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How to Profit from the Greening of the Blue Economy

January 18, 2022 By admin Leave a Comment

In Focus:

  • What is the Blue Economy?
  • The Greening of the Blue
  • Several Opportunities to Consider

The “blue economy” is going green… and it’s time investors took notice.

But first, what is the blue economy?

The World Bank defines it as the “sustainable use of ocean resources for economic growth, improved livelihoods and jobs while preserving the health of ocean ecosystems.”

The European Commission, in contrast, defines it as “all economic activities related to oceans, seas and coasts. It covers a wide range of interlinked established and emerging sectors.”

The blue economy supports many sectors, including aquaculture, coastal tourism, fisheries, shipbuilding, port activities and maritime transportation.

One of the largest sectors in the blue economy has been oil and gas production. And sadly, waste disposal – both intentional and unintentional – has been part of the blue economy too (at least by the European Commission’s definition of it). So has overfishing.

But now the blue economy is going green in many different ways.

The Greening of the Blue

The blue economy is starting to seriously take note of its environmental impact.

For example, areas that were once home to oil and gas rigs are increasingly being used as sites of offshore wind farms.

Additionally, excess energy from offshore wind can generate green hydrogen. That will power the world’s newest ships.

[The Forever Battery: Making Gas Guzzlers Obsolete]

Desalinization plants, many powered by renewable energy, will provide fresh water to irrigate arid regions. And floating solar arrays can now be found in oceans and other waters. Tidal and wave energy production are also gearing up.

But let me explain what’s really driving the greening of the blue economy. Investors are increasingly focused on companies that apply environmental, social and governance (ESG) standards to their businesses.

Over the last few years, the momentum of companies adopting ESG standards has increased. As of the end of 2020, 88% of public companies and 67% of privately owned companies had adopted some form of ESG initiatives.

Several Opportunities to Consider

The number of sectors and companies in the blue economy is so vast that the best way for investors to play it is through one or more of the exchange-traded funds (ETFs) focused on it.

Today, there are no blue economy ETFs that trade on U.S. indexes. However, there are a number of European ETFs that investors should have access to.

The first one I like is the BNP Paribas ECPI Global ESG Blue Economy ETF (France: BLUE). This ETF tracks the performance of the Global ESG Blue Economy Index, which is composed of companies involved in the blue economy.

The second is the Lyxor World Water UCITS ETF (London: WATC), an ETF that tracks the World Water CW Total Return Index. It invests in the 30 largest companies in the world that get at least 40% of their revenues from water-related activities. These include companies involved in infrastructure, utilities and water treatment.

[New Battery Breakthrough: Could Revolutionize the $2 Trillion Automotive Industry]

The size of the ETF has doubled during the last three years. And as of June 2021, it was valued at 1.02 billion British pounds, or about $1.38 billion.

Some investors may be interested in individual companies with a focus on the blue economy. There are three worth considering that trade on U.S. exchanges.

The United Utilities Group PLC (OTC: UU.L) is focused on reducing water leakages by 15% and water pollution by 20%.

Xylem (NYSE: XYL) uses artificial intelligence to reduce pipe failure costs by 80%.

And finally, Essential Utilities (NYSE: WTRG) is a leader in water desalinization.

As the blue economy becomes greener, interest in these companies and others like them will only increase.

Investors might want to position their portfolios to take advantage of the changing blue economy sooner rather than later.

Good investing,

Dave

[Exclusive: Company Pioneering this New Battery could be the Investment of a Lifetime]

Read more from David Fessler at ProfitTrends.com

Filed Under: Analysis Tagged With: BLUE, Blue Economy, David Fessler, ETFs, Hydrogen, oil and gas, renewable energy, solar energy, UU.L, WATC, wind energy, WTRG, XYL

2022 Will Be a Strong Year for Green Energy

January 17, 2022 By admin Leave a Comment

I’m a trader. I’m all about building systems and then watching them work in the wild. I love the intellectual rigor and — naturally — the profits that result.

Not every trade works out, of course, just as even Steph Curry misses the occasional 3-pointer!

But trading… like Steph Curry’s 3-point shooting … is a numbers game. If you find a process that works, you have to give it time to work.

The same holds true with longer-term investing themes. Not every investment works out on the time frame you hope. But if the theme is solid, you can keep coming back to it, even if some of the trades within that theme end up being duds.

Look at green energy. This is the future. It’s happening. I would go so far as to call it an inevitability. Every government in the world is pushing for cleaner energy initiatives, and some of the smartest minds in business are staking their futures on it.

It just makes sense.

High-minded idealism isn’t the reason the world is going green. It’s basic economics.

In 2018, the cost of generating new wind and solar energy dropped below the cost of generating power from existing coal plants for the first time.

[The Forever Battery: Making Gas Guzzlers Obsolete]

Green Energy Chart
(source:MoneyandMarkets.com)

That was three years ago, and prices haven’t stopped dropping. Solar and wind energy now slug it out with natural gas in a race to be the cheapest energy source.

Forget politics. Forget the midterm elections. Forget all of that noise. At the end of the day, money talks. And green energy delivers the goods cheaper, so its share of the grid will only continue to grow.

As of last year, renewable energy — including wind, solar hydroelectric and even biomass – already accounted for 23% of all utility power generated in the United States. Between 2040 and 2045, renewables will make up a majority of all energy produced.

2022 Will Be a Strong Year for Green Energy

Last year saw some of the bigger names in green energy stumble, particularly in the electric vehicle space.

Tesla Inc. (Nasdaq: TSLA) has trended lower since early November, and many of the high-flying Chinese competitors have fared much worse. NIO Inc. (Nasdaq: NIO) lost more than half of its value since topping out earlier this year.

