Energy Stocks

How to Capitalize on Climate Change Today

Roughly 89% of the world’s carbon dioxide emissions are from fossil fuels. Transportation and power generation are the two biggest offenders.

Those two sectors spew out a whopping 36 billion tons of carbon dioxide every year.

The goal is to cut carbon dioxide emissions from those sectors by half over the next 10 years. If we don’t succeed, experts believe we risk a rise in global temperatures between 1.5 and 2 degrees Celsius.

Luckily, we’re well on our way to changing these sectors for the better. The electrification of transportation is a massive disruption that’s just getting underway. And as far as power generation goes, wind and solar farms are being installed at record rates.

But without long-term, affordable storage, excess energy generated by these farms is wasted. That’s currently one of the bottlenecks to an all-electric economy.

Being able to store energy cheaply opens up all kinds of new opportunities. We could use this stored energy to power boats, cars, trucks, airplanes and just about anything else.

But transportation and power generation aren’t the only sectors guilty of spitting carbon dioxide into our atmosphere.

Most of today’s manufacturing reeks of carbon dioxide emissions. For example, everything in the room you’re in right now was most likely made using an unsustainable process.

So needless to say, it’s time to rethink how we manufacture our products.

Rethinking Manufacturing

Let’s start with the cement used to build foundations, bridges and roads. Global cement-making spews out 2.5 billion tons of carbon dioxide every year.

There are a number of start-ups working to eliminate this gas from cement-making. But cleaning up cement is just the start.

Aluminum and steel are two more energy-intensive industries. If we were to make these sustainable, we would get rid of 8% of carbon dioxide emissions every year.

Additionally, your dining room table, sink, refrigerator, desk, chairs and even your walls all contribute to climate change.

Currently, we can’t buy many sustainably produced products. And that needs to change.

Now, I’m not out to change anyone’s opinion about climate change and carbon dioxide emissions.

But investors should be aware that there are some fantastic opportunities in companies focused on solving it.

Three Great Ways to Invest in the Disruption of Climate Change

For most investors, the best way to add climate change disrupters to their portfolios is not to invest in individual companies.

There are just too many to choose from. A better option is to invest in one or more of the clean energy exchange-traded funds (ETFs).

Some investors may be motivated by personal principles on climate change. Others may be looking to boost portfolio returns. Regardless, investors can reap sizable gains in some of the clean ETFs available today.

One of the oldest clean energy ETFs is also one of the largest. The iShares Global Clean Energy ETF (Nasdaq: ICLN) has been around since 2008.

It has more than $6 billion in assets under management. U.S. companies make up about 38% of its 76 assets.

The fund gained about 140% in 2020. This year, its performance has cooled off, and it’s down about 16% year to date. But this drop means that now is a great time to get in on it.

A smaller clean energy fund is the First Trust Nasdaq Clean Edge Green Energy Index Fund (Nasdaq: QCLN). It has about $3 billion in assets under management and holds about 60 companies.

It had an astounding 182% return last year. And it’s already up nearly 15% this year.

Finally, I like the ALPS Clean Energy ETF (NYSE: ACES). It has roughly $1 billion in assets under management.

Unlike the two ETFs mentioned above, the ALPS Clean Energy ETF is focused solely on U.S. and Canadian companies. Last year, it gained 137%. And so far this year, the fund is down about only 4%.

There are plenty of other climate change-oriented ETFs to choose from. And there are literally hundreds of public companies in the sector, with more going public all the time.

Growth investors should consider overweighting their portfolios in climate change companies. This is a thematic disruption that’s going to be with us for decades.

Smart investors should back up the truck and buy.

Good investing,


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