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2 ETFs highlight record year for clean energy

2023 was a record year for clean energy use, further highlighting global efforts to reduce emissions. The transition is highlighted by a pair of exchange-traded funds (ETF) opportunities to use growth: Invesco Global clean energy ETF (PBD B+) i Invesco WilderHill Clean energy ETF (PBW B).

As published in a report by Yahoo News, a report by London-based think tank Ember shows that in 2023, more consumers were using different energy sources every day. Thirty percent of the electricity produced came from clean energy sources such as wind and solar.

In particular, solar power accounted for the largest share of clean energy sources in 2023. The amount of solar power produced was twice that of coal, making it the fastest-growing source of electricity generation for the 19th consecutive year. The Ember report added that 2024 may see an even greater increase in the number of photovoltaic installations.

As mentioned, the emissions reduction target is a global initiative. The Ember report showed that many countries are collectively using more clean energy sources. China, in particular, has made the biggest leap in adding renewable energy.

“China added more renewable energy than any other country last year – 51% of the world’s new solar power and 60% of the world’s new wind power,” confirms the Yahoo report. “China, the European Union, the United States and Brazil together accounted for 81% of new solar generation in 2023.”

Global and small cap option

To capture the global clean energy transition, PBD offers exposure to the Global Clean Energy Index, with both US and international equities in the underlying portfolio. Therefore, it is an ideal fund for investors who also want to increase portfolio diversification by investing outside the US.

In addition, PBD diversifies into different types of clean energy such as wind, solar and hydro, making it an interesting option for those who want to bet on the clean energy boom but don’t want to focus on a specific subsector.

PBW tracks the WilderHill Clean Energy Index, which consists of U.S. companies that focus on cleaner energy and environmental protection. The fund is more growth-oriented, focusing primarily on small-cap companies (over 80% of the fund’s assets as of May 3).

The focus on small-cap companies is further segmented by qualitative factors, thereby providing investors with exposure to the mix, growth and value of small-cap companies. As PBDinvests in a broad spectrum of companies dealing with various sources of clean energy, increasing sub-sector diversification.

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