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The Challenge to Investors

Climate Change and a Slower Energy Transition

Challenge Overview

In this video, Inigo Fraser-Jenkins discusses why climate change and a slower energy transition is one of the challenges identified in The Book 2025 Edition.

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      The ongoing energy transition has the potential to change the outlook for growth and inflation.

      We believe that the energy transition will take longer than investors currently assume. The political and social fallout from trying to change behavior enough to achieve net zero by 2050 will prove too challenging.

      It has also been accepted for a long time that emerging economies’ power demand would have to rise to improve the standard of living for the very poorest people. The hope was for some reduction in power demand for developed countries to counter that increase. However, the extra power demand from AI data centers will soon be equivalent to Japan’s total power usage.

      The consequences of this issue on economic growth will likely be much more uncertainty about growth rates. The impact on inflation is complicated, with arguments in either direction, but it seems reasonable that we’ll see a greater number of extreme weather events. This implies that inflation rates will vary much more than they have in the past, and investors models must account for this.

      Historical analysis does not guarantee future results.
      As of May 24, 2022
      Source: Intergovernmental Panel on Climate Change (IPCC), “Summary for Policymakers,” in Global Warming of 1.5°C, ed. Valérie Masson-Delmotte et al. (Cambridge University Press, 2018): 3-24; and AB

      What Is The Book?

      The Book is an annual collection of thought-provoking strategic research and thought leadership from AB’s Institutional Solutions team. With a long history of taking on asset owners’ most pressing issues, the team zeroes in on themes and trends that will shape the macro, market and investment-industry landscape over the medium to long term. The team have been publishing Books on the strategic outlook for a decade.
      LEARN MORE ABOUT THE BOOK

      Explore the 2025 Edition

       


      Webcast Replay: Exploring The Book 2025 Edition

      Recorded Tuesday 24 June

      Hear Inigo Fraser Jenkins and Alla Harmsworth as they discuss the five challenges identified in the latest edition of The Book, and the responses they are seeing for investors.

      LISTEN NOW

      Explore Other Challenges from The Book

      Debt Burdens

      The government debt burden across G7 economies has returned to its lofty heights at the end of WWII, mainly to keep consumers happy.

      The cost of servicing that debt is growing, and letting inflation run hotter might be the easiest political way out of the problem.

      EXPLORE TOPIC
      Artificial Intelligence

      It’s hoped that AI will unleash a wave of productivity to counter lower economic growth. But it also brings big questions, including what the future of democracy holds and the meaning of money. These types of risks don’t tend to show up in return forecasts.

      EXPLORE TOPIC
      Higher Inflation

      The future likely holds higher inflation, so investors will need to put more weight on maintaining purchasing power.

      This point is highly relevant, given questions about long-term public-debt sustainability and the temptation to use inflation as a relief valve.

      EXPLORE TOPIC
      Geopolitics

      Markets struggle to price the risks from geopolitics, adding another layer of uncertainty to investment plans. With geopolitical dynamics shifting, investors must take a broader view of potential future scenarios.

      EXPLORE TOPIC

      Questa è una comunicazione di marketing. Le presenti informazioni sono fornite da AllianceBernstein (Luxembourg) S.à r.l. Société à responsabilité limitée, R.C.S. Lussemburgo B 34 305, 2-4, rue Eugène Ruppert, L-2453 Lussemburgo. Autorizzata in Lussemburgo e regolamentata dalla Commission de Surveillance du Secteur Financier (CSSF). Vengono fornite unicamente a scopo informativo e non rappresentano una consulenza d’investimento né un invito all’acquisto di titoli o altri investimenti. I giudizi e le opinioni espressi sono basati sulle nostre previsioni interne e non vanno intesi come indicazioni della futura performance dei mercati. Il valore degli investimenti in qualsiasi fondo può diminuire o aumentare e un investitore può anche non riottenere l’intera somma investita. La performance passata non costituisce garanzia di risultati futuri.

      © 2025 AllianceBernstein L.P.