Utilico Emerging Markets Trust invests in the energy transition Megatrend and in this piece from Utilico (UEM) explored the decarbonisation challenge facing emerging markets.

The need for action and global warming has risen up the agenda, public and private funding for climate change initiatives now average 1.2 7 trillion US dollars in 2021/22.

Although large, this is $7 trillion, short and the climate finance required.

Those allocating capital to finance climate initiatives correspond with those areas who need to combat climate change most. For example, East Asia and the Pacific responsible for 39% of greenhouse gas emissions, and 60%.

For coal consumption accounted for almost half of global climate investments. Energy is essential for economic activity. And since the Industrial Revolution, our energy needs to been powered by carbon intensive fossil fuels.

Inevitably, as economies develop their consumption of oil, coal and gas increases, which is why China has become the largest consumer of energy in the world, and accounts for 55% of the world's coal consumption.

Whilst hitting Net Zero targets by 2050 may be possible for Western nations like the UK, hitting Net Zero remains a challenge for emerging market economies. Despite the considerable achievements made transitioning to renewables.

China also has the world's second largest population, and UTM is a measure of energy consumption will be on a per capita basis. As you can see, on this measure, China's similar to Europe on a per capita basis, the US is by far the most energy intensive country. These global energy trends are mirrored by co2 data, which as you can see demonstrate the clear link between energy consumption and carbon emissions. Emerging markets have invested significantly in renewable energy over the last 10 years, making enormous progress also from a lower base.

Read more on UEM here.