Green Energy as an Investment Strategy

Christel Chan |

Green, clean energy has reached new heights in North America. There are more hybrids than ever on the streets, wind turbines out above the cornfields, solar panels on roofs, and even that new convenience store down the street is LEED certified. It’s not a trend; it’s a shift away from fossil fuels—oil, coal, and natural gas. And it’s not just your typical environmentalist rhetoric, clean energy is politically supported at the highest levels of government.

The Paris Agreement under the United Nations Framework Convention on Climate Change of which signatory nation-states agree to work towards the aim, among others, of “Making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.” And, in 2016, Prime Minister Justin Trudeau joined forces with the President of Mexico Enrique Peña Nieto and American President Barack Obama to craft the blueprint for an ambitious North American goal: 50 percent of all energy used will be of clean power sources by 2025.

And, that’s just the big picture; think of all the actionable research and development, improved energy technology, and deployment innovations that will be needed to meet these national and global goals; this means an increase in investment opportunities in green energy like never before.

There are a diverse and growing number of investment opportunities in the field of green energy. The majority of such investments are done to either capitalize on the energy trend and/or procure green energy. Depending on your financial situation, certain investments will make more sense than others, and it’s recommended to consult with a trusted financial advisor to determine the optimal investments for your individual situation. Some of those options include the following:

Privately-held companies and farms. Take available capital and apply it to private companies that focus on clean energy whether that’s through investment or public stocks. You could also opt to be an equity or stock investor in a farm for wind and/or solar power.

Be an entrepreneur. If you have a penchant for innovation and business, invest in yourself. A sellable solar asset could take an initial investment at, or above, $50,000 for a one to three- megawatt project that could then in turn be sold for an attractive profit. This option carries more and less risk than investing in others’ projects, depending on your acumen in the field.

Make it a mutual fund. Include mutual funds in your investment strategy that are comprised of a number of diverse clean energy opportunities.

Check out company stocks. The big behemoths of industry are also in on the renewable energy game, and they’re usually less risky than smaller clean energy companies because they do/make/provide more than solely renewable resources. Purchase shares in these diversified multi-product businesses (good examples are companies like GE, Philips, and Seimens) for a steady investment that’s not fully reliant on the success of green energy products.

Get in on green bonds. Bonds aren’t sexy, but they are important to aid in the financing of renewable energy infrastructure. Governments (and federally-qualified organizations) around the world are offering “green bonds,” to allow investors to back projects related to lowering carbon emissions and adaptations to impact climate change. The green bonds will be used to fill the climate financing gap; prospective investors (small and large, alike) should be doing very thorough research to ensure the investment is certifiably going to support renewable energy and climate measures.

Resources

  1. http://unfccc.int/paris_agreement/items/9485.php
  2. https://www.greenbiz.com/article/business-guide-green-power-12-ways-invest-renewable-energy
  3. https://www.theguardian.com/sustainable-business/investment-renewables-10-things-climate-change
  4. http://www.greentechmedia.com/articles/read/how-to-invest-in-renewables
  5. http://www.npr.org/2016/06/27/483766620/obama-to-set-new-clean-energy-goal-50-percent-carbon-free-power-by-2025
  6. https://www.greenbiz.com/article/how-invest-green-bonds
  7. https://www.climatebonds.net/market/explaining-green-bonds

*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets. This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2014-2017 Advisor Websites.