The cleantech sector is one of the most important industries today, and investor interest is 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 on a global level.
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 the cleantech investor.
For example, according to PwC, the deployment of artificial intelligence innovation in clean technology will provide US$15.7 trillion for the global economy by 2030. It also has the potential to reduce global CO2 emissions by up to 10 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).
How to invest in cleantech: 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 cleantech industry companies to choose from.
To help potential cleantech investors get an idea of the various sectors available to them under the clean technology umbrella, the Investing News Network has put together a number of lists:
- 5 Renewable Energy Stocks on the TSX
- 7 US Biofuel Stocks
- 6 Top US Solar Energy Stocks
- 5 ASX Water Treatment Stocks to Watch
These lists of cleantech companies of course provide only a small glimpse at the broader sector, but for those just learning about the cleantech investment opportunity they are a good place to start.
How to invest in cleantech: 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 for clean energy investment enthusiasts to look at, ranging from solar to wind to clean energy. They include:
- iShares Global Clean Energy ETF (NASDAQ:ICLN): With 83 holdings within the renewable resource and clean energy sectors, this ETF originated in June 2008. Among its top holdings are Vestas Wind Systems (OTC Pink:VWSYF,CPH:VWS) and Enphase Energy (NASDAQ:ENPH).
- Invesco WilderHill Clean Energy ETF (ARCA:PBW): The Invesco WilderHill Clean Energy ETF has 68 holdings and tracks the WilderHill Clean Energy Index (INDEXNYSEGIS:ECO). Its top holdings include JinkoSolar Holding (NYSE:JKS), ChargePoint Holdings (NYSE:CHPT) and Ameresco (NYSE:AMRC).
- First Trust NASDAQ Clean Edge Green Energy ETF (NASDAQ:QCLN): Begun in February 2007, this ETF has 54 holdings and tracks the NASDAQ Clean Edge Green Energy Index (INDEXNASDAQ:CELS). Its top holdings include Tesla (NASDAQ:TSLA) and NIO (NYSE:NIO).
For a complete look at available cleantech ETFS, this ETF database is 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.
How to invest in cleantech: Future outlook
The cleantech sector encompasses the wind, solar, energy storage and battery industries, among others. Looking ahead, global innovation continues to drive advancements in these key spaces.
For example, sales of electric cars topped 3 million globally in 2019, or 4.6 percent of global car sales, bringing the number of electric vehicles on the road to 10 million. According to Brookings, as the industry continues to grow, 320 new occupations alone are projected to be created in sectors such as 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 can be seen, the industry is clearly 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, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.