Global Demand Should Propel This Clean Energy ETF Higher

The S&P 500 Energy index is up 47% for the year, highlighting the strength in the energy sector, which speaks to the global dominance the sector has seen in 2021.

Whether it’s produced from fossil fuels or renewable sources, global demand for energy has been off the charts in 2021. The former has been piggybacking off higher oil and gas prices, while the latter is seeing a push towards more clean energy sources like wind or solar power.

“The global power market is experiencing rapid power demand growth as markets recover from the pandemic. Despite all the capacity additions in renewables generation, the amount of power currently generated by renewables is still not enough to meet this increased demand,” said Matthew Boyle, manager of global coal and Asia power analytics at S&P Global Platts.

The recently signed infrastructure bill makes several references towards a green push, such as more electric vehicle charging stations and incentives for additional solar and wind projects. That said, however, the renewable energy sector still has a lot of growing to do.

“The total amount of renewable energy that’s available is growing. That’s good news for a world threatened by potentially devastating climate change,” CNBC notes. “But the increase in renewable energy is still lower than the increase in global energy demand overall. A ‘transition’ from fossil fuels may come someday, but for now, renewable energy isn’t even keeping pace with rising energy demand — so fossil fuel demand is still growing.”

In the meantime, traders can still play opportunities in the growth of the still-nascent renewable energy sector. As more clean energy infrastructure gets built out, this should generate opportunities for traders to capitalize on with leveraged exchange traded funds (ETFs).


Doubling Down on Clean Energy Gains

To build off this demand, traders can look at keeping the Direxion Daily Global Clean Energy Bull 2x Shares (KLNE) in their toolbox. It is a leveraged ETF that seeks to return 200% of its benchmark index, the S&P Global Clean Energy Index, in a single day.

The S&P Global Clean Energy Index gives exposure to developed market countries whose economic fortunes are in the global clean energy business. These include companies that are involved in the production of clean energy or provide clean energy technology and equipment.

KLNE Chart

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