GREEN ENERGY

Climate change is the greatest environmental challenge the world has ever faced, but we can do something about it. We are the last generation that can stop devastating climate change.’ (WWF)

Climate Change and how it is affecting us


Climate change is global warming instigated by human emissions of greenhouse gases and the resulting large-scale shifts in weather patterns. The consequential changing environment is expected to cause more heat stress, an increase in waterborne diseases, poor air quality, and diseases transmitted by insects and rodents. It also results in extreme weather events that can compound many of these health threats and effect natural disasters.


Climate change continues to exacerbate the frequency and severity of natural disasters, such as large-scale wildfires, droughts, hurricanes, and floods. To illustrate, at the start of 2020, while countries worldwide were just starting to tackle the effects of the pandemic, at the same time, Australia was also suffering from devastating bushfires that tore through communities. This resulted in countless fatalities, and considerable amounts of land damage. Although the climate crisis-fueled fires were mostly extinguished by May, a dry, hot summer has sparked further wildfires in Australia, displacing communities that were quarantining from the ongoing coronavirus.


Elsewhere, in the Artic, polar bears are top predators in their food web, meaning they play a vital role in the stability of their ecosystem. The Arctic is warming about twice as fast as the global average, causing the ice that polar bears depend on to melt away. Loss of sea ice also threatens the bear's main prey, seals, which require the ice to raise their young. Decreasing the threat of climate change on the polar bear would enable the Arctic food chain to stay strong, for the benefit of both wildlife and people in and outside the Arctic. The Arctic provides fish for millions of people, including in the UK.

Climate change continues to exacerbate the frequency and severity of natural disasters, such as large-scale wildfires, droughts, hurricanes, and floods

Renewable energy or clean energy is one of the most effectual tools there is in the fight against climate change



Global awareness of the serious and critical nature of climate change has rapidly increased and it is now big on the global policy agenda. Clean Energy and Climate Change are incorporated in two of the United Nations Sustainable Development Goals, goal 7, Affordable and Clean Energy (Ensure access to affordable, reliable, sustainable, and modern energy for all) and goal 13 Climate Action (take urgent action to combat climate change and its impacts).


For the past few years, US action on clean energy and climate change had decelerated and even reverted, as federal funding for green initiatives declined. Trump had previously referred to climate change as a hoax and taken steps to remove the US from the 2015 Paris climate agreement.


But whilst America had stepped back, Europe had driven forward developing its own clean energy initiatives and established an early leadership position in this area. However, with the Biden administration swearing to go green, the US is now ready to step back into a global leadership role in the quest for clean energy. America’s unmatched technology sector combined with its history of innovation means that, in combination with policy incentives laid down by the new Biden administration, the US is due to catch up to Europe’s lead. Biden’s win places the world’s biggest economy back at the core of global efforts to limit global warming.


A pledge to re-join the Paris Climate Accord within a day of taking office and a promised $2 trillion of new green investment are the core of a grand plan that aims to make the US carbon neutral by 2050. Recently, China, Japan and Korea have announced their own newly ambitious net-zero carbon goals.


For sustainable investors, all paths lead towards net zero target by 2050, and these swings in government and regulatory policy should act as a driving force for companies and sectors that serve the new clean, green, and low carbon economy

In the UK, during November, the Prime Minister unveiled his ten-point climate action plan supported by £12bn of government investment to kick-start a green industrial revolution in the UK. Clean energy is the mandate across the world, and the Prime Minister is seeking to turn the UK into a green energy superpower, through investment in offshore wind, hydrogen and nuclear. Meanwhile the EU launched the ‘European Green Deal’, which is €100bn plan to transition to a clean, circular economy through industry innovation and environmentally friendly policies.


For sustainable investors, all paths lead towards net zero target by 2050, and these swings in government and regulatory policy should act as a driving force for companies and sectors that serve the new clean, green, and low carbon economy. Billions of dollars of new private and public investment can be expected to flow into environmental technology and green infrastructure. Therefore, clean energy could become the fundamental mainstay of the 21st century economy.


Our Sustainable and SRI models



Clean Energy and tackling climate change are longstanding themes in our sustainable investment approach. In our Sustainable and SRI models we hold several funds focused on tackling climate change and investing in solutions to the global crises we face. For example, we hold the Climate Assets Fund which invests in companies providing solutions to the problems of using fossil fuels and energy scarcity and security. Such solutions are renewable energy generation, green transport, products and technologies for green building design and construction, and energy efficiency.


Clean energy is the best weapon we have in the fight against climate change and globally governments

Climate Asset fund invests in Union Pacific as one of its top holdings. Union Pacific is a freight-hauling railroad that operates 8,300 locomotives over 32,200 miles routes in 23 in the US. Union Pacific is the second largest railroad in the United States. Trains are one of the nation’s most environmentally responsible modes of moving freight. Union Pacific can move one ton of freight 444 miles on a single gallon of diesel fuel, generating a carbon footprint that is up to 75% less than trucks. The railroad squeezes the most out of every drop of fuel, focusing on conservation through better locomotive technology, and employee training and involvement and they have retired more than 2,300 older, less fuel-efficient locomotives.

Also, within the SRI and Sustainable models is the Pictet Clean Energy Fund which invests in equities of companies that contribute to lowering carbon emissions by choosing clean energy in their production process. For example, the Pictet Clean Energy fund invests in ON Semiconductor, who are committed to engineering a better tomorrow by providing customers around the globe with an innovative, energy efficient and environmentally friendly semiconductor solutions. Semiconductors play a key role in clean energy by enabling clean, renewable energy sources and improving energy efficiency. Semiconductor devices are also used to condition power from solar arrays and wind turbines so the energy can be used by electric equipment and fed onto the electric grid.


Climate change is the biggest global challenge ever faced and its effects are devastating for both humans and wildlife across the globe. Clean energy is the best weapon we have in the fight against climate change and globally governments are now paying heed and making it a key driver in their political agendas, thus giving green investment monumental growth potential. For existing seasoned sustainable investors clean energy is already a key theme and exposure within their investments, meaning they are well placed to share in the benefits of the growing clean energy sector and be a part of the fight against global warming.











Disclaimer:
This communication is from Alpha Beta Partners a trading name of AB Investment Solutions Limited. Alpha Beta Partners Limited is registered in England no. 10963905. AB Investment Solutions Limited is registered in England no. 09138865. AB Investment Solutions is authorised and regulated by the Financial Conduct Authority. This material is directed only at persons in the UK and is not an offer or invitation to buy or sell securities. Opinions expressed, whether in general, on the performance of individual securities or in a wider context, represent the views of Alpha Beta Partners at the time of preparation. They are subject to change and should not be interpreted as investment advice. You should remember that the value of investments and the income derived therefrom may fall as well as rise and you may not get back your original investment. Past performance is not a guide to future returns. Further information is available on request, or on our website www.alphabetapartners.co.uk