Investing in Renewable Energy Stocks

Renewable Energy is On the Rise... 

But the World’s Biggest Polluters Must Change Course Now! 

Renewable energy sources are becoming increasingly important as the world strives to reduce its dependence on fossil fuels and mitigate the effects of climate change with an overall aim of reaching carbon neutrality by 2050.

In fact, never before in human history has the urgency for carbon-emission reduction been higher.

Urgency for carbon-emission reduction been higher.

According to U.N. Secretary General Antonio Guterres, “Humanity is on thin ice, and that ice is melting fast!”

In response to a new U.N.-backed report on global warming, he calls the current status quo a “ticking time bomb” — yet, one that’s not entirely irreversible if proper steps are quickly taken.

One of the key goals of the Paris Agreement is to keep warming to 1.5°C (2.7°F). Guterres says the 1.5°C limit is still achievable, “but it will take a quantum leap in climate action” to get there. 

At present, the world is 1.1°C above pre-industrial levels. 

That seemingly miniscule rise in temperature has already resulted in more frequent and more intense extreme weather events that have caused increasingly dangerous impacts on nature and people in every region of the planet. 

The polar ice caps, both in the Arctic and the Antarctic, are melting at an accelerating rate due to global warming caused by human activities, and the resulting rise in sea levels could prove catastrophic to coastal communities — and not just the rich ones.  

The fight, really, isn't with the acceptance or rollout of renewable energy sources and clean energy innovations. That’s all happening now… as we’ll get into in a moment.

The problem lies with the world’s biggest polluters — such as the United States, China, the European Union, and India — with the worst effects being felt, as you might expect, in the world’s poorest and most vulnerable regions. 

With the clock ticking, Guterres is calling on nations to “massively fast-track climate efforts” and, specifically, for rich countries to hit “the fast-forward button” on commitments to reach net-zero, which translates to removing as much planet-heating pollution from the atmosphere as they emit.

Fast-forwarding, in that sense, means a coordinated effort among rich nations to reach net-zero by 2040… or as close to that timeframe as humanly possible. 

Of course, there’s been a lot of talk about the Paris Agreement, which is the original framework that set global efforts to limit warming to 1.5°C. 

As of Q2 2024, 194 states and the EU, representing over 98% of global greenhouse gas emissions, have ratified or acceded to the agreement, including China, India, and the United States. 

What’s startling, however, are some of the actions we’ve been seeing in places like China and right here in the USA. 

As you’ve probably heard, the Biden administration has now greenlit the hugely controversial Willow oil drilling project in Alaska. 

Biden administration just greenlit the hugely controversial Willow oil drilling project in Alaska.

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Once operational, the project is projected to produce enough oil to release 9.2 million metric tons of planet-warming carbon pollution a year — equivalent to adding 2 million gas-powered cars to the roads.

Naturally, that greenlighting, or, shall we say, gaslighting, doesn’t quite jive with the President’s goal of at least 50% of vehicle sales to be electric by 2030! 

And then you have China, the world’s biggest polluter, planning a huge expansion of coal — the dirtiest of the fossil fuels.

China, the world’s biggest polluter, planning a huge expansion of coal — the dirtiest of the fossil fuels.

Last year alone, China granted permits for coal production across 82 sites, equal to starting two large coal power plants a week! 

In other words, we’re seeing far more lip service than action of late, making it difficult to envision a level of global proactiveness necessary to avoid the catastrophic events that are fast approaching. 

And while renewable energy sources can help… and they are indeed helping… it has become abundantly clear that renewables will not be enough to solve the global climate crisis unless the world’s biggest polluters massively and quickly rein in their carbon-emissions output. 

With a very steep uphill battle ahead, let’s take a look at the various types of renewable energy sources that are available, and currently helping to reduce carbon emissions, at present technologies. 

Renewable Energy Sources: Slowing the Ticking Time Bomb

There are several different types of renewable energy sources in use today, each with their own unique advantages and limitations. 

Renewable energy sources — such as solar, wind, hydroelectric, geothermal, and biomass — are becoming increasingly competitive with fossil fuels in the United States.

