Most of us are quite done with reading about the negative effects of the pandemic. Here is a positive effect: the pandemic boosted the evolution of the energy market and it helped mankind to make a huge step forward a greener and more sustainable future. COVID-19 intensified already existing global energy trends: the decline of coal, the growing surplus of oil production and the booming demand for renewables.
According to the Energy Information Administration (EIA) the demand for the three key resources (oil, gas and coal) in the global energy mix decreased on a historic level in 2020. Meanwhile a new study by European think tanks Agora and Ember shows that Europe generated more electricity from renewables than from fossil fuels last year. Green energy is taking over and the change is inevitable.
The United Nations’ and the European Union’s climate goals, the new US administration’s initiatives clearly mark the way. Solar, wind and geothermal will take over energy production, corporations will go green, companies will leverage green tax credits and even traditional energy companies will diversify by investing in green tech. Meanwhile the demand for electricity is on the rise and not just because people spend more time at home during the lockdowns. Electric cars invaded our streets and soon mass and cargo transportation will rely on electricity too. Electric mobility will take over the roads, rails, the skies and the seas. Innovation drives green efforts.
Even 20 years ago every decent investment portfolio had a little renewable energy in it, clean energy has been a little balancing ingredient which is safe, but “boring”. In the post pandemic era green energy will become the cornerstone of any progressive investment portfolio. From the last page of financial publications renewables jumped to the front pages, from a “nice to have” it was quickly upgraded to the “hot stuff” level and it will soon become a “MUST”.
So how can you take part in this boom? In short: invest in renewables! The media says you can’t go wrong: bonds, funds, stocks related to clean energy or even a household solar system is a good investment. In principle the media is right, but tread carefully. Making money from stocks for example, let they be related to big tech, pharma or green energy, require constant watch and deep knowledge of the dynamics of the markets.
Investing in renewable energy is not a horse race, it is more like betting on the slowly moving camel caravan in the desert, which will reach its destination surely and securely. It is not “quick buck”, in fact I like to call it “slow money”. Slow in the sense of making decent profits surely on the long run. Just like the lifestyle trends “slow food” or “slow living”, you can enjoy the benefits of your investment for a long time and also be proud that you have invested in something, which is actually good for our planet.
You can speed up the process of course: since you are investing in a value generating asset (for example a solar power plant generating electricity every day), the more directly you are involved in the actual investment, the quicker and the bigger the profits will be. So try to find something which suits your needs, attitude and expectations: install a solar system on your house or if you can’t, then invest in a community solar power program for a more direct and safe approach, buy bonds or invest in funds for a less direct approach with minimal risks, invest in a renewable tech startup or buy clean energy related stocks for a more risky hands on approach if you have the time and the skillset.
We all want a better future, that is why we make changes to our daily routine by using less plastic, buy more efficient household appliances, recycle, reuse and so on. Use the same logic when investing: make a future aware or environmentally conscious investment, which will have a big impact on your future and the planet’s future too. So, if you really want to make the world better “put your money where your mouth is”.