustainable Energies group three years ago, bringing together previously disparate parts of our portfolio to invest in renewable energies, and to support the transition of conventional power assets. The group is an actively invested, globally diversified $30-billion portfolio of companies developing and operating renewable energy projects, including onshore and offshore wind, solar, geothermal and hydro as well as energy storage and several emerging and disruptive technologies. The portfolio also includes conventional power, upstream oil and gas, liquefied natural gas and carbon capture and storage projects.
In October, our second annual Sustainable Energies CEO Summit in Alberta brought together investors and energy experts from around the globe. At the event, leaders connected, learned from one another, and discussed the challenges and opportunities facing companies across the energy spectrum.
A shared concern among renewable and conventional energy players, is the impact of regulatory uncertainty and the increasing cost of advancing energy transition projects, from carbon capture to power transmission. Participants also noted the ripple effects of an uncertain geopolitical environment on both the supply chains and the adoption of some renewable technologies such as electric vehicles. Yet many expressed optimism that growing demand for power—including from data centres and electric mobility—could heighten support for reducing regulatory and other barriers to energy transition projects at scale.
So how is CPP Investments approaching the global energy transition? Our investment strategy has placed us at the forefront of the challenge. We believe supporting the global energy transition is integral to maximizing sustained long-term returns without incurring undue risk across our investments. We’re therefore investing in renewable power capacity globally and in companies advancing technologies aiming to reduce greenhouse gas emissions. Our investment strategy involves partnering with conventional energy players on their transition to lower-carbon business models. And it backs businesses that benefit from the decentralization, decarbonization, and digitalization of the power system.
Calls for divestment from fossil fuel companies have grown in recent years. Proponents say this approach would force a more rapid transition to a low-carbon economy. We believe supporting the comprehensive decarbonization of the real economy requires a different approach—one that supports capital market participants in financing their emissions reductions and investing in more efficient solutions. And we believe that blanket divestment from oil and gas is a bet against human ingenuity and could impact access to affordable, reliable energy in some markets. Moreover, shedding high emitters rather than working with them leaves the reduction or abatement of their carbon footprint to others, some of whom may not share the same mindset as it relates to the whole economy transition.
The challenge we face globally and as investors is significant, but the engagement and commitment demonstrated at the summit gives us reason for optimism. It also reinforces the need for an all-hands-on-deck approach.
Only through partnership and collaboration can we meet the moment.
Read more insights from the 2024 Sustainable Energies CEO Summit:
Road to Zero: Harvard Business School highlights CPP Investments’ Net Zero
In February 2022, CPP Investments committed to reaching net zero greenhouse gas emissions across its portfolio and operations by 2050.
In Conversation: John Graham and David Blood
CPP Investments' President & CEO discusses the net zero transition with Blood, a pioneer of sustainable investing.
The profits of purpose: How can we shift from corporate commitments to concrete
What we learned since COP26 two years ago: The financial sector cannot solve climate change alone – but can act as a key facilitator.