The latest report from the Intergovernmental Panel on Climate Change (IPCC) has just urged the world to respect the net zero project. Increasing investment in alternative energy sources and electrification would help to keep countries in line with the climate goals of the Paris Agreement and improve energy security at the same time.
A $37trn investment opportunity
We believe the lasting effect of this war will be much more investment in renewable energy. European countries and indeed many other industrialised countries around the world will want to reduce their dependency on and vulnerability to oil price movements outside their control.
The newly re-elected French president Emmanuel Macron has pledged a tenfold increase in solar capacity to 100GW and in offshore wind to 40GW by 2050.
Germany’s chancellor Olaf Scholz has labelled renewables “crucial for our security”, saying “the faster we push ahead with the expansion of renewable energies, the better.”
According to one estimate, the “higher capital intensity of renewable power and rising importance of energy storage and networks” represent a $37trn investment opportunity on the path to net zero.3
Here at Amundi ETF, we refer to this global drive towards alternative energy sources, energy efficiency, electrification and battery technology as the rise of ‘new energy’.
New energy sources come with low emissions – that is their raison d'être – but now they have a huge additional benefit: renewable energy is local energy, independent and sovereign. Its prospects, already strong given the net zero project, now look set to strengthen further by the quest for energy security.
How investors can access new energy
Our new energy ETF groups new energy companies together in a way we think offers an appropriate exposure to the theme, going beyond a traditional sector-based approach.
The ETF’s index aims to represent the performance of stocks whose activities are linked to the development of products and services in the areas of alternative energy, energy efficiency, and the battery value chain.4
These sectors broadly reflect the key areas where CO2 reductions are needed to achieve net zero by 2050. The goal is simple: to direct capital to the companies at the centre of the energy transition, and benefit from the opportunities they create.
Learn more about our New Energy ETF
1 New York Times, 26 April 2022, https://www.nytimes.com/2022/04/26/business/russia-nuclear-power-europe.html
2 Frank Jotzo, head of energy at the Australian National University’s Institute for Climate, Energy and Disaster Solutions, quoted in The Lowy Institute on 28 February 2022, https://www.lowyinstitute.org/the-interpreter/russia-s-war-will-hasten-drive-clean-energy-security
3 Source: Goldman Sachs Carbonomics, Introducing the GS net zero carbon models and sector frameworks.
4 For further details on the methodology of the index, please refer to the prospectus and the KIID of the relevant fund.
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