Capital Expenditure

Capital expenditures, or capex, are used to acquire, upgrade, and maintain physical assets—such as property, plants, buildings, technology, or equipment—that are anticipated to provide a long-term benefit to the business (usually 12 months or more).

Capex are central in supporting the sustainability transition: they help to build the large-scale infrastructure necessary to support a net-zero economy, sustainable transportation, clean water, and other key infrastructure for the Sustainable Development Goals.

“Goldman Sachs Research believes Green capex will be the dominant driver of global infrastructure over the next decade, with $6 trillion of investment needed annually to decarbonize the world, address water needs, and shore up transportation and other critical systems.”
GS Sustain
The Net Zero, Infrastructure and Clean Water Mosaic. Critical technologies/focus areas and annual investment in the 2020s to achieve Net Zero, Infrastructure and Clean Water needs

Source: GS Sustain, IEA, McKinsey, OECD, Company data, Goldman Sachs Global Investment Research

Capex-Heavy Sectors: Energy Transition

Transitioning to a carbon-free power sector will require unprecedented investments in new technologies, such as solar, wind, and storage, and also in more frontier technologies, like hydrogen fuel cells and small modular reactors.

Goldman Sachs projected that renewable energy would be the largest area of energy spending in 2021—eclipsing fossil fuels for the first time, with a total investment of up to US $16 trillion by 2030.

Cumulative investment in clean energy transition to 2030 (US$tn)

Source: GS Sustain, IEA, Goldman Sachs Global Investment Research

Capex-Heavy Sectors: Sustainable Transportation

Car manufacturers are planning substantial investments in R&D and capex to develop and market zero-emission vehicles at scale; this includes exploring alternative power trains (for example: hybrid vs. battery vs. fuel cells).

Capex-Heavy Sectors: Resource Transformation

Energy-intensive processing industries, including iron and steel, chemicals, and cement, are responsible for a large share of global GHG emissions. To meet commitments to a net-zero economy, companies in these industries are investing heavily in energy-efficient and circular-production methods.

For example, the steel industry is committed to decarbonizing steel production by switching the source of energy from high GHG-emitting sources, such as coal-fired blast furnaces, to greener technologies based on hydrogen and renewable energy. The industry is also organizing to collect steel at scale; the metal is 100 percent recyclable, and production of recycled steel is much less energy intensive.

The chemical industry, too, is investing in the sourcing of materials recognized as more green than those typically used—materials that can bolster growth in terms of productive capacity, while driving the company toward its sustainability goals.