Apollo’s head of sustainable investing says we need to speed up the

(Click here to subscribe to the Delivering Alpha newsletter.)

Geopolitical tensions in Ukraine have had a massive impact on global energy supply chains and prices this year, reminding the world how reliant we are on fossil fuels and how far we are from a true shift toward clean energy. That shift will require $131 trillion in energy transition investments by 2050, according to the International Renewable Energy Agency. 

To find out how all this capital will be deployed, Leslie Picker sat down with Apollo Global Management’s Olivia Wassenaar for the Delivering Alpha newsletter. Wassenaar helms Apollo’s sustainable investing platform and also co-leads natural resources at the firm. Her team has invested $19 billion in the energy transition and decarbonization and has committed $50 billion more over the next five years. 

 (The below has been edited for length and clarity. See above for full video.)

Leslie Picker: Given the discussions that you’re having in and out of the boardrooms, do you think that the war in Europe has exacerbated this transition to clean energy? Or do you think it’s actually slowed it as people realize, “Wait a minute, we can’t transition this quickly without making sure that we are still able to fulfill the needs of traditional sources of energy.” 

Olivia Wassenaar: I do think everything that’s going on has made us all realize that we do need to speed up the transition. This is something that has been at work for the last several decades and yet in many ways, it still feels like we’re at Ground Zero. When we look at the amount of capital for the next 10, 20, 30 years that needs to get invested in the energy transition, we estimate it’s about $4.5 trillion a year to get us where we need to be in the future.

Picker: You think then that you can do both at the same time, effectively, ensure that nations especially in the U.S. and Western Europe are able to meet their short-term energy goals while also focusing on the long-term? Or do you think that the two actually get muddled given the crisis nature of the situation?

Wassenaar: We do absolutely need to transition to cleaner fuels over time, but you’re right in that it’s something that is not going to happen overnight. And so, we look at some things that are bridge fuels. For example, something like LNG is very critical for taking lower carbon fuels to areas that are currently burning higher carbon fuels such as coal and diesel, for example. So, it is very much a transition. It is an area where we will see evolution over time and I do think it’s important to acknowledge that.

Picker: In terms of investment, there’s a statistic that’s been thrown out there saying that the annual clean energy investment globally will need to be about $4 trillion to achieve net zero carbon emissions by 2050. That 4 trillion will need to take place probably within the next five years on an annual basis that is a lot of money going into one area. Do you think that that will come from private…