Global S&T Development Trend Analysis Platform of Resources and Environment
Energy Investing: Exploring Risk and Return in the Capital Markets | |
admin | |
06 2020 | |
出版年 | 06 2020 |
国家 | 国际 |
领域 | 地球科学 ; 气候变化 |
英文摘要 |
Going into the COVID-19 crisis, the trend towards renewable power was accelerating. Renewables accounted for nearly two-thirds of additions to the power sector last year and renewable power capacity had been increasing at over 8% annually over the past 10 years. Yet, despite enormous advances in the cost-competitiveness of renewables over the past decade, investments in clean energy are still falling short of the level needed to put the world’s energy system on a sustainable path. Capital allocation decisions in the private sector hinge upon expectations. Given the inherent challenges of seeing into the future, investors often rely on history as a guide. Has investing in clean energy made financial sense over time? Was the recent crash in fossil fuel commodity prices positive or negative for renewables? To shed light on this debate, we investigate the historical risk and return proposition to investors in the energy sector. Our study examines the financial performance of listed companies engaged in fossil fuel supply as compared to those active in renewable power over the past 5 and 10 years. Our twofold aim is to document the characteristics of this evolving investment universe and set the stage for a more advanced analysis of investment attractiveness in future reports. We constructed hypothetical investment portfolios in three countries/regions: 1) the United States, 2) the United Kingdom, and 3) Germany & France. We calculated the total return and annualized volatility of these portfolios over 5 and 10-year periods. Figure 1 shows the 5-year results, which is more complete in terms of data. The numbers for the 10-year view are broadly similar, and can be found in the Results section. Our results indicate that renewable power shares offered investors higher total returns relative to fossil fuels. Just as importantly, annualized volatility (a measure of investment risk) for the renewable power portfolio was lower across the board.
Note from the Authors: This is the 2nd Edition of the report, which was first published in May 2020. The following revisions have been made in the 2nd Edition: 1) a correction to the composition of the US Renewable Power Portfolio to exclude a UK equity security that was inadvertently included, 2) an update of a Figure on oil demand by sector, and 3) a recalculation of average market capitalisation for the US and UK Renewable Power Portfolios. |
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来源平台 | International Energy Agency |
文献类型 | 科技报告 |
条目标识符 | http://119.78.100.173/C666/handle/2XK7JSWQ/298114 |
专题 | 气候变化 地球科学 |
推荐引用方式 GB/T 7714 | admin. Energy Investing: Exploring Risk and Return in the Capital Markets,06 2. |
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