2020 has been a testing year for several relatively obvious and sad reasons. While the obvious social impacts of COVID-19 enter the forefronts of our minds, 2020 has also been an exceptionally testing year for investors across all sectors. However, those who are seeking some positivity amidst these bleak times can take some confidence from green infrastructure and the broader work in combatting climate change.
While some industrial traditionalists will be tossing and turning in their sleep at the prospect of industrial diversification, everywhere we look, the world is going green, from recycling to organic food, the near dominance of electric cars and most notably renewable energy. No matter who you turn too, everyone seems to be including climate change and the measures to protect the environment. For economies, investment in green infrastructure not only satisfies several formal pledges, positive media, but also a large number of jobs and a clear path forward in their business growth. Not only this, but it also provides an attractive element for consumers.
What Does the Green Revolution Mean for Investors?
In a world that is increasingly concentrating on the impacts of climate change, green energy, in all of its manifestations are finding themselves closer to the heart of economies every day. As a consequence, it seems like the old guard of fossil fuels and unrenewable energy sources are slowly being pushed out by greener alternatives. Subsequently, this is providing investors with a plethora of new and growing investment opportunities, some of which many would have ignored previously.
With a limited supply of fossil fuels and growing concern over their environmental impact, governments across the world have committed to dramatically lowering their emissions. In accordance with international agreements, countries will need to double their annual investment in renewables, to meet the targets set out in the Paris Agreement.
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The Growth of Renewables
As expressed, renewables are predicted to be the fastest-growing energy source over the next 20 years, with the sector be supported by the declining cost of wind and solar power. Many industry commentators see this accelerating demand for alternative sources as signalling a ‘new era’ for energy, which in turn presents significant opportunities for investors all across the world.
One of the sectors that were previously seen as dull with minimal growth prospects, but with the increase in prominence in renewable energy, the utility sector has seen a renaissance in the last few years and are predicted to grow. Identifying the shift towards renewable energy sources, both onshore and offshore energy, large utility companies across continental Europe, the UK and further afield are looking to take advantage and position themselves in line with the increased demand that will inevitably come in the future.
As companies across the globe continue to develop and transition their resources into their renewable energy capacity over the next five to ten years, profits, growth and subsequent returns to investors will naturally increase. Especially as new technologies, the method’s of practice and storage make renewable energy more cost-effective and popular across the grid, supporting further uptake and reliance and subsequently profits.
Furthermore, as utility companies exposure to renewable energy is set to increase in the future, the actual value of should be higher and a more sustainable investment option in the longer term. As climate change has become an increasingly more critical issue amongst society, and with governments signing legally binding treaties to reduce greenhouse gases, significant future investment is required.
The future looks to be dominated by renewable energy sources and carbon-friendly modes of transport. Although we are currently witnessing the slow stream of electric cars and renewable energy into our daily lives, the growth the sector will need to experience over the coming years to meet the growing demands outlined by international treaties is exponential. Whilst this may seem an intimidating factor for the industry, this most certainly provides investors with an opportunity to cash in from green investment going forward.