As the world economy wakes back up, shortages and price spikes are affecting everything from the supply of Taiwanese chips to the cost of a French breakfast. As we explain this week, one kind of bottleneck deserves special attention: the supply-side problems, such as scarce metals and land constraints, that threaten to slow the green-energy boom. Far from being transitory, these bottlenecks risk becoming a recurring feature of the world economy for years to come because the shift to a cleaner energy system is still only in its infancy.
Governments must respond to these market signals, facilitating a huge private-sector investment boom over the next decade that increases capacity. If they don’t, they stand little chance of keeping their promises to reach “net-zero” emissions. Scientists and activists have worried about climate change for decades. Recently politicians have shown signs of more commitment: countries accounting for over 70% of world gdp and greenhouse gases now have targets for net-zero emissions, typically by 2050. And there has been a dramatic shift in the attitude of business.
Investors are demanding that firms change tack, spurred by the new reality that clean technologies are more cost-competitive. The giants of the fossil-fuel age, such as Volkswagen and ExxonMobil, are having to shift their investment plans, while clean-energy pioneers are cranking up capital spending fast. Orsted, a wind-farm champion, plans a rise of 30% this year; Tesla, an electric-car maker, a jump of 62%. Meanwhile a cool $178bn flowed into green-tinged investment funds in the first quarter of 2021.