Wind and solar power grew by record-breaking amounts during the ongoing pandemic. In fact, renewables were the only energy source that saw increased demand in 2020.
Demand for coal, oil, and natural gas has increased. However, alternative energy companies have continued to see gains, and according to the International Energy Agency, solar and wind capacity in Europe and the United States is expected to continue growing quickly.
However, CO2 emissions are still rising this year, indicating the importance of changes in both policy and investment in order to meet climate goals.
The IEA has called for increased investment in renewable and clean energy, saying earlier this month that “a surge in spending on clean energy transitions provides the way forward” before noting that “this needs to happen quickly or global energy markets will face a bumpy road ahead.”
According to a Reuters report, the IEA has said that investment in clean energy needs to triple by 2030 to curb climate change.
Investing in Alternative Energy With ETFs
A number of ETFs provide exposure to the alternative energy space via investment in solar, wind, hydroelectric, and geothermal energy.
Some ETFs provide targeted exposure within the clean energy space, focusing on specific types of power, such as the First Trust Global Wind Energy ETF (FAN) or the Invesco Solar ETF (TAN).
Other funds invest more broadly in the space, such as the ALPS Clean Energy ETF (ACES) and the iShares Global Clean Energy ETF (ICLN).
Funds that invest in the market more broadly can be differentiated by region — ICLN, for example, includes both domestic and international stocks in its portfolio, while ACES provides exposure to companies based in Canada or the United States.
Additionally, some funds, such as ACES, provide exposure to companies involved in the development of clean technologies, such as electric vehicles and smart grids, as a complement to their diversified investments in clean energy businesses.
ACES’ top holdings include hydrogen fuel cell systems developer Plug Power, electric vehicles company Tesla, and solar panel and battery provider Sunrun.
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