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The increasing focus on finding alternative energy sources and diminishing global reliability on fossil fuels has resulted in a surge in investment in clean energy sources. Escalating climate challenges have made investments in clean energy a top priority.
Global economies have been hiking their investments in the clean energy sector, with total global energy investments anticipated to surpass $3 trillion in 2024 for the first time, according to of the International Energy Agency’s annual World Energy Investment report.
Surge in Clean Energy Investments
Per IEA’s report, around $2 trillion is projected to be allocated toward clean technologies such as renewables, electric vehicles, nuclear power, low-emission fuels and efficiency improvements.
With coal, gas and oil being allocated the remaining $1 trillion, nearly two dollars are invested in clean energy for every dollar spent on fossil fuels. The surge in the allocation to clean energy sources is indicative of the momentum behind global economies increasing their attention toward achieving net zero carbon emissions.
Where Do Economies Stand Globally?
According to the IEA report, China leads global economies in clean energy investments, contributing $675 billion courtesy of robust solar, lithium batteries and EV demand. Europe and the United States follow suit, with an investment of $370 billion and $315 billion, respectively, with the three major economies accounting for more than two-thirds of global clean energy investments.
However, significant disparities remain in energy investment, with limited investments flowing in from emerging and developing economies, outside China. Investments from emerging and developing economies are forecast to surpass $300 billion, with India and Brazil leading the way, constituting only about 15% of global clean energy investment.
Climate Change's Financial Toll on Economies
According to a research paper, as quoted on the Gaurdian, a rise in global temperature by 1C leads to a loss of 12% in world GDP. This is far worse when compared to the decline in global wealth due to the financial losses incurred in a prolonged and ongoing war.
Per estimates by climate scientists, a 3C (5.4F) rise could occur by the end of this century due to the continued burning of fossil fuels. This is projected to cause steep declines in output, capital and consumption, exceeding 50% by 2100. This estimate can be supported by a rise in coal investments. According to the IEA report, approvals for unabated coal-fired power exceeded 50 gigawatts in 2023, marking the highest level since 2015.
Per the research paper, it is predicted that rising temperatures, more frequent and intense extreme weather events, and greater rainfall will result in $38 trillion in damage yearly, by the middle of the century.
ETFs in Focus
The increase in investments in clean energy highlights the growing commitment of global economies to combat climate change. With expectations for continued growth, investing in clean energy ETFs becomes increasingly attractive.
Below, we highlight a few ETFs for investors to increase their exposure to clean energy.
iShares Global Clean Energy ETF (ICLN - Free Report) has gained 13.04% over the past month and 7.61% over the past three months.
First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN - Free Report) has gained 16.71% over the past month and 7.13% over the past three months.
Invesco WilderHill Clean Energy ETF (PBW - Free Report) has gained 12.83% over the past months but lost 2.65% over the past three months.
ALPS Clean Energy ETF (ACES - Free Report) has gained 17.35% over the past month and 5.38% over the past three months.
SPDR S&P Kensho Clean Power ETF (CNRG - Free Report) has gained 15.47% over the past month and 7.89% over the past three months.
Investors can increase their exposure to solar power by investing in funds concentrated on the electric generating technique. According to the IEA, as quoted on The Economic Times, investments in solar power are expected to reach $500 billion in 2024, surpassing the combined investment in all other electricity generation technologies.
Invesco Solar ETF (TAN - Free Report) has gained 18.78% over the past month and 11.47% over the past three months.
Global X Solar ETF (RAYS - Free Report) has gained 9.14% over the past month and 2.16% over the past three months.
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Clean Energy ETFs Soar on Global Investment Surge
The increasing focus on finding alternative energy sources and diminishing global reliability on fossil fuels has resulted in a surge in investment in clean energy sources. Escalating climate challenges have made investments in clean energy a top priority.
Global economies have been hiking their investments in the clean energy sector, with total global energy investments anticipated to surpass $3 trillion in 2024 for the first time, according to of the International Energy Agency’s annual World Energy Investment report.
Surge in Clean Energy Investments
Per IEA’s report, around $2 trillion is projected to be allocated toward clean technologies such as renewables, electric vehicles, nuclear power, low-emission fuels and efficiency improvements.
With coal, gas and oil being allocated the remaining $1 trillion, nearly two dollars are invested in clean energy for every dollar spent on fossil fuels. The surge in the allocation to clean energy sources is indicative of the momentum behind global economies increasing their attention toward achieving net zero carbon emissions.
Where Do Economies Stand Globally?
According to the IEA report, China leads global economies in clean energy investments, contributing $675 billion courtesy of robust solar, lithium batteries and EV demand. Europe and the United States follow suit, with an investment of $370 billion and $315 billion, respectively, with the three major economies accounting for more than two-thirds of global clean energy investments.
However, significant disparities remain in energy investment, with limited investments flowing in from emerging and developing economies, outside China. Investments from emerging and developing economies are forecast to surpass $300 billion, with India and Brazil leading the way, constituting only about 15% of global clean energy investment.
Climate Change's Financial Toll on Economies
According to a research paper, as quoted on the Gaurdian, a rise in global temperature by 1C leads to a loss of 12% in world GDP. This is far worse when compared to the decline in global wealth due to the financial losses incurred in a prolonged and ongoing war.
Per estimates by climate scientists, a 3C (5.4F) rise could occur by the end of this century due to the continued burning of fossil fuels. This is projected to cause steep declines in output, capital and consumption, exceeding 50% by 2100. This estimate can be supported by a rise in coal investments. According to the IEA report, approvals for unabated coal-fired power exceeded 50 gigawatts in 2023, marking the highest level since 2015.
Per the research paper, it is predicted that rising temperatures, more frequent and intense extreme weather events, and greater rainfall will result in $38 trillion in damage yearly, by the middle of the century.
ETFs in Focus
The increase in investments in clean energy highlights the growing commitment of global economies to combat climate change. With expectations for continued growth, investing in clean energy ETFs becomes increasingly attractive.
Below, we highlight a few ETFs for investors to increase their exposure to clean energy.
iShares Global Clean Energy ETF (ICLN - Free Report) has gained 13.04% over the past month and 7.61% over the past three months.
First Trust NASDAQ Clean Edge Green Energy Index Fund (QCLN - Free Report) has gained 16.71% over the past month and 7.13% over the past three months.
Invesco WilderHill Clean Energy ETF (PBW - Free Report) has gained 12.83% over the past months but lost 2.65% over the past three months.
ALPS Clean Energy ETF (ACES - Free Report) has gained 17.35% over the past month and 5.38% over the past three months.
SPDR S&P Kensho Clean Power ETF (CNRG - Free Report) has gained 15.47% over the past month and 7.89% over the past three months.
Investors can increase their exposure to solar power by investing in funds concentrated on the electric generating technique. According to the IEA, as quoted on The Economic Times, investments in solar power are expected to reach $500 billion in 2024, surpassing the combined investment in all other electricity generation technologies.
Invesco Solar ETF (TAN - Free Report) has gained 18.78% over the past month and 11.47% over the past three months.
Global X Solar ETF (RAYS - Free Report) has gained 9.14% over the past month and 2.16% over the past three months.