Total Returns: Tesla (TSLA) vs. Nio (NIO) 2021

[New Battery Breakthrough: Could Revolutionize the $2 Trillion Automotive Industry]

Likewise, solar stocks haven’t had a great run. The Invesco Solar ETF (NYSE: TAN) is down nearly 40% from its 52-week highs.

But here’s the deal. Many of the stocks in this space have worked out just fine, including several I recommended in Green Zone Fortunes.

I recommended a maker of energy-efficient power systems in June, and it’s up a good 24% already. And my stock for this month’s issue is a revolutionary battery maker that is up around 5%, with plenty of room to run higher.

My Green Zone Fortunes readers even banked a 53% gain on the second half of a position back in August after holding since my initial recommendation in July 2020. (We closed the first half of this position for a 124% gain after only five months!)

Again, not every trade works out. But in a powerful mega trend like this, we can wait for our moments and trade around them. Like Steph Curry, we can keep lobbing 3-pointers because we are confident that enough of them will drop.

And green energy is too big of a mega trend to ignore.

Join us now, and get ready for a life-changing 2022!

Adam O’Dell

Chief Investment Strategist

[Exclusive: Company Pioneering this New Battery could be the Investment of a Lifetime]

Read more from Adam O’Dell at MoneyandMarkets.com

Filed Under: Analysis Tagged With: Adam O’Dell, electric vehicle, NIO, solar energy, TAN, tesla, wind energy

2022 Will be a Crucial Test for Biden’s Clean Energy Goals

January 11, 2022 By admin Leave a Comment

  • America’s failing electric grids and clean energy goals will be key themes in the U.S. energy sector this year.
  • The coming months will also be a test for President Biden’s green energy policies, considering that his Build Back Better Act is now stalled in Congress.
  • Clean energy targets set by states are “going to be more difficult to achieve” without federal action.

The winter months will show whether state legislators and utilities have learned the lesson from last February’s Texas storm in ensuring grid reliability, while Democrats are scrambling to salvage President Joe Biden’s proposed Build Back Better Act. Grid reliability, states’ clean energy goals, and further federal action to advance renewable energy will be the key themes in the U.S. electricity sector in 2022.

The Biden Administration announced last year ambitious goals to promote green energy, including decarbonizing the electricity grid by 2035. But issues with grid access, flexibility, and reliability need to be addressed by states and the federal government sooner rather than later to avoid another deadly storm like the one in Texas in February 2021.

Despite newly introduced regulations to avoid power failures, the Texas grid remains vulnerable to blackouts in case of a repeat of the February Freeze, a report by the North American Electric Reliability Corp warned at the end of last year.

According to the 2021-2022 Winter Reliability Assessment report, Texas risks a 37-percent reserve margin deficit in case of a harsh winter, NERC said.

A cold spell this winter could test the Texas grid and whether the state legislators have managed—through legislation—to help the Lone Star State avoid a repeat of last February’s disaster.

The coming months will also be a test for President Biden’s green energy policies, considering that his Build Back Better Act is now stalled in Congress.

The outlook of U.S. renewable markets and economic growth became even more uncertain just before Christmas, when Democratic Senator Joe Manchin of West Virginia, a crucial vote in a divided Senate, said he would not support President Biden’s bill. Democrats are now trying to salvage the bill and may be forced to drop some policy priorities if they want Senator Manchin’s decisive vote and the bill to pass.

[The Forever Battery: Making Gas Guzzlers Obsolete]

The Biden Administration believes a carbon-free electricity grid by 2035 is an achievable goal. Many analysts believe it is not.

The stalled Build Back Better legislation will impact the future renewable energy installations in the United States.

The U.S. solar industry is set to be torn between huge opportunities and major stumbling blocks in the coming months and years, and it will likely see a wild “solar coaster” ride in the next few years, Wood Mackenzie said in the middle of December.

Supply chain setbacks and constraints could delay many projects and put gigawatts of capacity additions at risk, Michelle Davis, Principal Analyst, Solar, at WoodMac, says. But on the other hand, if Congress passes the Build Back Better Act, the U.S. solar industry will receive a shot in the arm with the multiple clean energy incentives set in the legislation, including an extension of the investment tax credit (ITC), Davis added.

Due to the opposing bullish and bearish dynamics, near-term U.S. solar capacity is set for the largest fluctuations since 2016, when the ITC almost expired, WoodMac’s analyst noted.

The U.S. Department of Energy insisted in its Solar Futures Study in early December that by 2035, solar energy has the potential to power 40 percent of the nation’s electricity, drive deep decarbonization of the grid, and employ as much as 1.5 million people—without raising electricity prices.

However, the study also shows that by 2035 the United States “would need to quadruple its yearly solar capacity additions and provide 1,000 GW of power to a renewable-dominant grid.”

[Exclusive: Company Pioneering this New Battery could be the Investment of a Lifetime]

Electric vehicles also received major policy support in 2021, and major automakers are now racing to build battery plants across the U.S. in a sign that the car manufacturing industry has started to embrace the EV future. It now needs to turn American consumers into fans of electric vehicles, which will take time.

In 2021, more states adopted clean energy and/or net-zero emissions targets, and others are expected to join the list this year and in the coming years. North Carolina, Oregon, and Illinois adopted legislation in 2021 to reach carbon neutrality by 2050, or by 2040 in Oregon’s case.

Clean energy targets set by states are “going to be more difficult to achieve” without federal action, Warren Leon, Executive Director of the Clean Energy States Alliance (CESA), told E&E News.

Overall, the year is set to be a crucial test for the Biden Administration’s clean policy goals.

Read more from Tsvetana Paraskova at Oilprice.com

Filed Under: Analysis Tagged With: Battery, biden, Build Back Better, electric vehicle, Energy Policy, Grid, solar energy, Supply Chain

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