The race to go green





“WE cannot outrun your carbon emissions. We cannot outrun the hurricanes, which are becoming more powerful, and we cannot outrun our sea levels as our islands disappear.”

Philip E. Davis, Prime Minister of the Commonwealth of the Bahamas, Bloomberg’s “Quote of the day”, November 2, 2021.

Our newly-elected Prime Minister did not mince his words at the United Nations (UN) Climate Summit in Glasgow last week. He urged the industrial nations to finally put their money where their mouth is and take action now to prevent the worst-case scenario.

The small island states account for less than one percent of global greenhouse gas (GHG) emissions but are among the most vulnerable of all locations to the potential adverse effects of climate change and sea-level rise, such as losing coastal arable land to degradation as well as salinification.

As developing economies relying on sectors vulnerable to climate patterns such as tourism, agriculture and fishing, Caribbean nations would be greatly affected by the ongoing rise in sea levels, changes in rain patterns and temperatures, and increasing intensity of natural disasters identified by the Intergovernmental Panel on Climate Change (IPCC).

Climate change refers to long-term shifts in temperatures and weather patterns. These shifts may be natural, but since the 1800s, human activities have been the main driver of climate change, primarily due to the burning of fossil fuels (such as coal, oil and gas), which produce heat-trapping gases, especially carbon dioxide (CO2). The invisible molecule CO2 has become a symbol of an energy industry that no longer appears sustainable.

In contrast, renewable energies are largely free of such climate-affecting emissions. Their costs have been falling for years and will probably continue to do so, making them increasingly attractive as investments in a future worth living in. With the power of the sun, they generate clean energy - in the form of solar, wind and hydro power.

Major upside: The sun does not send us an invoice. Its radiation energy is about 5,000 times greater than the energy needs of all people. Global politicians have long recognised the potential and have been promoting the expansion of corresponding power plants with legislation such as the Renewable Energy Sources Act (EEG) since 2000.

Green investment is a subsection of the global socially responsible investing (SRI) trend that has taken the world by storm. In a nutshell, SRI is the process of investing in projects or companies dedicated to conscious business activities. SRI is often considered through the lens of environmental, social and governance (ESG) investments.

Investors can also benefit from this development, especially because investments in renewable energies have long ceased to be a niche product. They have successfully established themselves on the market for sustainable investments. In 2020 alone, sustainable fund assets hit a record $1.7 trillion. Global ESG assets are projected to exceed $53 trillion by 2025, and $100 trillion by 2030.

The market for renewable energy investments is growing steadily, so it is even more important to have a good overview for your own investment decision. With a sustainable investment you can make an effective contribution to climate protection.

And we have now several ways to invest in a better future: Direct investment in renewable energy projects, investment in exchange-traded funds (ETFs) or buy renewable energy stocks.

Some of our established energy companies are now heavily involved in the push towards green energy. Shell (RDSA), for example, has spent about $2bn since 2016 on investing in renewable energy.

The Strathcona renewable diesel project is part of ExxonMobil’s (XOM) plans to provide more than 40,000 barrels per day of low-emissions fuels by 2025. In the US, the company has agreed to purchase up to five million barrels of renewable diesel annually from Global Clean Energy to supply markets in California. Both companies share prices are up by over 50 percent in 2021.

But also, relatively new companies such as Tesla (TSLA), JinkoSolar (JKS) and Siemens Renewable Energy (SGRE) had an incredible performance in recent years. The Tesla share price just reached a new record on Thursday at $1230.

Clean energy ETFs are exchange-traded funds that invest in stocks in the alternative energy sector, which might include solar energy, wind, hydroelectric and geothermal companies. Like other types of funds, clean energy ETFs can easily diversify your portfolio.

The question for most investors now is not if but when they will become a part of the green revolution. As years of market history had shown, the sooner, the better.


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