The renewables revolution 

Nearly half the world’s carbon emissions (the major cause of climate change) come from fossil fuel-powered electricity, heat and transport. So replacing fossil fuels with renewable energy is crucial to addressing climate change. 

In 2023, 133 national governments set the goal of tripling renewable energy by 2030 to stay on track for the international goal of limiting warming to 1.5°C - most of this is likely to be be solar, hydro  and wind. 

Solar, wind, geothermal and hydropower are replacing fossil fuel electricity. The world added 50% more renewable power in 2023 than the year before, the fastest growth rate in the past two decades. Solar capacity grew 85% and wind by 60%.

But they are also replacing petrol for electric vehicles, gas heaters for electric heat pumps, and gas cooktops for electric cooktops. 

‍Green hydrogen is also a possible game-changer by replacing oil and gas in many industries, like steel and chemical manufacturing, and air travel. 

These companies and ETFs aim to capitalise on those trends. 

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Renewable energy ETFs on the ASX 

‍Betashares Solar ETF (ASX:TANN)

• Aims to invest in leading global companies in the solar energy industry
• Provide exposure to companies in the industry including solar panel manufacturers, suppliers, installers and manufacturers of energy storage systems and solar powered charging
• Big holdings include the American solar panel maker First Solar, residential solar installer SunRun, solar finance company HASI, and Enphase Energy, which makes EV chargers and solar micro-inverters

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VanEck Global Clean Energy ETF (ASX:CLNE)

• Managed by VanEck and invests in 30 large international companies involved in clean energy production and equipment 
• Includes companies in solar and wind power and manufacturing, hydro electricity and geothermal energy, biofuel and biomass energy, ethanol and fuel alcohol production, fuel cell technology 
• Companies involved in thermal coal, oil sands, tobacco, military contracting, small arms, contriversion weapons, shale energy and arctic oil and gas exploration are excluded above a certain threshold
• Small exposure to nuclear power which has environmental and safety risks 

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Global X Hydrogen ETF (ASX:HGEN)

• Invests in companies across the world that produce, develop and adopt hydrogen and fuel cell technologies, spanning industries such as energy, industrials, and technology
• Designed for investors interested in the potential of hydrogen as a clean energy source, HGEN includes holdings in major companies leading hydrogen innovation worldwide

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Global X Battery Tech & Lithium ETF (ASX:ACDC)

• Invests in companies involved in battery storage technology and mining companies that produce metals used to manufacture lithium batteries
• These companies stand to benefit from global efforts to address climate change by replacing fossil fuel generation and petrol vehicles with battery storage and EVs    
• Removes companies that produce tobacco, weapons, coal, oil and gas, but has some exposure to single-use plastic makers 

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Betashares Climate Solutions ETF (ASX:ERTH)

• Invests in up to 100 companies that earn at least 50% of revenue from activities that address climate change through removing or avoiding carbon emissions 
• 21% of the fund is invested in clean energy companies. This includes companies that build and run renewable power plants, like Acciona, Neoen, Mercury and Meridian, wind turbine manufacturers like Vestas and Goldwind, and solar panel manufacturers like First Solar. It also invests in companies that make and install home solar and battery systems like Canadian Solar and Solaredge Technologies. 
• The remainder of the fund invests in sustainable products, electric transport and water solution 

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For more in-depth information on these ETFs, sign up for a trading account on the SIX app.

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These three companies all have renewable energy as their main business.‍

‍Renewable energy stocks on the ASX 

‍Meridian (ASX: MEZ)

• New Zealand’s largest renewable energy generator and retailer 
• It makes money from generating and selling 100% renewable electricity from its 5 wind and 6 solar farms to commercial and retail customers

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Mercury NZ (ASX: MCY)

• Large power company that produces over 15% of New Zealand’s electricity
• All power generated from renewables - mainly hydroelectric with some geothermal and wind

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Contact Energy Limited (ASX:CEN)

• Owns 8 solar, hydropower and geothermal power plants, making it one of the largest renewable energy generators in NZ
• Investing in new solar, hydro and batteries to achieve its net zero emissions targets
• Also owns 2 gas power plants which have no closure date 

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Big electricity companies on the ASX often sell electricity they generate from renewable and fossil fuel sources (e.g. solar and coal). Renewables are a minor part of these three companies’ businesses. 

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Infratil Limited (ASX:IMM) 

• A New Zealand-based infrastructure investment company that owns and manages assets across various sectors, primarily in energy, transport, telecommunications, and healthcare
• Its renewables portfolio generates about 35% of the company’s revenue, mainly hydropower 

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APA Group (ASX:APA)

• Owns a portfolio of renewable energy generation plants that produces 9% of its revenue
• Owns Australia’s largest gas pipeline network, and has plans to expand its fossil fuel operations

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AGL (ASX:AGL)

• AGL Energy is an Australian energy generation and retail company
• 15% of AGL’s electricity generation comes from renewables (which accounts for 11% of its revenue)
• Other revenue from operating Australia’s largest and dirtiest electricity generation plants 
• Has begun to respond to climate and energy transition risks by bringing forward the closure date for its coal power plants 

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Head to the SIX app for full ethical profiles on these companies and ETFs, and begin building your portfolio! 

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