The world is facing an energy crisis, with global demand expected to grow dramatically over the next two decades. But in a resource-constrained world, energy demand needs to adjust to limited supply says Sarbjit Nahal, head of thematic investing for BofA Merrill Lynch Global Research. "We believe that energy efficiency – reducing the amount of energy required to provide products and services – is the logical response," he says. "We also believe that the recession is making 'less is more' the maxim of our era, and that energy independence and security are contingent on energy efficiency."
Nahal also notes that increased energy efficiency is a boon to economic development and competitiveness, helping to combat rising energy costs and protect the environment. "End-use energy efficiency offers the greatest potential to lower both energy demand and CO2 emissions," he says. And while there has been a lot of work on developing alternate sources of energy and sustainability in recent years, Nahal also notes that "two-thirds of the economic potential to improve energy efficiency remains untapped," according to the International Energy Agency.
Nahal points to seven industries that could benefit from the shift to greater energy efficiency, highlighting the range of opportunities open to investors who are interested in tapping into the theme:
- Industrials and Integrated Plays
- Information Technology
- Lighting and LEDs
- Smart Grid and Energy Storage
- Transport – Bus, Rail, Shipping and "Light-weighting."
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