Friday 29 May 2020

‘Renewable power outperforms fossil fuels in major American and European stock markets’

Renewable power is outperforming fossil fuels in major American and European stock markets.

That's according to new research from the Centre for Climate Finance and Investment at Imperial College Business School in partnership with the International Energy Agency, which notes that despite such successes, total investment in clean energy is still falling 'well short' of the level needed to tackle climate change and reach net zero.

The report analyses the performance of listed companies in the US, UK, Germany and France that are engaged in fossil fuel supply and compares them with those that are active in renewable power over the past decade - the results show renewable power shares have offered investors significantly higher total returns relative to fossil fuels over this period, as well as being less volatile.

Additionally, US portfolios of renewables held up better than their fossil fuel counterparts during January-April 2020 as the Covid-19 pandemic saw energy demand fall dramatically.

However, the report notes there are a number of challenges for renewable stocks and shares remaining, such as low liquidity and a lack of depth.

Dr Charles Donovan, Executive Director of the Centre for Climate Finance and Investment at Imperial College Business School, said: “There's momentum gathering behind renewable power, based on its economic advantages. Our results show that renewable power is outperforming financially, but has still not attracted sizable support from listed equity investors.

"The research highlights the challenges facing investors of accessing the growth potential of the renewable power sector via public equity markets. Existing norms in the investment industry will have to change to provide savers and pensioners with better ways to participate in the upsides from a clean energy transition."