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The adoption of clean energy continues to gain traction as governments get serious about climate change commitments. Find out who are our new picks in the clean energy ETFs space.

Group Research – Equities 27 Aug 2021

  • Adoption of clean energy to combat rising carbon emissions and global temperatures
  • Renewables have significantly less carbon emissions and are getting cheaper now
  • Biden’s administration aims to achieve zero emissions by 2050 with big plans in place
  • Our previous picks – ICLN, INRG, and PBW have done well, up an average c.57%
  • New picks: TAN focus on renewable; ALPS, PBD, and QCLN for exposure to renewable and clean energy

Renewables have significantly less carbon emissions and getting cheaper. To combat climate change, governments and organisations are pushing for increased investments and usage of renewable energy sources. Renewables generate considerably less carbon emissions compared to fossil fuels, and this would help alleviate the situation and slow down climate change. With technological advancements and continuous investments into R&D in this area, costs for renewable technologies are declining. A report by the International Renewable Energy Agency (IRENA) showed that 62% of total renewable power generated in 2020 had lower costs than the cheapest new fossil fuel option.

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Increasing government spending on clean energy to achieve zero emissions by 2050. US President Biden has championed building a sustainable economy and an equitable clean energy future. He plans to bring the country’s electricity to 100% clean electricity by 2035 and build a zero emissions economy by 2050. This would translate to increased government spending on clean energy infrastructure and projects.

Our picks have done well, surged 57%. In our August 2020 Clean Energy ETF report, we highlighted three ETFs to ride on the sustainability theme. iShares Global Clean Energy ETF (ICLN) and iShares Global Clean Energy UCITS ETF USD Dist (INRG) are more exposed to renewable energy, while Invesco WilderHill Clean Energy ETF (PBW) is more focused on clean technology. All three ETFs have done very well, generated an average price gain of 57% since our report.

More avenues to invest in renewable and clean energy ETF. We have added another four ETFs to our list of clean energy ETF. In this issue, our picks are mainly focused on the renewable and clean energy segment. 1) Invesco Solar ETF (TAN US): TAN offers exposure to the renewable energy segment. 2) ALPS Clean Energy ETF (ACES US): Tracks companies involved in the clean energy industry, including renewables and clean technology. 3) Invesco Global Clean Energy ETF (PBD US): Invests in global renewable energy companies, including those involved in conservation, improving energy efficiency, and advancing renewable energy. 4) First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN US): Holds a broad portfolio of US-listed firms in the clean energy industry, including both the renewables and clean technology.