Is alternative energy a good investment? I’ve been asked this for years. And now, alternative energies are a hot sector. Some reasoning for this might be due to Tesla, which is not only a relatively new luxury electric vehicle, but the stock price has recently grown at an incredible rate. So yes, that might be some of the reason, but I think much of it is because investors are realizing there is less purpose for dirty oil-based energies and more reasons to include clean energies.
In 2019, less than 9% of America’s power came from solar and wind, whereas fossil fuels (mainly coal and natural gas) made up over 62%.2 I see that as an opportunity, as in, there’s a lot of room to grow! Let’s first compare that with our peers in the EU. Their total 2018 renewable energies provided 18.9% of their overall energy, with Sweden coming in as the highest at over 50%!4 So not only are they ahead in the game, but what’s more is that they have recently approved the largest Green stimulus plan in history adding more than 500 billion Euros into renewable energy sources.1 Europe has long been utilizing renewable energies and on a much larger scale than the US. That isn’t where we’re used to being- in the back-row. We are used to being the innovators and first on the technology scene, but in this case, we’re the slow ducks and we are now finally looking to catch up.
It is expected that President Elect Joe Biden will enter the U.S. back into the Paris Climate Agreement, which infers that reducing emissions of GHGs (Green House Gases) will be part of his Administration’s policy.3 He also has plans for a $2 trillion stimulus to invest in clean energy infrastructure with a lofty goal of 100% clean-electricity by 2035.1 Alternative energies have been growing so rapidly in the US, even with the Trump administration and all it has done to go backward with increased focus on fossil fuels and even taking us out of the Paris Climate Agreement (among many other anti-climate initiatives). With this new level of support there is likely going to be an even more amazing future ahead for alternatives!
What might be even bigger than the US’s move to more renewables is China’s recent announcement of plans to be carbon-net zero by 2060. 1 China is massive in size and population. Imagine the kind of growth this industry will need to have in order to keep up with their demand? Similarly, the third largest economy in the world, Japan, has announced their goal of being carbon net-zero by 2050.1 And our northern neighbor, Canada, plans to increase their renewable use by 2030 to where 90% of its electricity would come from non-carbon emitting sources.1
Not only is an increase in renewables good for our carbon footprint, but it’s also good for our labor market. Think of it as the new-age CCC (Civilian Conservation Corps) from the Great Depression. In 1933 FDR created the CCC as a form of a stimulus package that would put people back to work when they needed it most. He had them beautify our nation with tree planting, building wildlife refuges, bridges and campsites. It put over 3 million men to work!5 Back in May of this year our local utility, Alliant Energy, committed $900 million to add 675 megawatts of solar power projects across 6 Wisconsin counties. That project is planned to create more than 1,200 construction jobs and nearly $80 million in local tax revenues.6 And as I’ve shown, this is just the beginning of the cycle.
I normally don’t jump onto bandwagons or get excited about the next “hot sector” in the market. By the time you or I know about it it’s already likely too late. As in, it’s overhyped enough by that point that it isn’t priced well enough for us to see a profit. But I feel differently about renewable energies. There is a lot of good that I see coming from increasing their use, and I see it lasting a long time. If you’re not already invested in renewable energy sources, I encourage you to connect with me. I have been helping investors invest in this niche for close to the entire duration of my 16 years in the business. It’s still a growing sector, so that means it takes a little finesse and knowledge of the systems to be able to sort the good from the bad. Let me help you separate the wheat from the chaff, so-to-speak.
The opinions expressed are those of the author and not necessarily those of Lincoln Financial Advisors Corp.
Carrie Waters Schmidt is a registered representative of Lincoln Financial Advisors Corp. Securities and investment advisory services offered through Lincoln Financial Advisors Corp., a broker/dealer (member SIPC) and registered investment advisor. Insurance offered through Lincoln affiliates and other fine companies. Equanimity Wealth Planning and Investing is not an affiliate of Lincoln Financial Advisors. CRN-3354211-120220
1 Joslyn, Dillon. The ALPS Clean Energy ETF (Ticker: ACES) Continues to Surge Following Biden Election. www.alpsfunds.com. 24 Nov 2020.
2 Lack, Simon. The Hidden Cost of Renewables. Catalyst Insights. https://catalyst-insights.com/the-hidden-cost-of-renewables/. 24 Nov 2020.
3 Lack, Simon. Fighting Climate Change is Hard. Catalyst Insights. https://catalyst-insights.com/fighting-climate-change-is-hard/. 18 Nov 2020.
4 Eurostat Statistics Explained. Renewable energy Statistics. www.ec.europa.eu./eurostat/statistics-explained/index.php. 2 Dec 2020.
5This Day in History: April 5, 1933: FDR Creates Civilian ConservationCorps. https://www.history.com/this-day-in-history/fdr-creates-civilian-conservation-corps. 2 Dec 2020.
6 Commitment to Clean Energy Will Create Jobs and Tax Revenues for the State. InBusiness Magazine. May 2020.