Veteran bankers who have advised on mega-deals in the oil and gas industries are beginning to take on roles as consultants on mergers and acquisitions in the renewables sector, as the global energy industry shifts its emphasis away from fossil fuels and toward low-carbon enterprises, Oilprice.com writes.
Because of the worldwide drive toward cleaner energy and net-zero emissions, bankers have also found themselves in a type of transition quandary.
Some have transitioned from advising oil and gas companies on multi-billion-dollar transactions to collaborating with consumers on smaller-scale renewables transactions.
However, although the entire value of transactions in the clean energy sector has increased significantly in recent years, it remains a small percentage of the total value of transactions in the oil and gas business. On the other hand, according to bankers, the rising trend toward net-zero emissions and environmental, social, and governance (ESG) tendencies will result in much more work for bankers in renewables in the future decades, while the field and breadth of work in fossil fuels will diminish.
The field of conventional oil and gas will necessarily contract over time as the world moves toward net zero, according to Ralph Ibendahl, Managing Director and Head, EMEA Energy Transition at RBC Capital Markets, in a statement for Reuters.
In spite of the fact that Europe has seen a surge in renewable capacity installations in recent years, and that renewable power in the EU will surpass electricity generated from fossil fuels for the first time in 2020, Ibendahl predicted that Europe will still require significant clean energy capacity.
In the future decades, the renewable energy industry will be shaped by a large amount of money, private investment, and acquisitions of start-up companies. In order for the world to have any hope of attaining net-zero emissions, forecasts predict that investments in renewable energy would need to more than treble by 2050.
According to statistics from Refinitiv, the number of mergers and acquisitions (M&A) in the renewables industry increased by more than 11 times last year when compared to the same period five years before.
At the same time, the total value of all oil and gas transactions completed throughout the globe last year was 10 times more than the total value of all renewables transactions. According to the statistics, oil and gas transactions reached $290 billion, which was 10 times the amount of renewable energy sales.