The cost of renewable energy has been decreasing steadily while the cost of fossil fuels, obviously, fluctuates wildly… as we’ve all borne witness to these last few years. 

In some cases, renewable energy sources have actually become cheaper than fossil fuels, especially in states with high renewable energy potential such as California and Texas.

Renewable energy sources are widely available in the United States, while fossil fuels are concentrated in certain regions. For example, the Midwest and Great Plains states have abundant wind resources, while the Southwest has abundant solar resources. 

That means renewable energy can be generated and used locally, reducing the need for long-distance transportation and fossil fuel backup.

Despite all the positives, renewable energy sources currently account for only about 12.7% of total energy consumption in the United States with the largest sources being wind and hydroelectric power. 

However, the percentage of energy consumption in the US from renewables has been rising steadily in recent years — and that trend is expected to continue well into the future. 

Let’s take a quick look at the different types of renewable energy sources, how they are used, and where their limitations lie.

Solar energy is perhaps the most well-known and widely used form of renewable energy globally. It is harnessed by capturing the energy from the sun through solar panels or photovoltaic cells. These cells convert sunlight into electricity that can be used to power homes and businesses. 

The advantages of solar energy include its abundance and accessibility as well as its ability to be used in remote areas. However, the limitation of solar energy is that it is dependent on sunlight (obviously) and cannot generate electricity at night or in cloudy weather.

Solar energy is perhaps the most well-known and widely used form of renewable energy globally.

Solar is one of the cleanest forms of renewable energy as it does not produce any emissions or waste products. The only potential environmental impact is the manufacture and disposal of solar panels, which can be minimized with responsible manufacturing and recycling practices.

Wind energy is another popular form of renewable energy that is considered clean. It is generated by harnessing the power of wind turbines, which convert wind energy into electricity. Wind turbines are typically placed in areas with high wind speeds such as offshore or in open fields.  

Wind energy is another popular form of renewable energy that is considered clean.

The advantages of wind energy include its low cost and abundance as well as its ability to generate electricity even at night. And although it doesn’t produce any emissions or waste products, there are some concerns about the impact of wind turbines on birds, sea mammals, and other wildlife along with noise concerns for those living close by.

Hydro energy, also known as hydropower, is generated by harnessing the power of water. This is typically done by using dams to control the flow of water and turn turbines to generate electricity. 

Hydro energy is a clean, reliable, and predictable source of energy as it is not dependent on weather conditions. However, the construction of dams can have a negative impact on the environment, and the availability of suitable locations for hydro energy is obviously limited.

Geothermal energy is generated by harnessing heat from the Earth's core. This is typically done by drilling wells into the Earth’s surface and using the heat to generate electricity. 

Geothermal is a clean, reliable, and consistent source of energy, and it can be used in a variety of applications, including heating and cooling. However, the cost of building geothermal plants can be extremely high, and suitable locations are limited as well.

Perhaps the best example of the successful use of geothermal, globally, is the country of Iceland. Iceland is located on the Mid-Atlantic Ridge, which is a tectonic plate boundary that runs through the center of the country. 

As a result, the country has a large number of active volcanoes and hot springs, which provide an abundant source of geothermal energy.

Geothermal energy is generated by harnessing heat from the Earth's core.

Over 85% of the country's energy comes from renewable sources with geothermal energy being the largest contributor. 

America — which has a number of geothermal plants in the west — certainly has the potential to emulate Iceland’s successful model when it comes to geothermal energy production.   

Overall, the United States has more than 3.7 GW of installed geothermal capacity, making it the third-largest producer of geothermal energy in the world.

Yet, geothermal still ranks at the very bottom of renewable energy consumption in America in terms of percentage:

  • Wind: 8.3%
  • Hydropower: 6.5%
  • Biomass: 5.5%
  • Solar: 4.6%
  • Geothermal: 0.1%

So, a lot of work still needs to be done… but the potential is clearly there. Especially considering the number of geothermally active areas in the United States in places like California, Nevada, Utah, Alaska, Hawaii, and the Gulf Coast.

Lastly, biomass energy is generated by burning organic materials such as wood, agricultural waste, and even garbage. This produces steam, which is used to generate electricity. Biomass energy is a renewable source of energy as the organic materials can be replenished. 

