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The energy transition - where are we now?   By Michael Chou Investment Manager

This year's Earth Day, which takes place on April 22, is putting the spotlight on the need for a more urgent transition to renewable energy with the theme Our Power, Our Planet.     Earth Day, observed in 192 countries and coordinated by the non-profit Earthday.org, is petitioning for a tripling in renewable energy generation by 2030 by advancing clean energy sources including solar, wind, geothermal, tidal and hydropower. This ambitious target supports climate goals set out in the Paris Agreement. The Global Carbon Budget (GCB), an annual scientific report tracking carbon dioxide (CO2) emissions, highlights the world’s continuing over-reliance on fossil fuels. In 2025 total fossil CO2 emissions hit a record 42.2 billion tonnes1. Coal, oil and gas all contributed to the rise, with coal making up the largest share. The electricity sector is also facing a rise in global demand, with the artificial intelligence (AI) boom leading to a surge in large and power-hungry data centres, which according to the International Energy Agency are on track to exceed Japan’s electricity use by 20302.   Global fragmentation   Globally there is increasing fragmentation between countries’ approaches to meeting this increased demand and making the transition. In January this year the US formally exited the Paris Agreement, citing potential economic damage and unfair economic burdens on American workers and taxpayers. Where once the US was in the race for clean energy leadership, its priorities have now shifted to capitalising on its position as the world’s largest oil and gas producer and achieving a global leadership position in AI. While China is also leading the way on AI, energy security and clean energy leadership are strategic priorities for the world’s largest emitter of CO2. According to a recent Climate Council Report3, since 2020 China’s solar capacity has almost quadrupled and its wind capacity has doubled. China is also the global leader in clean technology manufacturing, supplying 80% of the world’s solar panels and 70% of electric vehicles. China also saw its climate pollution drop in the first half of 2025, up to five years ahead of when it was supposed to peak, signaling a major milestone in the worldwide shift to clean energy. Europe and the UK, meanwhile, are rapidly transitioning to renewable energy, with wind and solar use surpassing fossil fuels for the first time in 20254. European nations also dominate the list of clean energy consumers with Denmark, Finland, Portugal, Spain and Belgium in the top five. Australia is also demonstrating that rapid change is possible. In the fourth quarter of 2025, renewable energy supplied more power (52.4%) than fossil fuels for the first time, despite record demand and additional pressure on the grid during the summer heatwave. The Australian Energy Market Operator (AEMO) noted that the unstoppable growth of rooftop solar was continuing to meet much of the additional demand and consumption5. In addition to these regional themes, the whole world is currently focused on the energy crisis on the Persian Gulf, driven by the war in Iran. The closure of the Strait of Hormuz saw oil prices soar from US$71 to US$100 per barrel. This has resulted in the release of emergency global stockpiles, which will only partially compensate for the loss of some 15 million barrels per day. These energy bottlenecks are expected to increase demand for renewable energy, while at the same time hastening the adoption of nuclear power programs globally.   How are we contributing to the energy transition? The Uniting Financial Services (UFS) range of ethical managed funds are managed in line with the ESG and Ethical Investment Policy of the Uniting Church, Synod of NSW. The policy has a clear vision which is ‘not to encourage or profit from activities which create goods or services that have unacceptable harmful effects on people or the environment which cannot be avoided by prudent or practical controls’. Where practicable, we direct our investment managers to invest in companies that score well regarding the management of environmental, social and governance (ESG) risk factors, including climate change. We also apply negative screens, seeking to exclude companies whose principal activities are considered harmful to society, including fossil fuels (direct extraction). Our managers also engage closely with organisations to express opinions on ESG themes and learn about industry and community best practices. As an example, the manager of part of our fixed interest portfolio, Janus Henderson, undertook 18 engagement meetings in the past 12 months. Some of the entities it met with include Great Southern Bank, which is one of the few Australian banks to have made a commitment to achieving net zero emissions by 2040. As residential lending makes up the largest part of its loan book, Great Southern Bank is currently focused on educating residential consumers on enhancing home resilience to extreme weather and improving energy efficiency. Janus Henderson also met with the Province of Quebec, which has an extensive green bond program which funds projects including clean transportation such as electric buses and the Montreal light rail, along with green buildings and sustainable water. Quebec’s energy production is largely focused on hydroelectric power but the province is also looking at increasing other renewable energy sources to cope with increased demand on the grid.   Summary   What is clear is that the global energy transition is becoming increasingly divergent across regions, which have very different policy settings and economic priorities. However, the question is no longer whether the transition will occur but how long it will take. Investors will continue to play a crucial role in weeding out companies and industries which cause environmental harm, while shifting capital towards renewable energy, energy efficiency and low-carbon technologies.   Sources: 2025 Global Carbon Budget, The Global Carbon Project Energy and AI, International Energy Agency Power Shift Report, Climate Council, 2025 European Electricity Review, Ember, 2025 Quarterly Energy Dynamic Report, AEMO   Would you like to discuss your organisation’s financial objectives and needs? UFS Investment Manager Michael Chou would be pleased to meet with you to provide general information and, if applicable, additional guidance about our managed funds. You can contact Michael at Michael.chou@unitingfinancial.com.au or learn more about our managed funds on the UFS website: www.unitingfinancial.com.au     The Uniting Financial Services (UFS) unregistered managed investment schemes are available for investment only to wholesale investors. Prospective wholesale investors who wish to invest via our unregistered managed investment schemes can access the Information Memoranda for any of these funds on the UFS website. Certain statements in the report may constitute “forward-looking statements.” These statements involve subjective judgment and analysis and reflect UFS’ expectations. Such statements are subject to significant uncertainties, risks and contingencies outside the control of UFS, which may cause actual results to vary materially from those expressed or implied. You are cautioned not to rely on such forward-looking statements. While the information in this report has been prepared with all reasonable care, UFS accepts no responsibility or liability for any errors, omissions or misstatements however caused. No action has been taken to register or qualify these products or otherwise permit a public offering of these products in any jurisdiction outside Australia. Past performance is not indicative of future performance. 

