The Savvy Investor Cleantech Investing section consists of the latest articles, white papers, thought leadership and commentary on the investment case for renewable energy and the new technologies being developed to help reduce or eliminate the negative effects of human activity on the environment.
Cleantech is classed as an alternative investment product and is an umbrella term that includes products, services and processes which promote energy efficiency and the environmentally-responsible use of natural resources. Cleantech is closely associated with other socially responsible investment themes such as sustainable and impact investing and environmental and social governance (ESG
Recommendations made by the Intergovernmental Panel on Climate Change (IPCC) state that the world must limit temperature rises to 1.5 degrees Celsius (versus pre-industrial levels) over the next three decades. To satisfy this target, governments and policymakers must “decarbonise”, relying less on fossil fuel and focusing more on renewable fuel sources. As a result of government incentives and innovation from industry, demand for cleantech is growing, presenting opportunities for investment in the following areas:
- Renewable energy e.g. solar, wind, hydro, geo-thermal
- Alternative energy e.g. biofuels, biomass and biodigesters
- Recycling e.g. advanced chemical recycling for plastics and other materials
- Waste management e.g. existing landfill remediation
- Water management e.g. desalination and clean water recycling technology
- Air pollution control e.g. air filters and sensors
- Transportation e.g. electric vehicles (EVs)
- Advanced materials and applications e.g. graphene technology
According to Bloomberg New Energy Finance, the knock-on effects of global decarbonisation from the present day to 2050 will result in a 62% increase in global power demand. Over this period, it is expected that $13.3 trillion in power generation investment will be required, 77% of which is forecast to be allocated to renewables.
In order for new technologies to witness widespread adoption, existing infrastructure will need to be upgraded. The creation of smart electricity grids and development of advanced battery technology for power storage will be key to satisfying seasonal or diurnal demand for electricity and to achieve optimal efficiency with minimal waste.
As the world develops a new circular economy founded upon green infrastructure, institutional investors will need to demonstrate responsible stewardship of client assets with consideration given to their choice of investments and the direct or indirect effects of those investments on climate change. As nations move towards a globally accepted carbon accounting standard, Savvy Investor members may wish to familiarise themselves with MSCI’s low carbon indices and investment metrics such as energy return on capital invested (EROCI), both of which are detailed in our Cleantech Investing section.
In addition to featuring in-depth white papers and industry articles on Cleantech investing, Savvy Investor also links to video and podcast interviews with renowned thought leaders in this arena. Some excellent research is published by The Institutional Investors Group on Climate Change (IIGCC) with other recent popular research pieces including:
- Preqin - The Future of Alternatives: 2018-2023
- Candriam - Long Live Our Batteries: Standardising recycling in the EV market
- Aegon - Solar Asset Backed Securities: A Growing Sector Offered Sunnyside Up
- World Economic Forum - A Vision for a Sustainable Battery Value Chain in 2030
- PIMCO - Sustainable Development Goal (SDG) Bonds: Their time has come
- Brookings Institution - Ten Facts on the Economics of Climate Change and Climate Policy