Clean energy surge: markets yet to catch up, says investment leader

By Newsdesk

January 15 2024
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The transition to clean energy is moving at an unexpectedly rapid pace, and markets may not be keeping up, according to a leading investment figure.

Clean energy surge: markets yet to catch up, says investment leader

George Whiting, Head of Institutional & Retail Business Development for the Perennial Better Future Trust, recently presented a compelling argument for why clean energy should be front and center in investment strategies.

In his presentation titled "The Energy Transition: Some empirical cause for optimism," Whiting painted an optimistic scenario where renewable energy sources, like solar and wind, are increasing their contribution to the global energy mix at a remarkable rate. He cited a Morgan Stanley forecast that anticipates "renewable generation to contribute 45 per cent of global electricity consumption by 2030," with solar and wind's share almost tripling by then.

The Australian context is particularly notable. "In Australia, the uptake of renewables has been significant, especially since 2021-22, a trend we expect to continue," Whiting remarked.

Despite empirical evidence illustrating the swift transition, Whiting pointed out a gap in market logic. "When it’s considered that one-third of the ASX will be directly impacted by the energy revolution and another third indirectly, it doesn’t seem feasible for it not to be a critical element of any investment strategy. But despite this tailwind, we believe that markets are inefficient and are not pricing it in the short term."

The Perennial Better Future Trust applies strategic negative screens to steer clear of investment headwinds caused by the energy revolution, instead, capitalizing on the opportunities to support companies positioned to benefit from the shift to clean energy. Whiting highlighted investments such as Calix, which is revolutionizing the decarbonization of cement and lime manufacturing, and Meridian Energy, a 100% renewable energy retailer in New Zealand. Furthermore, Alpha HPA's innovative technology presents an eco-friendly breakthrough in aluminium production.

"What we do is use our negative screens to really focus on avoiding headwinds from this energy revolution and tap into the tailwinds to invest in those companies that will benefit," Whiting explained.

The transition's drivers are multifaceted, layers of short, medium, and long-term influences including climate change repercussions, the critical need for energy security, globalization of net-zero pledges, and the tangible benefits of decentralized energy systems. The frequency of energy crises and the accelerating adoption of electric vehicles highlight the urgency of this transition.

Whiting equated the renewable energy push to the transformative digital revolution of the last two decades, positing significant technological advancements yet to be fully appreciated. For example, Whiting pointed out advances in battery technology paving the way for more affordable electric vehicles thanks to more accessible materials, which could have a profound impact on developing markets.

With the Perennial Better Future Trust at the helm of recognizing and investing in clean energy's potential, Whiting's insights serve as a clarion call for investors to reconsider the weight of renewable energy in their portfolios before the market fully acknowledges its accelerating value.

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