The global move towards a reliance on clean energy is tangible. That was evident last year as $1.1 trillion was poured into clean energy tech, clearing the path for traders to seek opportunities in the alternative energy sector.
The move towards clean energy was already happening, but geopolitical factors accelerated the shift. Last year, it was Russia’s invasion of Ukraine.
“Russia’s war on Ukraine caused a spike in energy prices and talk of potential winter blackouts,” a World Economic Forum article noted. “But it also triggered a long overdue shift away from gas and other fossil fuels towards cleaner forms of energy – so much so that global investment in low-carbon energy technology surged to a record level of $1.1 trillion in 2022, according to a new report from research firm BloombergNEF (BNEF).”
According to the data from BNEF, this represents an increase of 31% from the previous year. Furthermore, it denotes that investment in low-carbon technology is now on par with investments allocated to the supply of fossil fuels.
In the U.S. specifically, government funding towards clean energy technology has increased. This was apparent in the Infrastructure Investment and Jobs Act in 2021, which provided subsidies for building out infrastructure that supports clean energy.
“Our findings put to bed any debate about how the energy crisis will impact clean energy deployment,” said BloombergNEF’s head of global analysis, Albert Cheung. “Rather than slowing down, energy transition investment has surged to a new record as countries and businesses continue to execute on transition plans. Investment in clean energy technologies is on the brink of overtaking fossil fuel investments, and won’t look back.”
Trade the Clean Energy Movement
Traders looking to capitalize on the clean energy movement can look to individual stocks, but to get ideal exposure to the industry could mean opening multiple positions. As such, exchange traded funds (ETFs) are an ideal option for broad exposure.
For the bold trader looking to maximize their profits, they can consider the Direxion Daily Global Clean Energy Bull 2x Shares (KLNE). The fund seeks to return 200% of its benchmark index, the S&P Global Clean Energy Index, in a single day.
The 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 green energy technology and equipment.
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