However, the use of biomass energy can have negative environmental impacts due to the harvesting and processing of these materials as well as the emissions that can be produced during combustion. Plus, the availability of suitable biomass materials can be somewhat limited.

To summarize, there are several different types of renewable energy sources in use today. As we continue to develop and implement these technologies, we can reduce our reliance on fossil fuels and create a more sustainable future for our children and grandchildren. 

With costs coming down, renewable energy sources are becoming increasingly competitive with fossil fuels in the United States and are poised to play an increased role in our nation’s energy mix over the coming decades.

Investing in Renewable Energy Stocks.

How to Invest in Renewable Energy

There are a number of large-cap stocks that are focused on renewable energy. Here are a few of the top renewable energy stocks that merit additional due diligence. 

Brookfield Renewable Partners

Brookfield Renewable Partners L.P. (NYSE: BEP) is a Canadian energy firm that operates one of the world’s largest publicly traded, pure-play renewable power platforms. The company’s portfolio consists of hydroelectric, wind, solar and storage facilities in North America, South America, Europe, and Asia.

Plug Power Inc. (NASDAQ: PLUG)

Plug Power Inc. (NASDAQ: PLUG) is a US company engaged in the development of hydrogen fuel cell systems that replace conventional batteries in equipment and vehicles powered by electricity. 

NextEra Energy (NYSE: NEE)

NextEra Energy (NYSE: NEE) operates one of the largest regulated electric utility operations in the United States and is the largest wind and solar energy producer in the country. 
 

Ormat Technologies, Inc. (NYSE: ORA)

Ormat Technologies, Inc. (NYSE: ORA) is a leading US-based geothermal company and the only vertically integrated company engaged in geothermal and recovered energy generation with robust plans to establish a leading position in the US energy storage market.

There are also a number of renewable energy focused ETFs worth checking out, including the iShares Global Clean Energy ETF (ICLN)

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In Closing...

The world is currently facing significant and potentially catastrophic consequences due to global warming, which is primarily caused by the release of greenhouse gases such as carbon dioxide and methane directly into the atmosphere. 

The impacts of planet-warming pollution are already more severe than expected as we hurtle towards increasingly dangerous and irreversible consequences. 

As global temperatures continue to rise, glaciers and ice caps will continue to melt away. The end result is a historic rise in sea level that currently has us on the path to displacement of coastal populations and loss of coastal habitats.  

Global warming, at the pace we’re at now, will continue to produce more frequent and more extreme weather events such as heatwaves, droughts, hurricanes, and wildfires… which, as we’re seeing, can have devastating impacts on communities, infrastructure, and economies.

That also includes the disruption of ecosystems, leading to the loss of habitats and endangering the survival of many plant and animal species.

We’re also seeing, as a result of global warming, reduced crop yields, decreased access to freshwater resources, and increased food and water insecurity — particularly in already vulnerable regions.

It can also affect public health, including increased spread of disease carried by insects, such as malaria, and upticks in respiratory and cardiovascular conditions due to increased air pollution.

Global Warming can also affect public health

The consequences of global warming highlight the urgent need for swift action by the world’s biggest polluters to massively reduce greenhouse gas emissions while ramping up renewable energy sources as a means of mitigating the impacts of climate change.

Renewable energy sources such as solar, wind, hydroelectric, geothermal, and biomass can help combat climate change by reducing greenhouse gas emissions and by decreasing our dependence on fossil fuels.

Yet, there should be no uncertainty that the world’s climate goals are simply not achievable unless the largest polluters drastically change their course of action. We’ll see how that all plays out in the years and decades ahead.

In the meantime, there are a number of ways to invest in renewable energy stocks, and we’ve provided a few examples of large-cap firms that can be considered key players in the sector, plus one sector ETF. 

Unless Mr. Musk gets us quickly to Mars, we have just one planet to take care of for future generations… and, thus far, we’re not doing a very good job of that. 

Hopefully, the world’s worst polluters will make meaningful reductions in their carbon output over the coming years and decades… and do it sooner rather than later… BEFORE the clock runs out.

Mike Fagan

Mike Fagan
Editor, Daily Profit Cycle