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Rethinking investments for a lower-carbon future

27 March 2025

 

As global leaders and major players from finance and industry descended on Davos-Klosters for the 55th edition of the World Economic Forum in January, there was a renewed focus on how innovation, finance and frontier technologies can help advance the energy transition and global development.

During the UN climate change conference Cop28 in the UAE in late 2023, the world achieved an historic milestone, reaching a consensus to accelerate the journey towards the 2050 Net Zero goals. In this pivotal moment, two targets were set: tripling renewable energy capacity and doubling energy efficiency by 2030. This vision, supported by a global commitment, set out a roadmap for a cleaner, more sustainable future.

While some progress has been made in accelerating the deployment of renewables and cleaner technologies, it was made clear at Cop29 – held in November 2024 in Baku, Azerbaijan – that much more needs to be done if the world is to realise the ambitions of the UAE consensus and reduce global warming.

Obstacles to net zero

The journey to net zero carbon emissions is marked by obstacles. Renewable sources like wind and solar face intermittency issues, relying on favorable weather and time-of-day conditions, and require firm, dispatchable solutions for a stable power supply. Land availability is also a growing constraint, especially as demand for solar and wind installations increases.

Some countries struggle with transmission bottlenecks, where outdated infrastructure lags behind the expansion of renewable capacity. Additionally, the shift to electric vehicles (EVs) is progressing more slowly than expected due to infrastructure, cost and supply chain hurdles.

Further complicating the path are hard-to-abate sectors like cement, urea and steel, which lack scalable, cost-effective decarbonisation solutions but are essential to modern economies. Addressing emissions in these industries requires new technologies, policy support and targeted investments.

Overcoming challenges

For global investors such as UAE sovereign wealth fund Mubadala, these challenges present an opportunity to build a resilient portfolio of infrastructure assets that address core energy transition bottlenecks. By supporting projects that tackle intermittency, enhance grid capacity and advance electrification – as well as solutions for industrial emissions – Mubadala aims to play a key role in driving sustainable progress.

In 2022, Mubadala invested in Tata Renewables, one of India’s largest renewable energy players, which is pioneering solutions through firm and dispatchable renewable energy projects. By integrating solar, wind and battery storage, Tata Renewables provides round-the-clock renewable power, reducing dependence on fossil fuels and stabilising the grid.

In 2024, Mubadala also invested in Asia Pacific clean energy investor PAG Renewables, which is addressing land scarcity in Japan by repurposing under-utilised spaces for solar energy projects. This includes a landmark solar power project on a former golf course in Western Japan, which will deliver clean energy through a 30-year corporate power agreement.

Decarbonising industry

Decarbonising energy-intensive industries is vital if countries around the world are to achieve net zero. Mubadala’s investment in Perdaman’s fertiliser project in Western Australia exemplifies the company's commitment to decarbonising hard-to-abate sectors. This facility will utilise clean technologies like solar power and green hydrogen to reduce emissions, setting a new standard for sustainable fertiliser production.

Future of mobility

Decarbonising the way we travel will also be an important pillar of the global energy transition, with carbon dioxide emissions in the transport sector about 30% in developed countries and 23% in the case of total man-made emissions worldwide. This will not only require significant investment in new fuels for aviation and shipping, but also a large scale up in EVs and supporting infrastructure.

In 2023, Mubadala announced a strategic investment in Zenobe, a key player in fleet electrification and battery storage solutions, which is accelerating EV adoption by designing and operating specialised charging infrastructure for fleet operators. Zenobe's solutions are essential for efficient, reliable EV integration, supporting the broader shift towards decarbonised transportation.

Global collaboration

While significant strides are being made in the energy transition, much more is required to achieve the targets set at Cop28. Enablers like hydrogen and carbon capture will need stronger regulatory frameworks, financial incentives and infrastructure support. International collaboration between governments and the private sector is also imperative if climate change is to be successfully tackled.

Mubadala is proud to contribute to these critical developments, partnering countries and industry-leading companies to support innovative projects that address the most pressing challenges of our time and deliver a sustainable, low-carbon future.

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