Clean or green energy has been hitting headlines these days for several reasons. Increasingly, big corporations are making or promising investments in achieving the most coveted carbon neutral status. Also, the green energy space has been a hot discussion topic in the ongoing U.S. election campaign.
Let’s look at the factors that make the clean energy space a highly lucrative option for investors looking to enhance their portfolio returns:
Big Techs Favor Clean Energy Sources
The e-commerce giant Amazon (AMZN) plans to fund the development of environment-friendly technologies and services with a sum of $2 billion. It is targeting to utilize 80% and 100% renewable energy by 2024 and 2030, respectively. It is also aiming to reach net zero carbon by 2040. Management informed that it could completely use renewable energy by 2025, five years ahead of schedule. To that end, Amazon recently invested in five companies, namely the recycling startup, Redwood Materials, CarbonCure Technologies, climate technology company Pachama, electric automaker Rivian and Turntide Technologies.
In addition, Alphabet’s (GOOGL) division Google is working hard on achieving its zero carbon goals by 2030. The company is planning to run its offices and data centers fully on carbon-free electricity by 2030. It aims to meet the goal by using renewable energy only.
Further, other tech giants like Microsoft (MSFT) and Apple (AAPL) are taking actions to adopt alternative energy sources to lower overall carbon emissions and significantly reduce energy bills. Notably, Microsoft is aiming to become carbon negative by 2030. Its two power purchase agreements with EDP Renewables North America LLC to work on a wind energy project based out of Paulding County, OH are worth a mention.
Meanwhile, Apple is already carbon neutral for its global corporate operations. However, the company of late committed to attain the 100% carbon neutral status across its entire business, manufacturing supply chain and product life cycle by 2030.
Biden’s Strong Support
Joe Biden, the Democratic presidential candidate has been strongly campaigning for his clean energy and infrastructural plans. He aims to pump $2 trillion into green energy for over four years to build solar panels, charging stations, etc. Under his tenure, Biden plans to build numerous wind turbines and solar panels across the United States to rapidly achieve zero-carbon energy. The plan will eliminate toxic emissions from the power grid by 2035 and increase the utilization of electric vehicles.
Several Countries in Race to Become Carbon Neutral
China, Japan, India, Brazil and European countries are among those that are strongly working on climate change. China is considered responsible for around 28% of global emissions, according to a BBC News report. However, the country is aiming to hit peak emissions before 2030 and achieve carbon neutrality by 2060, per Chinese President Xi Jinping’s announcement at the UN General Assembly in New York (per a BBC News article).
Moreover, Brazil is known for its conditions that are extremely conducive to the production of energy through photovoltaic (PV) systems. In June 2020, the country's Ministry of Mines and Energy announced that it projects the addition of more than 8,000 MW of solar capacity over the next decade, largely on the support of a new protocol for the issuance of green debentures. Further, the installed Solar PV capacity in Brazil is predicted to touch 14GW in 2026 and 125GW in 2040.
Clean Energy ETFs That Can Shine
According to the International Energy Agency (IEA), renewable energy sources are expected to make up 30% of the world’s electricity by 2024 in comparison to the current 26%. Per Allied Market Research, the global renewable energy market is expected to reach a value of $1.51 billion, seeing a CAGR of 6.1% between 2018 and 2025. Against this backdrop, let’s take a look at some alternative energy ETFs:
iShares Global Clean Energy ETF ( ICLN Quick Quote ICLN - Free Report)
The fund seeks to track the investment results of an index composed of global equities in the clean energy sector. It has 30 holdings. The fund’s AUM is $1.50 billion and the expense ratio is 0.46% (read:
Green Energy on Spotlight Ahead of Election: Best ETFs YTD). Invesco Solar ETF ( TAN Quick Quote TAN - Free Report)
The fund is based on the MAC Global Solar Energy Index, which comprises companies in the solar energy industry. It has 32 holdings. The fund’s AUM is $1.49 billion and the expense ratio is 0.71% (read:
Trump vs. Biden: ETF Strategies for the Election Outcome). First Trust NASDAQ Clean Edge Green Energy ETF ( QCLN Quick Quote QCLN - Free Report)
The fund seeks investment results that correspond generally to the price and yield, before fees and expenses, of the NASDAQ Clean Edge Green Energy Index. It has 45 holdings. The fund’s AUM is $531.6 million while the expense ratio is 0.60% (read:
Beyond Clean Energy, 5 Best Global ETF Areas of Q3). ALPS Clean Energy ETF ( ACES Quick Quote ACES - Free Report)
The fund seeks to track the performance of an index containing U.S. and Canadian-based companies that primarily operate in the Clean Energy sector. It comprises 36 holdings. The fund’s AUM is $391.3 million and the expense ratio, 0.65%.
Invesco Global Clean Energy ETF ( PBD Quick Quote PBD - Free Report)
The fund is based on the WilderHill New Energy Global Innovation Index. It consists of 97 holdings. The fund’s AUM is $105.1 million and its expense ratio, 0.75% (read:
Investors Flock Green Energy Before Election: Top ETFs, Stocks). Want key ETF info delivered straight to your inbox?
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