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  Important for you to know Financial services are provided by The Uniting Church (NSW) Trust Association Limited ACN 000 022 480, ABN 89 725 654 978, AFSL 292186 (“UCTAL”) and by The Uniting Church in Australia Property Trust (NSW) ABN 77 005 284 605 (“UCAPT”) (together and separately “Uniting Financial Services”), for The Uniting Church in Australia, Synod of NSW and the ACT (“Synod”), under a s.911A Corporations Act 2001 (Cth.) authorisation and pursuant to APRA Banking Exemption No. 1 of 2021 and ASIC Regulatory Guide 87 and ASIC Corporations (Charitable Investment Fundraising) Instrument 2016/813 exemptions. Uniting Financial Services® is a registered trademark of UCTAL used with permission of UCAPT. None of The Uniting Church in Australia, UCAPT and UCTAL is prudentially supervised by APRA. Therefore, investments with or contributions to these Uniting Church organisations will not receive the benefit of the Financial Claims Scheme or the depositor protection provisions in the Banking Act 1959 (Cth.). All financial services and products are designed for investors who wish to promote the religious and charitable purposes of Uniting Financial Services and The Uniting Church in Australia and for whom profit considerations are not of primary importance in their decision to invest. The information on this page has been prepared without considering your objectives, financial situation or needs. You should, before acting on it, consider its appropriateness to your circumstances or refer to the relevant disclosure document. Loan applications are subject to credit approval. Interest rates are subject to change. Fees and charges may apply. 

Kindly note that the information on this webpage is only intended for wholesale, professional or sophisticated investors (as defined in the Corporations Act). Please do not refer to this webpage if you are not one of these investors. Uniting Financial Services is not providing any personal advice or recommendation regarding any financial products described or referred to on this webpage. Prospective investors should make their own enquiries and should seek all necessary financial, legal, tax and investment advice. Past performance is not indicative of future performance, all information contained on this wepbage is current at the date of publication, however may be subjected to change without notice.