A renewable energy ETF can be a wise investment option if you are interested in socially conscious investments or want to invest in a growing industry.
There are several causes to be optimistic about clean energy advancements: The sector is assisting in environmental preservation and the development of new industries, as well as making electric vehicles more accessible. Start trading in clean energy stocks if you want to get your investment fund interested in the green transition.
What are the implications of investing in clean energy?
Many people invest in renewables for personal or ethical interests, but helping the environment isn’t the only advantage of having green energy in your portfolio. Alternative energy investments will help you diversify your portfolio. Renewable assets can act as a stabilising force when oil and other conventional energy resources are volatile.
For instance, electricity from renewable sources such as wind, solar, geothermal, and biomass is currently used to produce hydrogen and so you may want to consider investing in a hydrogen ETF, or Wasserstoff ETF as they say in Germany.
The global incentive to drive the transition to renewable energy is presented by the volatility in fossil fuel prices.
The coronavirus crisis has struck the fossil fuel industry especially hard, with leading oil, coal, and petrochemical firms losing an average of 45 percent of their overall market value. The sharpest drop in oil demand in a quarter-century has occurred since the beginning of the year.
Although lockout directives have intensified the fossil fuel industry’s problems, this systemic breakdown has been in the works for a long time. According to the Centre for International Environmental Law, “the likelihood of a complete recovery for many of these income sources in the medium term is, at best, remote.”
By 2050, ambitious investments in green energy and energy conservation could result in the creation of 63 million new jobs.
Today, the clean energy market employs over 11 million people worldwide, while the energy conservation industry employs 3.3 million people in the United States and Europe alone. Many energy-efficiency jobs, according to the International Energy Agency, specifically generate local work opportunities within small and medium-sized enterprises.
When you weigh the effect on the entire energy market, including transition-related employment like infrastructure and grid flexibility, as well as traditional technology including fossil fuels and nuclear energy, the total number of jobs increases to 100 million. As opposed to the current employment rate, the fossil fuel sector is estimated to shed more than 6 million jobs during the same time span.
The sector’s opportunities for growth are absolutely amazing.
Renewable technology production costs have dropped to the point that they are now less expensive than fossil fuels. In certain cases, onshore wind is less costly than constructing a new combined cycle gas turbine, whereas solar is quickly approaching the level of cost. Solar, according to many forecasters, would soon be the cheapest source of bulk fuel.
Renewable electricity returns are becoming more enticing.
For years, government subsidies were the primary catalyst of green energy growth, since they were used to justify the investment. Renewables, on the other hand, will now produce lucrative returns on investment due to falling prices.
Improve the stream of passive income
Investing in dividend-paying stocks is an excellent way to accumulate equity, whether you’re unemployed and trying to augment your Social Security income or actually like being paid to do nothing. While there aren’t as many alternatives as there are for growth stocks, there is a range of clean energy stocks that can help investors fuel their investments with passive income.