Lower costs in clean energy and battery prices could give China’s clean energy initiatives a boost. In the meantime, this could feed into exchange-traded funds (ETFs) that focus on renewable energy sources or even environmental, social and governance (ESG) investing.
“China is the world’s largest greenhouse gas emitter, and is building the most power plants of any country in the world, making its decarbonization paramount to preventing dangerous climate change,” a Forbes article noted. “But the costs of wind, solar, and energy storage have fallen so fast that building clean power is now cheaper than building fossil fuels – a lot cheaper.”
Of course, with falling prices, it could mean more renewable energy developments across the country.
“New research shows plummeting clean energy prices mean China could reliably run its grids on at least 62% non-fossil electricity generation by 2030, while cutting costs 11% compared to a business-as-usual approach,” the article added. “Once again, it’s cheaper to save the climate than destroy it.”
ETF investors who are sensing an opportunity brewing in the second largest economy can look to funds like the Global X YieldCo & Renewable Energy Income ETF (YLCO). YLCO seeks to track, before fees and expenses, the price and yield performance of the Indxx YieldCo & Renewable Energy Income Index.
The fund invests at least 80% of its total assets in the securities of the underlying index and in ADRs and GDRs based on the securities in the underlying index. The underlying index is designed to provide exposure to publicly traded companies that are formed to own operating assets that produce defined cash flows, as well as companies that are involved in the production of renewable energy such as solar, wind and hydroelectric power that meet minimum dividend yield criteria.
For investors looking for a more broad play on ESG, particularly sustainability, can look to a fund like the Global X Conscious Companies ETF (KRMA). KRMA seeks to provide investment results that correspond generally to the price and yield performance, before fees and expenses, of the Concinnity Conscious Companies Index.
The fund invests at least 80% of its total assets in the securities of the underlying index. The underlying index is designed to provide exposure to companies listed in the U.S. that operate their businesses in a sustainable and responsible manner, as measured by their ability to achieve positive outcomes that are consistent with a multi-stakeholder operating system (“MsOS”), as defined by the provider of the underlying index.
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