Want to make a dollar out of the fact that the planet is on fire? Here are six ways to do so. Well, six ways to invest in the mitigation of climate change, anyhow.
As far as investment megatrends go, climate change is right up there.
It has the potential to radically alter life on the planet and wreak untold damage on the atmosphere and trigger disasters not yet seen on earth.
But, as governments around the world battle (or don’t really battle, depending on your perspective) to mitigate the worst of it the private sector is also coming to the party.
Companies set up to tackle specific problems, and profit from the market opportunities the market has presented, have sprung up.
Here are the problems, and market opportunities, they’re tackling.
1. Renewable energy equipment manufacturers
A huge part of climate change mitigation is making electricity grids around the world green — so manufacturers of things like solar panels and wind turbines are expected to have their books filled for quite a while yet.
However, a heck of a lot of solar panel manufacturers are in China — so while they are huge growth companies, investing in any one Chinese company can be very difficult indeed.
There’s also the small matter of the US/China tariff face-off complicating matters for those looking for a shorter-term return.
Your best bet here for exposure is to look into clean energy ETFs, which will more often than not have a few investments in manufacturers.
2. Battery mineral miners
This one’s a little bit more clear-cut, and there are some great local companies available for your investment dollars.
Battery mineral (think lithium and cobalt) miners are the flavour of the day, and for great reason.
Not only will electric vehicle batteries need these metals in increasing numbers, but grid batteries will need them as well — which is the real game-changer for renewable energy.
Luckily in Australia, the opportunities for investment in battery mineral miners aren’t exactly limited.
3. Electric vehicles
As alluded to above, electric vehicles are being hailed as the solution to the un-environmentally friendly fossil fuel-run vehicles.
If they’re truly powered by a grid which is green rather than a darker shade of brown, then they could be a game-changer.
That’s because vehicle emissions are one of, and in some cases, the highest sources of greenhouse gas emissions.
According to the IPCC, for example, transport accounted for 14 percent of direct greenhouse gas emissions in 2010.
So, electric vehicles are catching on.
In terms of the best-selling electric vehicle makers, it’s not all-that surprising to see Tesla (NASDAQ:TLSA) out in front — followed by traditional players in the market, along with a couple of Chinese manufacturers.
However, other electric vehicle makers such as VMoto (ASX:VMT) are also worth a look if you want exposure to the electrification of our roads.
Vmoto is focused on two-wheeled electric vehicles – a trend that is growing in Europe and the company just signed a licencing agreement with Italian luxury motorcycle maker Ducati.
READ MORE: Vmoto reports record international sales
4. Carbon trading ETFs
One of the major ways governments, both local and national, have sought to mitigate the effects of climate change is through the trading of carbon permits.
There are mixed reviews on whether the practice actually works or not in reducing emissions — but it has opened an entire new market to brokers and traders.
By some estimates there are currently 45 national and 25 sub-national carbon trading initiatives in place — more often than not attached to a cap-and-trade system.
Because there’s a way to invest in everything if you put your mind to it, you can invest in ETFs such as the CARB.LN one listed in London — which is pegged to movements in the futures market.
5. Future Food makers
One of the other major sources of greenhouse gases is the agricultural sector, which has triggered introspection about our consumption of red meat in particular.
Because red meat takes a lot of water to produce, and cows emit methane, plenty of people have stopped eating red meat altogether — but not enough.
For many people, the lure of a good burger is too strong to ignore — which is why people have pegged their hopes on lab-grown meat and other kinds or artificial meat.
There’s a reason the likes of Impossible Foods keeps on attracting investors – raising $300 million in its latest round of funding.
There are a swathe of startups working on the problem as we speak, so keep your eyes peeled for other investment opportunities and IPOs, should the likes of Impossible Foods make it to public markets.
6. AgTech companies
Unfortunately, one of the major effects of climate change will be felt in the agricultural sector — with crop yields set to go down.
However, wherever there is a major challenge there are also dozens of companies working on a solution.
Our friends over at Stockhead have previously delved into the companies on the ASX with an exposure to agtech, so you can have a look there.
The majority of agtech plays are either in startup incubators or in the US — meaning it can be hard to buy in as a retail investor.
Luckily Crunchbase has this list of agtech deals done — but again it can be hard to buy in.
Star Investing has a commercial partnership with some companies mentioned in this article. This content does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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