{"id":618145,"date":"2024-04-03T00:00:00","date_gmt":"2024-04-03T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/egypt\/hardhats\/larry-fink-on-why-the-future-of-energy-infrastructure-will-be-achieved-through-public-private-partnerships\/"},"modified":"2024-04-03T00:00:00","modified_gmt":"2024-04-03T00:00:00","slug":"larry-fink-on-why-the-future-of-energy-infrastructure-will-be-achieved-through-public-private-partnerships","status":"publish","type":"hardhat","link":"https:\/\/enterpriseam.com\/egypt\/hardhats\/larry-fink-on-why-the-future-of-energy-infrastructure-will-be-achieved-through-public-private-partnerships\/","title":{"rendered":"Larry Fink on why the future of energy infrastructure will be achieved through public-private partnerships"},"content":{"rendered":"

Private players have a crucial role to play in building up global energy infrastructure:<\/strong> In his annual letter to<\/a>shareholders<\/a> 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 \u2014 if not essential \u2014 as governments around the world try to balance growing public debt while still investing in infrastructure. <\/p>\n

Globally, the demand for infrastructure is growing:<\/strong> \u201cAs countries decarbonize and digitize their economies, they\u2019re supercharging demand for all sorts of infrastructure, from telecom networks to new ways to generate power,\u201d the BlackRock boss writes. Fink explained how this is also driven by people in poorer countries getting richer and \u201cboosting demand for everything from energy to transportation\u201d and governments in richer countries needing to embark on new infrastructure projects and repair aging infrastructure.<\/p>\n

And one sector in particular sticks out, according to Fink: <\/strong>Within the USD 1 tn infrastructure sector, BlackRock\u2019s opinion is that \u201cthe greatest demand for new investment is energy infrastructure.\u201d Fink adds that in his nearly 50 years in finance, he has \u201cnever seen more demand for energy infrastructure.\u201d <\/p>\n

This is being driven by a global transition to green energy: <\/strong>The green transition is a \u201cmajor economic trend being driven by nations representing 90% of the world\u2019s GDP,\u201d 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.<\/p>\n

But, a growing concern for energy security is pushing countries to be \u201cenergy<\/strong> pragmatists\u201d: <\/strong>Russia\u2019s 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 \u2014 that he dubs energy pragmatism \u2014 as states invest in both renewables and more traditional hydrocarbons as countries \u201ctransition to lower-carbon sources of power while also achieving energy security.\u201d<\/p>\n

Egyptian policymakers seem to be of the same opinion: <\/strong>Although Egypt is planning to up its renewables mix from 10% currently, to 42% by 2030<\/a> and 60% by 2040<\/a>, 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<\/a> to oil and gas companies and courting<\/a> foreign investments.<\/p>\n

States have an appetite for energy investments, but not the financial means to pay for it: <\/font><\/strong>Fink points out that \u201cpublic debt has tripled since the mid-1970s\u201d and reached 92% of global GDP in 2022. With countries \u2014 even rich and powerful ones like the US \u2014 facing growing and potentially dangerous debt burdens, many can no longer afford to fund infrastructure projects entirely through public debt.<\/p>\n

But, Fink thinks he has a solution: <\/strong>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, \u201cthe debt is just too high.\u201d<\/p>\n

We should also look to capital markets<\/strong>, which \u201ccan help countries meet their energy goals, including decarbonization, in an affordable way,\u201d Fink argues.<\/p>\n

Private investment can also help support a more equitable green transition<\/strong>:<\/b> <\/strong>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, \u201cprivate investment can help energy companies reduce the cost of their innovations and scale them around the world,\u201d Fink argues.<\/p>\n

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