How Can I Invest In The Renewable Energy Sector? – From recycling and energy production to organic food and sustainable fisheries, the world is going green. Almost everyone, from climate scientists to businesses, consumers and politicians, has an interest in reducing the human burden on the environment.
Investors looking for a way to add a little green to their portfolio may be surprised by the wide range of products available. Here’s a look at the best areas for green investing.
How Can I Invest In The Renewable Energy Sector?
A green investment is a company or foundation that seeks to reduce harmful pollutants or use resources more sustainably. This could be in the form of alternative technologies such as solar/wind energy or finding ways to use resources more efficiently.
Renewable Energy: How And Where To Invest
Green investments benefit the environment as well as your bottom line. As the world adapts to climate change, legacy technologies such as fossil fuels and polluting industries face high costs and regulatory barriers, providing market opportunities for alternatives. Many mutual funds and index funds look to these alternative investments in hopes of strong future returns.
Green energy is becoming a hot topic worldwide due to climate change. Energy production that does not rely on burning fossil fuels to generate electricity for homes or industries is creating more investment opportunities. Water, wind and sun are renewable energy sources. There are many alternative energy ETFs and mutual funds available to investors.
According to a report by the United Nations Intergovernmental Panel on Climate Change, human influence on global warming is undeniable and some forms of climate change have been ongoing for centuries. “This report marks the end of coal and fossil fuels before they destroy the planet,” said UN Secretary-General Antonio Guterres.
Water has also been a renewable energy source for centuries. The ancient Greeks used water power to run their grain mills. Today, projects like China’s massive Three Gorges Dam can power 70 to 80 million homes. According to the International Renewable Energy Agency (IRENA), hydropower is the most cost-effective means of generating electricity.
Investment Attractiveness For Renewable Energy, 2017
There are many pure play stocks in the hydropower business. However, there are three power producers that have significant amounts of hydropower in their portfolio. PG&E (PCG) is one of the largest hydroelectric power plants. Idacorp (IDA) owns 17 hydropower projects. Meanwhile, Brookfield Renewable Partners (BEP) operates 227 facilities in 87 river systems.
Wind power is one of the fastest growing sources of renewable energy, growing 75-fold in the last 20 years. China will lead the world with 288.3 gigawatts of installed capacity in 2020, followed by the United States with 122.3 gigawatts and Germany with 62.9 gigawatts.
If you are interested in this renewable energy, look for wind farms that sell wind-generated energy or check out wind turbine companies. Here are a few more pure renewable stocks, but there are also some interesting wind stocks.
Additionally, the First Trust Global Wind Energy ETF (FAN) offers a way to passively invest in wind energy.
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Solar energy powers everything from homes, buildings and lights to radios. If you think the sun is just rising in this area, don’t forget the solar panel companies that help homeowners and businesses get more solar power. First Solar (FSLR) is a leading manufacturer of solar modules and systems. Jinkosolar Holding (JKS) also manufactures solar modules and claims to have a manufacturing capacity of 80 gigawatts. SunPower ( SPWR ) makes solar modules and storage solutions for homes and businesses.
Of course, there is much more to it than solar panels. From components to installations, businesses offer investment opportunities:
Geothermal energy uses the heat of the earth to create clean energy. Ormat Technologies (ORA) builds, owns and operates geothermal facilities located in the United States, Guatemala, Guadeloupe, Honduras, Indonesia and Kenya.
Reduction is the key word here. From reducing greenhouse gas emissions from industrial power plants to reducing emissions from car tailpipes, the pollution control industry is evolving. The law responds when improvements are needed in the quantities of hazardous chemicals that can be released into the environment. Companies and ETFs focused on pollution control technologies:
China Aims To Spend At Least $360 Billion On Renewable Energy By 2020
When it comes to transportation, Tesla ( TSLA ) is at the top of many people’s bucket lists. While the company has been in the news time and again for its intriguing technology, this game is not the only one.
On a smaller scale, researchers are working on fuel cell technology to develop alternative ways to power cars. If this technology works there are millions of cars.
One company operating in this area is Ballard Power Systems (BLDP), which manufactures cells that can be used in vehicle and backup power systems. Meanwhile, FuelCell Energy (FCEL) focuses on powering commercial and industrial facilities.
Recycling has become a common practice. Most people know that paper, metal and glass can be recycled and reused, but the number of items that can be recycled continues to grow. Waste oil, vegetable oil, batteries, cell phones, computers and even car parts have a second life. Dealing with these factors involves businesses humming in the background.
New Energy Giants Are Renewable Companies: Iberdrola, Enel, Nextera, Orsted
In terms of your portfolio, waste management companies with large recycling facilities may be of interest, including Republic Services (RSG) and Waste Management (WM).
Agriculture and animal husbandry are major contributors to carbon dioxide emissions, not to mention the environmental consequences of agricultural fertilizers and pesticides. There are many ways to reduce the environmental footprint of agriculture.
Organic farms avoid the use of pesticides, practice sustainable agricultural practices, and are often healthier than three-letter words that have been unpronounceable and unmeasurable for decades. They also practice animal care practices that avoid the use of hormones and antibiotics, keeping these chemicals out of the food chain and into the land and water around the farm. One of the largest organic food companies is United Natural Foods (UNFI), a wholesale distributor of healthy food options.
Sustainable fishing is another investment opportunity related to food, as the world’s overfished ocean conditions affect the human food chain. Mowi ASA (MNHVF) is a Norwegian company that operates globally and has an interesting role in this space.
Ireland Will Invest Heavily In Renewable Energy In The Next Ten Years
For the latest analysis and advice on green investing, check out the Green Investor Podcast.
Water is one of the most important natural resources we have. He expressed concern that due to climate change, there will be a shortage of fresh water in the world. Cape Town, South Africa, was able to replenish its resources within months of 2018 with rapid conservation measures.
According to the European Environment Agency, around 20 European countries depend on other countries for more than 10% of their water resources. Five countries (Netherlands, Hungary, Moldova, Romania and Luxembourg) depend on rivers for more than 75% of their water supply. In the United States, cities from Los Angeles to Miami are worried about water shortages, as climate change threatens water supplies.
A water investment portfolio may include companies involved in water collection, treatment and distribution. The largest water company in the United States is American Water (AWK), which provides drinking water to 14 million people. Essential Utilities (WTRG) provides water to approximately 3 million people. And true to our water theme, these utilities are only the tip of the iceberg.
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While picking individual stocks can be difficult, mutual funds offer an additional avenue of investment. Calvert Global Water Fund and Virtus AllianzGI Water Fund harness water-based opportunities around the world.
For most companies, the desire to go green is a relatively recent phenomenon. As everywhere, some companies adapt and some don’t. Greenfield investment managers have begun classifying companies according to their position along the green spectrum.
Take an oil company for example. It’s hard to assume these companies are green, and in most cases they’re not. But if you take a closer look at their business models, it’s easy to see that some are more green than others. In fact, many major oil companies are among the world leaders in taxing greenhouse gases and investing in energy sources that help wean the world off oil. Another way to look at green investments is to choose a company with the best environmental track record and practices.
China is the largest contributor to green energy in terms of installed capacity and production. By the end of 2021, China will install 288 gigawatts of wind turbines and 253 gigawatts of solar panels, making it a leader in the production of renewable energy equipment and electric vehicles. Brazil, Thailand and India also have significant renewable generation capacity, according to the Renewable Energy Agency.
Investment In Renewable Energy Grows Around The World
Many major oil companies, including BP, ExxonMobil, Chevron and Shell, have invested in renewable energy and low-carbon technologies. However, these investments are still minuscule, less than 1% of the total budget.