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5 Winners in the Race to a Greener Economy

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Climate crisis in recent years has pushed governments and businesses to shift focus to reducing carbon footprint for a cleaner environment. The coronavirus pandemic has deepened focus to the pressing situation. But the most relevant question in these trying times is that, can economies afford to tackle climate change and the pandemic at the same time?

Well, certain activities during the pandemic did underscore the needs for a green transition. Per a National Climate Change journal report, the coronavirus-led lockdown had brought down global carbon emissions by 17% in early April, compared to 2019 level. In fact, the study highlighted that emissions were reduced by 31.6% in the United States during the aforementioned period.

Additionally, coronavirus-led lockdowns in April resulted in a 17% drop in daily emissions of carbon dioxide. The daily emissions dropped to as low as what was witnessed in 2006. Given the current scenario, annual emissions in 2020 are likely to witness the largest single annual decrease in absolute emissions since the end of World War II.

Renewables for a Cleaner Future

Over the last decade, climate crisis has also put financial strain on governments and businesses. The costs involved in repairs and recovery after wildfires, storms, droughts and floods weighs over insurance and mortgage markets, pension funds and other financial institutions. This has pushed businesses to fulfill the agenda of green transition to fit into a greener global economy.

In the green transition drive, adoption of clean energy plays a massive role. And thanks to advancement in technology and years of research, costs of renewables have drastically reduced. Cost-wise, renewables can now compete with older power generation assets, especially fossil fuels. This lends support to organizations as it ticks off the criteria of cost reduction.

Per a MarketsandMarkets report, the global renewable energy market size is projected to rise from $184.3 billion in 2020 to $226.1 billion by 2021, at a CAGR of 22.7%. Meanwhile, per the International Energy Agency estimates, demand for oil in 2020 will be 99.9 million barrels a day globally, which suggests a drop of 90,000 barrels per day from 2019 levels.

The renewable energy sector has not only turned up as an environment-friendly alternative to oil, it has also been less impacted by COVID-19.So far this year, the iShares Global Clean Energy ETF (ICLN) has moved up 41.6% against the iShares U.S. Oil & Gas Exploration & Production ETF’s (IEO) decline of nearly 49%.

The shift toward a cleaner and greener future has already begun with companies adopting policies in reducing carbon footprint. Recently, Uber launched the Uber Green projects in 15 U.S. and Canada cities that emphasize on the use of hybrid or electric vehicles. The company offers drivers who use hybrid or electric vehicles to pick up passengers with an extra 50 cents per ride and an additional dollar for using specifically battery-electric vehicles. The company now aims to achieve 100% rides via electric vehicles by 2030 in the United States, Canada and Europe, and the rest of the world by 2040.

Similarly, the aviation industry that is responsible for generating 12% of carbon dioxide emissions globally has also shifted focus to sustainable aviation fuels (SAF). On Sep 14, more than 13 airlines signed a new joint commitment for net-zero emissions by 2050. Top airlines including British Airways, Qantas and American Airlines have jointly signed on to invest in more fuel-efficient aircraft, sustainable aviation fuels and carbon offsetting to bring their net emissions footprint to zero by 2025.

Meanwhile, this “change to green” trend has boosted companies like ON Semiconductor. This chipmaker has made deals to bolster its footprint in the automotive, power management, and image sensors sectors. ON Semiconductor’s chips are now used to power electrification in electric vehicles and charging products for those vehicles. Hence, the chipmaker has product depth in the alternative energy industry and is making progress in this field.

5 Stocks to Buy

Given the push to transition into a greener global economy, the demand for renewable energy and related projects is likely to increase in the near future. Hence, we have shortlisted five stocks that can make the most of this boom.

Vestas Wind Systems A/S (VWDRY - Free Report) designs, manufactures, installs, and services wind turbines. The Zacks Consensus Estimate for its current-year earnings has climbed 2.9% over the past 60 days. Vestas Wind Systems currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Azure Power Global Limited (AZRE - Free Report) engages in the development, construction, ownership, operation, maintenance and management of solar power plants. The Zacks Consensus Estimate for its current-year earnings has moved up 38.3% over the past 60 days. Azure Power carries a Zacks Rank #2 (Buy).

Bloom Energy Corporation (BE - Free Report) designs, manufactures and sells solid-oxide fuel cell systems for on-site power generation. The Zacks Consensus Estimate for its current-year earnings has climbed nearly 12% over the past 60 days. Bloom Energy holds a Zacks Rank #2.

Equinor ASA (EQNR - Free Report) develops wind, and carbon capture and storage projects as well as offers other renewable energy and low-carbon energy solutions. The Zacks Consensus Estimate for its current-year earnings has climbed 35.3% over the past 60 days. Equinor carries a Zacks Rank #2.

ReneSola Ltd (SOL - Free Report) develops, builds, operates and sells solar power projects. The Zacks Consensus Estimate for its current-year earnings has moved up 62.5% over the past 60 days. ReneSola holds a Zacks Rank #2.

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