The Future of Energy Investing: Where to Invest in 2023 and Beyond
Let’s make this clear right from the outset: The future of energy investing is in renewable, clean, and green energy. Renewable energy is projected to grow steadily over the next 3 decades, accounting for at least 50% of global energy production/consumption by 2050. Solar power, in particular, will be big over the coming years according to the US Energy Information Administration.
Shifting from the dirty fossil fuels that dominate today’s energy market to a renewable energy future will require a huge investment. Top energy companies around the world have already taken note of this and are putting their money into clean energy. Shell, for example, has pumped more than $2 billion into renewable energy over the last 5 years. A recent study by Octopus, an alternative-investment manager, shows that pension funds and other institutional investors are betting on renewables as the best investment route to go. These institutional investors are projected to invest in excess of $700 billion in renewables over the next decade.
Why invest in clean energy? Because it is ethical and lucrative. You will be helping the world combat the negative effects of climate change and at the same time enjoying a solid return on investment (ROI). Here are 3 lucrative and ethical clean energy investment routes you can take in 2023 and beyond:
Liquefied natural gas (LNG) is touted by many energy experts as the transition fuel that will bridge the gap between dirty fossil fuels and clean, renewable energy. It’s easy to see why LNG is the perfect transition fuel. First, there are massive reserves of natural gas around the world. Each continent has enough natural gas to last more than 100 years at current rates of production. Secondly, LNG is the cleanest fossil fuel available today. Compared to other energy sources such as diesel, oil, and coal, LNG has negligible greenhouse gases, soot, and particulate emissions. It is, indeed, ethical to invest in LNG.
Besides being an ethical investment, LNG is also quite lucrative considering that its market has full support from governments around the world. Governments are committed to the long-term viability of a sustainable and responsible energy sector, and LNG promotion and adoption are right at the heart of that commitment. Investing in the LNG sector gives you access to incentives, international market insights, subsidies, and other valuable resources from governments.
Investing in LNG presents you with endless business opportunities throughout the natural gas value chain. These opportunities include upstream exploration, natural gas liquefaction at the source, shipping, regasification, pipeline infrastructure, LNG terminals, and city gas distribution (CGD) networks. You can put your money anywhere within that value chain and make a decent ROI. The LNG sector also presents you with a chance to have a positive impact on local communities, especially the underserved, unserved, and the forgotten. You get to provide employment opportunities to local communities, on top of providing them with affordable clean fuel for both domestic and industrial use.
Many companies are betting their money on LNG. Atlantic, Gulf & Pacific International Holdings (AG&P), for example, has made huge investments in underserved markets in the Philippines and India. The Joseph Sigelman-led company helps create jobs, injects money into local communities in the form of investments, employment opportunities, and even taxes, and revives manufacturing and industrialization in rural Asia. Its floating storage unit (FSU) in Batangas Bay, for example, is revamping manufacturing and industrialization in the Luzon region, Philippines. On the other hand, Cheniere Energy, the biggest U.S. LNG exporter, is bringing jobs back to Louisiana and Texas as it pursues more liquefaction expansion opportunities.
Solar is the fastest-growing clean energy and arguably the most viable option in combating climate change. This is because solar energy is readily available from the sun and can be tapped and used in small quantities for domestic use or in large quantities for industrial use.
In the US, the Biden administration has injected $82 million into domestic solar manufacturing, a move that’s likely to triple the solar market in the country over the next five years. Europe, through the REPowerEU Plan, has also stepped up its investment in solar energy infrastructure.
Some of the solar energy companies you can consider investing in include First Solar Inc. (FSLR), a company that deals with solar panels and photovoltaic power plants. Another option is Enphase Energy (ENPH), a software-driven home energy solutions provider that specializes in solar and battery systems.
3. Compressed Natural Gas (CNG)
CNG-powered cars are changing our everyday transportation. CNG is free of sulfur, benzene, and lead toxins. It’s non-corrosive and produces negligible amounts of carbon dioxide, carbon monoxide, and other suspended particles during combustion. CNG vehicles are, therefore, cleaner, more efficient, and more sustainable than diesel cars. Their maintenance and operation costs are competitive too because without lead, the longevity of their spark plugs is enhanced.
In India, the market share of CNG cars hit a record high of 8.60% in 2022, up from 6.30% in 2021. It’s projected that this figure will rise to up to 10% in 2023. The global demand for CNG vehicles is projected to grow to more than $312 billion over the next decade, up from $110.5 billion in 2022. This steady growth shows you how lucrative CNG investment will be in the near future. You can borrow a leaf from Joseph Sigelman’s huge investment in CNG stations in Asia. His company, AG&P, is in the process of building a network of 1,500 CNG stations to serve India’s transport sector.
Changing government incentives will push the world towards renewable and sustainable energy. Consumers are also more cautious than ever before about global warming and climate change. Any investor looking to invest in the energy sector must, therefore, buy shares in sustainability-focused energy stocks.