Markets are rangebound this week with the S&P/ASX 200 Index (ASX: XJO) up 156 basis points at 7,527 at the open of trade on Wednesday.
Whilst commodity sectors continue to book record gains in 2022, renewables have somewhat been left on the backburner (emissions free, of course).
Investing in green or renewables based companies has been somewhat of a love affair for investors ever since the theme popped onto the scene a few years ago now.
The theme of Environmental, Social and Governance (ESG) has now become an investment factor to which portfolio and asset managers weight their holdings towards (or not).
With the recent commodities supercycle, it’s no wonder to see some renewables focused shares make a sharp u-turn in 2022, as the market digests a number of macroeconomic factors.
Green is good, yes?
There’s a lot of debate out there, but one argument is that Australia could be a huge benefactor to the shift into renewables.
“We are probably the richest, the most regionally endowed nation in lithium, cobalt, rare earths, palladium, copper and nickel, all of which are somewhere between 200 and 1000 per cent under-supplied,” The Australian reports.
“If you join the dots…the energy transition will be good for us. While our balance sheet’s terrible, it’s better than anyone else in the world,” he added.
Elsewhere, Australia has made “significant strides” in its offshore wind industry in recent weeks, according to analysis from Herbert Smith Freehills LLP.
“On 4 March 2022, the Victorian Government announced Australia’s first offshore wind energy targets of 2GW of offshore wind energy production by 2032,” they wrote.
“According to the Paper, winds off Victoria’s coastline are among the best not only in Australia, but also on a global scale, with the potential for Gippsland and Portland regions to support 13GW of capacity using fixed platforms in shallow waters,” they added.
The Paper indicates a strong intention by the Victorian Government for Victoria to be the leader in the Australian offshore wind market, an industry that is developing rapidly internationally, and for which competition for investment is strong.
Meanwhile, shares in renewable energy companies were a mixed bag during the previous quarter, with several names expanding up to 96%, whilst others lagged substantially.
The post Own ASX renewable energy shares? Here’s why ‘the energy transition will be good for us’ appeared first on The Motley Fool Australia.
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Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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