VP Bank : Renewable energies and a circular economy

A hybrid circular-economy/technological-innovation approach is being taken by Swiss start-up Enespa as well as the publicly traded Norwegian firm Quantafuel. Both have developed independently a process to convert plastic waste back into so-called oil fractions by means of thermolysis. Due to the lower weight of the resulting paraffin oil, about 1,000 litres of high-quality feedstock for the plastics industry are recovered from one tonne of plastic waste.

The "sharing industry," which facilitates the exchanged utilisation of goods or services, plays an important role in the circular economy. It is also urgently needed: according to the renowned Ellen MacArthur Foundation, the projected economic growth through 2050 will require natural resources in an amount equivalent to 1.6 times the Earth's capacity. The industrial extraction of raw materials has increased 13-fold in the past 70 years and is responsible for 90% of all environmental damage and water stress. Sharing has a long tradition; rural cooperatives are just one example. In today's world, many people have already had experience with providers such as Uber, Spotify or Airbnb, without ever having thought about becoming part of the industry themselves. The relentless advance digitalisation is increasing the efficiency and thus the acceptance of such services. The related apps bring together people with corresponding interests and make the interaction convenient and transparent. The five largest industry segments are accommodation, car hire, music/video, employment services and financial intermediation. Management consultants PricewaterhouseCoopers expect the market in these areas to grow to USD 335 billion by 2025, the same amount as the traditional temporary-use sector. In terms of Europe's circular economy, consulting firm McKinsey foresees annual productivity growth of 3% through 2030, which represents a value-creation potential of EUR 600 billion. And on another note, the Ellen MacArthur Foundation recognises in the food industry alone a global value creation potential of USD 2.7 trillion through 2050 thanks to the sustainable and circular management of large cities.

Summary

Renewable energies and the circular economy are means for reducing CO2 pollution and helping in the global effort to treat the environment, which has been severely damaged by industrialisation, more gently in the future. As a part of this, infrastructure builders/equippers and greentech companies, for example, will be creating jobs and enhancing productivity - a highly attractive combination in the eyes of the capital markets. The urgently needed measures require enormous investments on the part of governments, companies and private households. Investors can play a positive role in this regard and expect attractive returns for doing so.

Specifically, we have two suggestions on how these themes can be addressed via funds. Please contact your cliend advisor.