When investors think of equity-based approaches to the themes of clean technologies and renewable energy, they usually think about solar and wind equities or broad-based exchange traded funds that provide exposure to multiple renewable energy industries.

Many market participants don’t think about what it takes to produce products like solar panels and wind turbines. On that note, some metals and mining ETFs, including the SPDR Metals & Mining ETF (NYSEArca: XME), are increasingly relevant, if not surprising plays on the renewable energy boom.

“Over the longer term, the rapid adoption of clean energy technologies implies a significant increase in demand for most metals. For example, a typical electric car requires six times the mineral inputs of a conventional car, and an onshore wind plant requires nine times more mineral resources than a gas-fired power plant,” notes Anqi Dong, senior research strategist at State Street Global Advisors.

The $2.48 billion XME follows the S&P Metals and Mining Select Industry Index. XME holds 32 stocks, and while its line-up of producers of coal, copper, and industrial and precious metals, among others, doesn’t scream “clean energy,” those materials and others are essential in the production of green energy products.

Moreover, the renewables transition is in its early innings, and forecasts call for tens of trillions of dollars to be spent in the years ahead to reach various net-zero goals. That could provide runway for growth for XME components.

“Based on the existing energy transition policies, the global demand for minerals used by clean energy technology would double by 2040,” adds Dong. “Achieving the goals of the Paris Agreement (well below a 2°C global temperature rise) would increase mineral demand by four times by 2040. This surging demand could lead to persistent high prices, as it typically takes years and intensive investment to discover and produce critical minerals for clean energy.”

For investors that want to approach XME in a more traditional sense, the ETF remains a credible avenue for accessing elevated infrastructure. The recently passed bipartisan infrastructure bill could be helpful to aluminum and steel producers on XME’s roster, among others.

“The 2021 Infrastructure Investment and Jobs Act includes more than $200 billion of new federal spending on metal-intensive infrastructures such as highways, rail roads, bridges and ports over the next five years,” concludes Dong.

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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.