Focus on: In times when the energy issue came to a head
Large parts of Europe have long been dependent on Russian oil and gas for their energy consumption and despite large investments in renewable energy in recent years, the energy crisis shows that the world cannot do without fossil energy. Therefore, the energy issue today is both concrete and acute.
"There are two important areas associated with energy supply. One is that we need sufficiently low energy prices for the world to be able to develop economically and thus eliminate poverty. At the same time, we are in a climate crisis with extreme weather and an increase in average temperature. How to handle these areas, which, at least in the short term, seem to be in contrast to each other, requires answers that no one fully has yet," explains Jan Petersson, Senior Portfolio Manager at AP4.
If you look more closely at pricing in the energy sector, the companies that have had the most exposure to fossil fuels have been rewarded, as the leverage effect on these companies has naturally been greater. We believe that the world will not be able to manage its energy supply completely without fossil energy for the foreseeable future, and AP4 will therefore continue to selectively invest in the energy sector.
"We are looking for companies that actively participate in the climate transition through investments in renewable energy and new technologies that limit carbon dioxide emissions. As a result of high energy prices, we will have to live in the short term with the fact that coal will be used somewhat longer than previously expected. But not all clouds in the sky are dark. We are positive about the development in the United States, which together with China is the largest emitter of carbon dioxide in the world. The US has generally lagged behind Europe in the energy transition, but with the introduction of the "Inflation Reduction Act" in the US, which includes tax credits for environmentally beneficial investments, there has been a marked improvement, which hopefully motivates the rest of the world to follow suit."
"As an asset manager, it gives us opportunities to continue investing in companies that work with the energy transition in a responsible way," concludes Jan Petersson