Della Vigna doesn’t expect to see a decline in renewable investment, even if more is spent on oil and gas. That’s as the extra cost of capital for high-carbon energy has risen to 15 percentage points over the past half decade, he estimates.
“Higher hydrocarbon prices and capital cost advantage are accelerating the pace of developments of renewable energy,” he said. “But on the other side, we’ve seen people putting more money into oil and gas. The reason why this is important is because as much as we want cleaner energy, we still need oil and gas as a backup, especially for seasonal demand. That’s why the broader energy spending will need to go higher.”
According to Goldman’s estimates, Europe will rely on natural gas for another two decades.
This article was provided by Bloomberg News.