Investing in sustainable energy sources – ETF Securities’ research

Alternative energy, which includes renewables and natural gas, is set to become the fastest growing source of energy over the next 30 years, ETF Securities’ latest research revealed.

Commitments by various governments across the globe to reduce greenhouse gas emissions, cleaner sources of energy will increasingly take share from traditional fossil fuels, ETF Securities’ “Alternative energy – Investing in sustainable energy sources” also showed.

However, the research warned that many governments are severely behind schedule to meet their targets and that they will need to intensify efforts to get back on track.

“On our estimates, the weighted average price-to-earnings ratio of the constituents of the DAXglobal Alternative Energy index is now more than 30% below its five-year historic average, indicating the sector is now at an attractive entry level for longterm investors,” the report read.

The research also investigated the falling costs of underlying technology reducing the risk that government subsidies or other incentives will disappear remains a key threat for the industry.

However, ETF Securities also said that it believes that government support was likely to continue as in many countries renewables usage is driven by government targets.

“Examples include the targeted share of 20% in total energy demand by 2020 in the European Union; US state-level renewable portfolio standards, covering 30 states and the District of Columbia; existing capacity targets by technology
type in China, India and Brazil and biofuels blending mandates in many countries,” the report also read.

Click here to read full research [asset_library_tag 7288,Alternative energy- Investing in sustainable energy resources]

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