Page 34 - DIY Investor Magazine | Issue 31

CLIMATE CHANGE & THE INVESTMENT CASE FOR CLEAN ENERGY Graeme Cooper is the Co-founder of the HANetf S&P Global Clean Energy Select HANzero UCITS ETF There is little doubt that the global fight against climate change will be the greatest challenge to face humanity in the coming century. While it will be a difficult fight to win, it will also create opportunity, in particular for those businesses that lead on innovation in clean energy. With strengthening tailwinds coming from both economics and policy, we believe the long-term investment case for businesses principally engaged in clean energy technologies is strong. The clean energy sector encompasses energy derived from zero-emission sources that are ‘renewable’, or naturally replenishing. Humans have been harnessing nature’s power for millennia, but as we develop increasingly innovative and efficient ways to do so, renewable clean energy is becoming increasingly viable and displacing the dirtier sources of energy (e.g. fossil fuels) that have dominated economies since the industrial revolution. Growing renewables’ share of generation capacity is a key pillar in the fight against climate change, and in particular with respect to meeting increasingly ambitious targets to drive national economies toward net zero carbon emissions. From a policy perspective, the change in US administration following the election of President Biden has re-galvanized global consensus and leadership in pursuing incredibly ambitious greenhouse gas reductions over the coming decades. ‘THE LONG-TERM INVESTMENT CASE FOR BUSINESSES PRINCIPALLY ENGAGED IN CLEAN ENERGY TECHNOLOGIES IS STRONG The Paris Agreement is at the centre of this movement, committing signatory nation-states to reducing emissions with the goal of limiting global warming to less than 2 degrees Celsius versus pre-industrial levels. 1The mechanism to achieve limited temperature increase is to reach peak greenhouse gas (‘GHG’) emissions as soon as possible and to achieve a carbon neutral world by mid- Century. The Agreement functions by inviting countries to submit nationally determined contributions (‘NDCs’), which communicate the actions each will take toward reaching the goals of the Agreement along with the actions they will take to build resilience against rising temperatures. Clearly, The Paris Agreement suffered a massive blow to its efficacy when U.S. President Donald Trump withdrew the United States. However, the subsequent election of President Biden has breathed new life into global coordination in the fight against climate change, restoring the US to its position of leadership. In the infancy of his presidency, Biden made an astonishing array of climate-related commitments across international channels and virtually every department of the government that essentially turned the policy of the prior four years on a dime. These initiatives included (but are not limited to)2: • Re-join the Paris Agreement • Establish a $2 trillion climate-focused infrastructure plan • Set a target to achieve a net-zero carbon economy by 2050 and a 50% reduction in GHG emissions by 2030 DIY Investor Magazine · Nov 2021 34