Page 35 - DIY Investor Magazine | Issue 31

Alongside the US, the European Union has targeted GHG reductions of 55% by 2030, the UK has committed to a 78% decline by 2035 (compared to 1990 levels)3, and China has committed to achieve peak emissions before 2030 and carbon From a levelized cost of electricity (‘LCOE’) perspective, this puts each squarely in or at the low end of the cost range for fossil fuels. There are a number of immense challenges that need to be solved for our economies to draw most of their power from renewables (e.g. intermittency and grid design), but that is an incredible area of opportunity and the economics increasingly speak for themselves5. In conclusion, a renewed ambition to fight climate change is impacting both regulatory and economic pressures to limit carbon emissions. Clean energy is at the beating heart of this monumental shift. We believe that the requirement to adapt existing technologies and/or developing new ones to facilitate this requirement may present an attractive opportunity for investors. INVESTING IN CLEAN ENERGY Investors looking to get a slice of themes such as the clean energy sector can consider exchange traded funds (ETFs). ETFs enable investors to invest in a broad basket of securities that represent companies from a specific sector or theme such as cloud computing, the space economy or solar energy. HANetf is an issuer of a wide variety of megatrend thematic exchange traded funds (ETFs). When you invest in ETFs, your capital is at risk. www.hanetf.com Graeme Cooper is the Co-founder of the HANetf S$P Global Clean Energy Select HANzero UCITS ETF 1 https://unfccc.int/process-and-meetings/the-paris-agreement/the-paris-agreement 2 https://www.whitehouse.gov/briefing-room/statements-releases/2021/04/22/fact-sheet- president-biden-sets-2030-greenhouse-gas-pollution-reduction-target-aimed-at-creating-good- paying-union-jobs-and-securing-u-s-leadership-on-clean-energy-technologies/ 3 https://www.theguardian.com/environment/2021/apr/21/new-eu-target-to-cut-carbon- emissions-by-at-least-55-disappoints-experts#:~:text=The%20development%2C%20said%20 by%20the,zero%20net%20emissions%20by%202050 4 https://www.scientificamerican.com/article/china-says-it-will-stop-releasing-co2-within-40- years/ 5 https://www.irena.org/publications/2020/Jun/Renewable-Power-Costs-in-2019) 4 neutrality before 2060 . Meeting these goals will require wholesale change across virtually all industries, calling on innovation to define the businesses that will lead and thrive. But we believe that this renewed consensus around the imperative of combatting climate change creates a massive tailwind for green energy. Indeed, we have already witnessed a significant uptick in renewables capacity, and this trend will need to continue. ‘THIS RENEWED CONSENSUS AROUND THE IMPERATIVE OF COMBATTING CLIMATE CHANGE CREATES A MASSIVE TAILWIND FOR GREEN ENERGY’ The U.S. Energy Information Agency forecast renewables to account for >50% of total power generation by the early 2040s (according to the U.S. EIA – International Energy Outlook 2020). Looking into the sector on a more granular basis, the main beneficiaries are expected to be solar and wind power, which are seeing installation at scale at an incredible pace. And whilst policy tailwinds are likely to be instrumental in supporting this extraordinary growth in the green energy space, it is ultimately the economics that will dominate the transition away from fossil fuels. The reality is that the accelerating pace of innovation in wind and solar in particular has made these technologies competitive with or superior to traditional fossil fuels from a cost perspective. The last decade alone (2010-2019) witnessed dramatic cost declines at 82% for solar, 39% for onshore wind and 29% for offshore wind. 35 Diy Investor Magazine · Nov 2021