Corporations and governments will need to get creative in order to meet ambitious carbon reduction goals in the years ahead. Fortunately for investors, they don’t need to stretch to capitalize on emerging carbon-neutral goals and trends,
An assortment of exchange traded funds provide related exposure. That group includes the SPDR Kensho Clean Power ETF (CNRG). As some experts argue that many of basic steps in the decarbonization movement have already been taken, CNRG’s breadth is all the more relevant as companies and governments embrace new solutions.
“The easy steps to reduce carbon emissions have already been taken, and further cuts will require innovation from planners and policymakers to maximize natural gas and hydrogen fuels, experts on an industry conference panel in Houston said,” notes S&P Global Market Intelligence.
At the conference, Julio Friedmann, the chief scientist and “chief carbon wrangler” at research and investment firm Carbon Direct, noted that governments can bring added stability to often-lumpy carbon reduction efforts. Additionally, governments have sizable budgets to commit to renewable energy, which potentially highlights long-term benefits with assets such as CNRG.
“They’ve (governments) done it for solar panels, with windmills … you can reduce the uncertainty by having a contract with purchase. And that contract for purchase creates standards, creates supply chains, creates contractual mechanisms that reduce the uncertainty in the space,” said Friedmann, as reported by S&P Global.
The $276.76 million CNRG follows the S&P Kensho Clean Power Index, which is home to innovative companies involved with a variety of clean energy concepts, including solar and wind, among others. Solar and wind are making substantial inroads, particularly as costs decline, making it easier for corporations and governments to embrace these technologies.
Still, some experts argue that there’s more work to be done in terms of carbon reduction and that next steps, though likely expensive, are necessary. Those factors could be positive for long-term CNRG investors.
According to S&P Global, “Today we can reach at least 25% of decarbonization with proven and existing technologies,” said Astrid Poupart-Lafarge, Schneider Electric’s global segment president of energy and chemicals. “The next step is about process change, and process changes around, first, electrification.”
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.