Clean technology and the investments that support it will get a boost under the initiatives outlined by President-elect Joe Biden, according to Andrew Little, an analyst for Global X, a global fund manager based in New York City with $15 billion in assets under management.
In addition to potential programs in the United States, where Biden said he wants carbon neutrality by 2050, governments in China, Japan and South Korea have intensified efforts to reach carbon neutrality. And corporations such as Walmart, Nestle and Amazon.com have taken steps to reduce carbon emissions. In a recent interview, Little said investors can take advantage of these trends that potentially could accelerate adoption of clean technology and renewable energy.
“Setting enforceable milestones, committing to significant public clean energy funding and creating green jobs,” will open up investment opportunities, he said. One of the technologies that should benefit from these new global policies is carbon capture, which captures and repurposes fossil fuel emissions before they enter the atmosphere. Another technology to watch involves carbon dioxide removal designed to reduce existing atmospheric emissions.
“As the economic and societal implications of these impacts continue to mount, governments and companies are ramping up carbon neutrality efforts by setting aggressive emissions targets and committing to the adoption of clean technology," Little said.
In accordance with these trends, Global X last month launched the Global X CleanTech ETF (CTEC), which invests in companies primed to benefit from the increased use of technologies that inhibit or reduce negative environmental impacts. The fund has 38 holdings and charges an expense ratio of 0.50%.
“Global X looks for companies in clean technology including construction, engineering and transportation,” he said.
“For the last four years, the United States has not been a leader, but beyond that we have not done well on building cleantech infrastructure for three decades,” Little said. He added that leaders in this space will include companies that build sustainable homes, retrofit existing buildings, promote electrification and promote renewable power sources.
Granted, some of Biden's green initiatives might be stifled by a Republican-controlled Senate. But he can use his bully pulpit to enact change in attitudes and action. "The president sets the tone when it comes to investing in infrastructure," Little said. "A lot can be done by executive orders and by the judicious staffing of government agencies. In addition, such things as solar and increased capacity for fuel cells are supported by both sides.”
He offered that climate change mitigation is a desirable outcome for a large swath of the general population. “Some of that will be accomplished with such things as electric vehicles and charging stations. Government policies can encourage the public to buy electric vehicles. This movement will also create jobs,” he said.
As for cleantech's role in investor porfolios, Little said the desirable allocation depends on an individual’s goals.