The cleantech sector is one of the most important industries today, and investor interest on the rise. Here’s an overview of how to invest in cleantech.
There’s no denying the importance of the cleantech sector — even more so as climate change continues to be a growing concern.
It should come as no surprise, then, that interest in the cleantech sector is making waves, and there’s no shortage of opportunities available for those stepping into the market.
For example, according to PwC, the deployment of artificial intelligence innovation in cleantech will provide US$5.2 trillion for the global economy by 2030. It also has the potential to reduce global CO2 emissions by up to 4 percent by that time.
With that in mind, here the Investing News Network provides a brief overview of how to invest in cleantech, from companies in the market to exchange-traded funds (ETFs).
Cleantech invest: Stocks
One possible route to invest in the cleantech sector is through equity investing. As the overarching cleantech space encompasses everything from energy and water to transportation and manufacturing, there’s certainly no shortage of companies to choose from.
Companies with market caps of less than US$500 million are one place to start. Here’s a look at a few cleantech stocks that meet this market cap limit:
- American Manganese (TSXV:AMY): American Manganese is a specialty and critical metals company with a focus on using its hydrometallurgical process to recycle lithium-ion battery cathode materials.
- Bion Environmental Technologies (OTCQB:BNET): Through its proprietary technology platform, Bion Environmental Technologies aims to reduce costs and improve efficiencies in the water treatment and dairy, meat and egg production industries. One highlight of Bion’s technology is its ability to reduce water pollution when it comes to livestock waste.
- Broadwind Energy (NASDAQ:BWEN): Broadwind Energy provides a variety of products and services to the energy, mining and infrastructure sectors, primarily in the US wind energy industry. Broadwind has two main segments: gearing, and towers and weldments.
- Carmanah Technologies (TSX:CMH): Carmanah Technologies designs, develops and distributes products with a focus on energy-optimized LED lighting and solar installations in infrastructure. The company, based in British Columbia, primarily caters to the industrial sector.
- DynaCERT (TSXV:DYA): DynaCERT is currently developing its carbon emissions reduction technology, called HydraGEn. The system provides engines with pure hydrogen and oxygen gasses to generate a cleaner, more efficient burn.
- EEStor (TSXV:ESU): EEStor provides electrical energy storage applications. The company states that its electrical energy storage unit stores more energy than lithium-ion batteries.
- Eguana Technologies (TSXV:EGT): Eguana Technologies designs and manufactures power control solutions that better utilize existing power grids. Its integrated energy storage system consists of three main parts: the software controller and the energy management system, the battery and advanced power controls.
- H2O Innovation (TSXV:HEO): H2O Innovation works in the water industry, notably providing technical water treatment solutions based on membrane filtration technologies to smaller communities, as well as energy and mining end users.
- MGX Minerals (CSE:XMG): MXG Minerals is using strategic partnerships to develop technology to extract minerals like lithium and magnesium from unconventional sources. For example, it has extracted lithium from heavy oil wastewater and removed lithium from geothermal brines.
- Natcore Technology (OTC Pink:NTCXF): Natcore Technology is an advanced solar cell research and development company working on two primary technologies: low-cost, all-black solar cell structures and black silicon cells.
- PyroGenesis Canada (TSXV:PYR): PyroGenesis Canada develops, designs, manufactures and commercializes advanced plasma waste-to-energy systems and plasma torch products. It also provides advanced materials processing, plasma waste processing and engineering services.
- Quest Resource Holding (NASDAQ:QRHC): Quest Resource Holding provides companies with consultation on waste solutions, as well as the implementation of those solutions, with the goal of helping companies reach zero waste.
Cleantech invest: ETFs and indexes
For investors who are more interested in cleantech as a whole rather than a single company, ETFs are a popular choice — especially for those who are making first-time decisions.
To that end, there are a number of cleantech ETFs ranging from solar to wind to clean energy, including:
- iShares Global Clean Energy ETF (NASDAQ:ICLN): With 30 holdings within the renewable resource and clean energy sectors, this ETF originated in June 2008. Among its top holdings are Meridian Energy (NZX:MEL) and Solaredge Technologies (NASDAQ:SEDG).
- Invesco Wilderhill Clean Energy ETF (ARCA:PBW): The Invesco Wilderhill ETF has 38 holdings and tracks the Wilderhill Clean Energy Index. Its top holdings include Nio (NYSE:NIO), Universal Display (NASDAQ:OLED) and Enphase Energy (NASDAQ:ENPH).
- First Trust NASDAQ Clean Edge Green Energy ETF (NASDAQ:QCLN): Begun in February 2007, the First Trust Clean Edge ETF has 41 holdings and tracks the NASDAQ Clean Edge Green Energy Index. Included in the ETF’s top holdings are Tesla (NASDAQ:TSLA) and Universal Display.
For a complete look at available cleantech ETFS, this ETF database is also a great place to start.
Finally, another way to cleantech invest is through an index such as the S&P TSX Renewable Energy and Clean Technology Index (INDEXTSI:TXCT). This is considered a form of passive investing and is a way of spreading potential risks.
Cleantech invest: Future outlook
The cleantech sector encompasses the wind, solar, energy storage and battery industries, among others. As we look ahead, global innovation continues to drive advancements in these industries.
For example, electric vehicle sales reached 5.1 million globally in 2018, and governmental policies are promoting the sector’s growth. According to Brookings, as the industry continues to grow, 320 new occupations alone are projected to be created in sectors including energy efficiency, clean energy production and environmental management.
Additionally, PwC has proposed five transformative cleantech solutions to help reduce carbon emissions and promote a sustainable economy. These solutions include innovations such as distributed grid technology, electric transportation systems and tech-driven urban planning applications. As we look forward, the industry is not short on new avenues for investment.
This is an updated version of an article originally published by the Investing News Network in 2017.
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Securities Disclosure: I, Dorothy Neufeld, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: American Manganese, Bion Environmental Technologies, dynaCERT and MGX Minerals are clients of the Investing News Network. This article is not paid-for content.