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Why Now is the Time To Invest in Clean Energy

image credit: https://naveco.ca/2021/03/12/is-it-time-to-invest-in-clean-energy/
Wil Robertson's picture
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An analytical thinker, with a passion for promoting the sharing of our truths. Proud to further the causes of social acceptance, sustainability, and justice. 

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  • May 21, 2021
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“Conventional wisdom says that investing in fossil fuels is more profitable than investing in renewable power. The conventional wisdom is wrong.” Charles Donovan, director of the Centre for Climate Finance and Investment at Imperial College, said that while speaking to Forbes.com. He wasn’t wrong; investing in clean energy is better than investing in fossil fuels

Investment Return on Clean Energy vs Fossil Fuels

A report released a year ago by Imperial College London and the International Energy Agency analyzed stock market data to determine the rate of return on energy investments over a five and 10-year period. The study found renewables investments in Germany and France yielded returns of 178.2% over a five-year period, compared with -20.7% for fossil fuel investments. In the U.K., also over five years, investments in green energy generated returns of 75.4% compared to just 8.8% for fossil fuels. In the U.S., renewables yielded 200.3% returns versus 97.2% for fossil fuels. Renewables are yielding better investment returns for investors than fossil fuels. Tim Nash, founder and investment coach at Good Investing, said, “in my opinion, we’re going to start seeing dividend cuts and bankruptcies in the oil and gas sector. Investors are going to have to take a long, hard look at their exposure to carbon risk and how much it’s going to cost them and their portfolio.” 

Why Switch to Clean Energy?

As we’re facing economic downfalls caused by COVID-19, the question of how to build back the economy is paramount. We know for certain that the world requires much higher levels of investment in renewable energy to meet Paris climate targets. We also know that currently, the renewable energy sector presents a more profitable and safe investment when compared to fossil fuels. Renewable energy offers an investment solution during these times. 

Now is the time to invest in renewable energy. If significant investments are made in the renewable energy sector, we could see sixty-three million new clean energy jobs by 2050. These levels of investment will help stifle global warming, create new jobs, grow the global GDP, and provide a better future for generations to come. As well, it’s clear that the fossil fuel sector is becoming increasingly unstable. From oil spills and other disasters to consistent pipeline protests to a higher percentage of people who are more environmentally conscious, renewables are becoming the top choice.  

Bloomberg New Energy Finance (BNEF) estimated last year that between now and 2050, 77% of investments in new power generation will be in renewables. COVID-19 will only help with renewable energy growth. Renewable energy is one of the few sectors of the global economy still expected to grow, despite the coronavirus pandemic. Renewable energy was a key part of the United States’ recovery from the 2008 recession, and it may be for their COVID-19 economic recovery as well. Clean energy is also already a cornerstone of the European Union’s economic recovery plan coming out of COVID-19. The continued growth and unified global faith in renewable energy will only push the growth of the sector. This will mean that it will continue to yield returns for investors and continue what may become exponential growth in the coming years.  

Why do Investors Shy Away from Renewable Energy?

two people having meeting at table

The main reason for the lack of mass investment in renewable energy is its youth. The sector simply hasn’t been around long enough for large-scale investment and investors to be entirely comfortable diverting from fossil fuels. As the years go on, this will change. The climate crisis will become more strenuous in the coming years, forcing the world’s governments and elite to invest in clean energy. 

That is what the future holds for us. There is no reason to wait - there is no time to wait. The renewable energy sector has already surpassed the fossil fuel sector in its rate of growth, stability, and investment return. Our environment requires more investment in renewable energy, and your portfolio only stands to gain from it.  

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Matt Chester's picture
Matt Chester on May 21, 2021

As we’re facing economic downfalls caused by COVID-19, the question of how to build back the economy is paramount. 

It's also important to stress, though, that clean energy isn't just about immediate benefits-- it's long-term economic stability and prosperity. The key, though, is there are short-term benefits when those projects kick off (jobs, construction, etc.), so why not kick them off now when so many need a jolt to restart economic activity!

Wil Robertson's picture
Wil Robertson on May 22, 2021

Exactly Matt, couldn't say it better myself. 

Joseph McLeer's picture
Joseph McLeer on Jun 4, 2021

Why is no data provided noting the impact of government subsidies on the growth of renewables?

Wil Robertson's picture
Wil Robertson on Jun 4, 2021

It seems one with an understanding of the industry would be aware of this. Yet to focus on it would discredit the high level of private investment, including oil and gas companies transitioning to renewable energy projects. Also, carbon emitting sources are and have been subsidized for as long as they have been developed, at a higher level than renewables historically. As an author as well, I can't always include every little detail for everyone's reading pleasure. If I did, I'd be writing a book, and that's not what this forum is for. Insights were provided, and folks can read them, consider them, and critique them as they see fit. That's the point of a piece like this :)  

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