Private players have a crucial role to play in building up global energy infrastructure: In his annual letter toshareholders last week, BlackRock boss and markets sage Larry Fink made the case that private investment into infrastructure, and especially energy infrastructure, is becoming increasingly important — if not essential — as governments around the world try to balance growing public debt while still investing in infrastructure.

Globally, the demand for infrastructure is growing: “As countries decarbonize and digitize their economies, they’re supercharging demand for all sorts of infrastructure, from telecom networks to new ways to generate power,” the BlackRock boss writes. Fink explained how this is also driven by people in poorer countries getting richer and “boosting demand for everything from energy to transportation” and governments in richer countries needing to embark on new infrastructure projects and repair aging infrastructure.

And one sector in particular sticks out, according to Fink: Within the USD 1 tn infrastructure sector, BlackRock’s opinion is that “the greatest demand for new investment is energy infrastructure.” Fink adds that in his nearly 50 years in finance, he has “never seen more demand for energy infrastructure.”

This is being driven by a global transition to green energy: The green transition is a “major economic trend being driven by nations representing 90% of the world’s GDP,” Fink points out. Wind and solar power are now cheaper than their fossil fuel counterparts in some countries, leading to a swell of investment in green energy infrastructure, and with this comes a shake up of the markets, with new risks and potentials for investors, Fink argues.

But, a growing concern for energy security is pushing countries to be “energy pragmatists”: Russia’s invasion of the Ukraine in 2022 caused an upheaval in the global supply of oil and gas that led to soaring energy bills that end consumers and subsidizing states struggled to pay for. Fink describes a new approach that he is increasingly hearing from policymakers — that he dubs energy pragmatism — as states invest in both renewables and more traditional hydrocarbons as countries “transition to lower-carbon sources of power while also achieving energy security.”

Egyptian policymakers seem to be of the same opinion: Although Egypt is planning to up its renewables mix from 10% currently, to 42% by 2030 and 60% by 2040, and has plenty of green energy projects in the works to help realize this, fresh investments in oil and gas are also part of the plan. The state is planning to double oil and gas exports to USD 36 bn by 2030 and has been working towards this by awarding new concessions to oil and gas companies and courting foreign investments.

States have an appetite for energy investments, but not the financial means to pay for it: Fink points out that “public debt has tripled since the mid-1970s” and reached 92% of global GDP in 2022. With countries — even rich and powerful ones like the US — facing growing and potentially dangerous debt burdens, many can no longer afford to fund infrastructure projects entirely through public debt.

But, Fink thinks he has a solution: Fink sees infrastructure projects in the future being built with both private and public funds from companies and government bodies in public-private partnerships because for the government to foot the bill alone, “the debt is just too high.”

We should also look to capital markets, which “can help countries meet their energy goals, including decarbonization, in an affordable way,” Fink argues.

Private investment can also help support a more equitable green transition: On the consumer and state level, choosing to live a greener life can be expensive and this is not a luxury everyone can afford to take. Whether it’s the decision on a consumer level to buy an EV or on a government level to ditch coal-powered stations for greener alternatives, “private investment can help energy companies reduce the cost of their innovations and scale them around the world,” Fink argues.

Your top infrastructure stories for the week:

  • Our industrial zones are a big hit with foreign investors: Egypt signed threeseparate industrial investment agreements with companies from China, Poland, and France collectively worth USD 353 mn for projects to be implemented in the country’s industrial zones.
  • Ades Holding to up its oil output in Egypt: Oil and gas drilling company Ades Holding will work to boost oil production at two brownfields in Egypt after landing a ten-year service agreement.
  • Orascom Industrial Parks to develop EGP 13 bn industrial complex: Orascom Construction subsidiary Orascom Industrial Parks received approval from the SCZone’s general authority to develop and manage a EGP 13 bn integrated industrial complex in the Sokhna Industrial Zone.
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