How to Invest in Cleantech

- July 13th, 2020

The cleantech sector is one of the most important industries today, and investor interest is on the rise. Here’s an overview of how to invest in cleantech.

There’s no denying the importance of the cleantech sector — even more so as climate change continues to be a growing concern on a global level. 

It should come as no surprise, then, that interest in the cleantech sector is making waves, and there’s no shortage of opportunities available for the cleantech investor.

For example, according to PwC, the deployment of artificial intelligence innovation in clean technology will provide US$5.2 trillion for the global economy by 2030. It also has the potential to reduce global CO2 emissions by up to 4 percent by that time.

Experts forecast the cleantech market will reach US$350 billion in 2020.

 
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With that in mind, here the Investing News Network provides a brief overview of how to invest in cleantech, from companies in the market to exchange-traded funds (ETFs).

How to invest in cleantech: Stocks

One possible route to invest in the cleantech sector is through equity investing. As the overarching cleantech space encompasses everything from energy and water to transportation and manufacturing, there’s certainly no shortage of cleantech industry companies to choose from.

To help potential cleantech investors get an idea of the various sectors available to them under the clean technology umbrella, the Investing News Network has put together a number of lists:

These lists of cleantech companies of course provide only a small glimpse at the broader sector, but for those just learning about the cleantech investment opportunity they are a good place to start.

How to invest in cleantech: ETFs and indexes

For investors who are more interested in cleantech as a whole rather than a single company, ETFs are a popular choice, especially for those who are making first-time decisions.

To that end, there are a number of cleantech ETFs for clean energy investment enthusiasts to look at, ranging from solar to wind to clean energy. They include:

  • iShares Global Clean Energy ETF (NASDAQ:ICLN): With 30 holdings within the renewable resource and clean energy sectors, this ETF originated in June 2008. Among its top holdings are Meridian Energy (ASX:MEZ) and SolarEdge Technologies (NASDAQ:SEDG).
  • Invesco WilderHill Clean Energy ETF (ARCA:PBW): The Invesco WilderHill Clean Energy ETF has 42 holdings and tracks the WilderHill Clean Energy Index (INDEXNYSEGIS:ECO). Its top holdings include Ballard Power Systems (TSX:BLDP), Plug Power (NASDAQ:PLUG) and Bloom Energy (NYSE:BE).
  • First Trust NASDAQ Clean Edge Green Energy ETF (NASDAQ:QCLN): Begun in February 2007, this ETF has 44 holdings and tracks the NASDAQ Clean Edge Green Energy Index (INDEXNASDAQ:CELS). Included in the ETF’s top holdings are Elon Musk-led electric vehicle company Tesla (NASDAQ:TSLA) and SolarEdge Technologies.

For a complete look at available cleantech ETFS, this ETF database is a great place to start.

Finally, another way to cleantech invest is through an index such as the S&P/TSX Renewable Energy and Clean Technology Index (INDEXTSI:TXCT). This is considered a form of passive investing and is a way of spreading potential risks.

How to invest in cleantech: Future outlook

The cleantech sector encompasses the wind, solar, energy storage and battery industries, among others. Looking ahead, global innovation continues to drive advancements in these key spaces.

For example, sales of electric cars topped 2.1 million globally in 2019, or 2.6 percent of global car sales, bringing the number of electric vehicles on the road to 7.2 million. According to Brookings, as the industry continues to grow, 320 new occupations alone are projected to be created in sectors such as energy efficiency, clean energy production and environmental management.

Additionally, PwC has proposed five transformative cleantech solutions to help reduce carbon emissions and promote a sustainable economy. These solutions include innovations such as distributed grid technology, electric transportation systems and tech-driven urban planning applications. As can be seen, the industry is clearly not short on new avenues for investment.

This is an updated version of an article originally published by the Investing News Network in 2017.

Don’t forget to follow us @INN_Technology for real-time news updates!

Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.

Experts forecast the cleantech market will reach US$350 billion in 2020.

 
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