Brace for a Selloff (and Buy Opportunity) in the Clean Energy Sector
- By John Tierney
- 7 min read
Summary
• Climate activists hope COP26 will jumpstart a global push to cut emissions.
• But the world is on track to increase emissions 16% by 2030, not cut them 25-45%.
• COP26 could persuade countries to up their commitments, yet has little control over actions.
• Biden has committed the US to halving emissions by 2030, but that requires his climate change legislation to survive largely intact, which looks unlikely.
• If the US cannot lead, many other countries will also refuse to cut emissions much.
Investment Implications
• We have recommended clean energy-related ETFs as a medium-term macro trade.
• This is because we believe global warming will make a wholesale shift to decarbonization inevitable. The only question is when.
• Given a less constructive outlook for COP26 and Biden’s climate change agenda, the clean energy sector could experience a selloff. We would view this as an opportunity for patient investors to add to clean energy positions.
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