Opinion: Here’s where investors can find money in Biden’s climate change targets
People who say the government can’t pick the winners often cite Solyndra, a thin-film solar cell company that went bankrupt in 2011 after receiving $ 535 million in funding from the Obama administration. But they are often silent when challenged to cite a second example.
Much like venture capital, where some startups that once looked promising fail to succeed while others may be spectacularly successful, the government certainly cannot choose all of them. Yet over the years he has invested taxpayer dollars in ideas that have seen spectacular success and have changed the way Americans live. To name just three: GPS, robotics, and perhaps the most important thing of all time: the Internet. I understand that the Internet has been associated with some degree of wealth creation over the past quarter century.
So maybe we shouldn’t be laughing when President Biden speaks out loud about America’s shift away from fossil fuels in favor of solar and wind power. He believes these industries are winners that will not only wean the United States off fossil fuels, but also generate wealth and jobs in the long run. (They already have.)
Where is the money to be made today? One of the most popular renewable energy investments is iShares Global Clean Energy ETF ICLN,
Even after falling around 27% this year, it has still tripled from the market lows of March 2020. If you think renewables will continue to increase their share of the US energy mix in the years to come, then the first ICLN – the quarter-dip could represent an entry point for anyone looking for a well-diversified long-term stake.
You can also track the money in another way. When cell phones started to take off, some entrepreneurs raised money by leasing land for cell phone towers. Similar models exist today for solar and wind farms. One of the largest onshore wind farms in the world, for example, is in Texas, where there is a lot of dirt and wind. Your investment game here could be a real estate investment trust. A REIT in this space is Hannon Armstrong Sustainable Infrastructure Capital Inc. HASI,
which has also retreated this year after a very strong race in 2020.
Fossil fuel companies
In the meantime, we don’t think of the oil and gas industry as being full of greenery that surrounds trees, but that is changing and could be opportunistic. Royal Dutch Shell RDS.A,
for example, began to move away from fossil fuels, announcing the closure of seven of its 13 refineries, as part of its plan to cut gasoline and diesel production by 55% over the next decade .
US fossil fuel giants ExxonMobil Corp. XOM,
Chevron Corp. CLC,
and NRG Energy NRG,
don’t get out of oil and gas, but they also understand that there is money to be made to fight carbon and dive into the carbon capture and sequestration (CCS) space.
CCS works by trapping CO2 at its emission source and storing it, often deep underground, to prevent it from entering the atmosphere. Maarten Wetselaar, director of integrated gas, renewable energy and energy solutions at Shell, called it more than just a solution but a real business. ExxonMobil CEO Darren Woods even puts a price on it: $ 2 trillion by 2040, nearly 8.4 times the size of the company’s market cap.
What about jobs? Woods believes that a major CCS effort “could generate tens of thousands of new jobs needed to manufacture and install CO2 capture equipment and transport it through a pipeline for storage.” It would also, he says, “protect thousands of existing jobs in industries seeking to reduce emissions.” In short, large-scale CCS would reduce emissions while protecting the economy. ”
There is more than environmental altruism. The Irving, Texas-based company wants tax breaks or a price on carbon to help drive its efforts. The former would put Biden in the awkward position of lending a hand to one of the country’s polluters, a move that environmentalists adamantly oppose. What is needed, they say, is a seamless approach to fossil fuels. As for the price of carbon, it is so far an approach that the president has so far avoided.
It’s not just the fossil fuel industry that is seeing the green. More than 400 large companies, which represent seven million workers in all 50 states and have more than $ 4 trillion in annual revenues, are also on board.
In a letter to the president, the group, which calls itself the “We Mean Business Coalition,” says reducing greenhouse gas emissions will spur a strong economic recovery, create millions of well-paying jobs and empower people. United States to “build back better” From the pandemic.
The group includes auto giants like General Motors GM,
and Ford F,
the behemoths of retail Walmart WMT,
and Amazon AMZN,
technology giants Apple AAPL,
and Facebook FB,
conglomerates like General Electric GE,
restaurant chains like McDonald’s MCD,
and dozens of asset management companies.
Some are not waiting for the federal government. Microsoft CEO Satya Nadella, who says a company’s goal is “to find cost-effective solutions to the problems of people and the planet,” stepped up ten-year efforts by the software and software giant. cloud computing to mitigate carbon emissions. It is investing $ 1 billion over four years to develop the technology that will be needed to remove greenhouse gases from the atmosphere and elsewhere; CFO Amy Hood calls being carbon negative a “good return on investment.”
Where can we make money here? I wrote last week that soaring house prices have excluded millions of Americans from the single-family home market. As well as being overpriced, they are also horrible for the environment.
“Among the types of residential housing, single-family homes are by far the most destructive to the environment,” said a study from Georgetown University. One way to achieve two things at the same time – more affordable housing and less carbon production – could be to change zoning laws that generally encourage the construction of single-family homes, often to the detriment of multi-family dwellings.
Between the environmental damage caused by single-family homes and the massive housing shortage in this country, there could be a surge in multi-family housing development. Two publicly traded companies to consider in this area could be Equity Residential EQR,
and AvalonBay Communities AVB,