Great News For Renewables

Summary

• Clean Energy has recently seen a sharp pullback.
• However, the bull thesis remains intact.
• We share a name that is getting interesting.
• Looking for a portfolio of ideas like this one? Members of High Yield Investor get exclusive access to our model portfolio. Get started today »

The outlook for green energy (ICLN) has never been brighter. While the sector has recently seen a significant decline due to rising interest rates, profit-taking, and negative headlines associated with the recent severe winter storm across much of the United States, the bull thesis for the sector remains intact.

Globally, green energy investment is expected to account for 50% of total energy investment in 2021 and the sector is expected to command a significant majority of total global energy investment over the coming decade due to the following factors:

#1 - COVID-19

When fossil fuel prices plunged in the wake of COVID-19 restrictions on economic activity and the Russian-Saudi Arabian pricing war, investment capital shifted away from fossil fuels (XOP) and towards energy investment towards renewables as the below chart makes abundantly clear:

While demand for oil and natural gas is already returning, the momentum provided to clean energy this past year is likely irreversible as many companies and governments are now on a firm path towards increasingly using clean energy.

#2 - A Shift In The Political Winds

With the ascendancy of the Biden administration, the United States government is conducting an about-face in its disposition towards clean energy and fossil fuels. In addition to a slew of executive orders aimed at promoting clean energy at the expense of the fossil fuels industry, the U.S. is also rejoining the Paris Climate Accords. This is expected to result in new government regulations and incentives that should further spur investment in clean energy technologies and generation.

Furthermore, as the following video details, the European Union and China have also recently announced major initiatives to transition increasingly towards clean energy:

#3 - Rise Of The ESG Movement

Perhaps the clearest signal that clean energy has a strong future at the expense of

Analyst’s Disclosure:I am/we are long ET. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Long AY via puts