How the clean energy revolution sweeps markets

The market foam that fuels clean energy technology stocks has delivered billions of dollars in business profits to investors around the world and led to the creation of dozens of funds designed to thrive on rising prices.

Whether it’s electric vehicle makers like Tesla Inc. and its lesser-known rivals, or companies like QuantumScape Corp. who are developing next-generation lithium-ion batteries, or solar power companies like Enphase Energy Inc., these actions have mostly gone in the same direction: upwards.

The gains have been absurd, with several clean energy stocks rising more than 100% since early 2020. Most company stocks are priced as if they are all long-term winners, while the reality is that some of the companies will probably stay put.

The pioneer of Quant, Rob Arnott, co-wrote a report published in March that called the rally in electric vehicle stocks the “great market illusion”.

Bloomberg Green’s Carbon Bubble series seeks to track how investors are navigating the bustle of the market. While there is no question that climate technology is a booming and growing type of asset, there are also some doubts that some investors may make the mistake of going after companies with excessive market valuations and questionable product offerings.

By the numbers

• 113% is the advance of the S&P Global Clean Energy Index since early 2020, including reinvested dividends
• More than US $ 1 billion is financing in wind and solar assets since 2016
• Almost US $ 3 billion is this year’s net entry in the iShares Global Clean Energy ETF

Because it is important

Governments, companies and other organizations have raised more than US $ 670,000 million since the beginning of 2020 by selling bonds where the proceeds go to projects “verdes”; Investors have invested more than $ 20 billion in US exchange-traded funds that track clean energy markets; and a venture fund led by billionaire philanthropist Bill Gates, (in which Michael R. Bloomberg, founder of Bloomberg News also invests) committed billions of dollars to the sector.

Financing for battery companies and electric vehicles it has skyrocketed and investment in solar and wind power continues to rise. These are just a few of the financial factors.

The avalanche of money flows has raised some questions about whether it is a market bubble. Some say the rapid rise in valuations is a clear sign of overpricing, while others say markets are destined to bounce, but the underlying clean energy technology is improving all the time and is ultimately here to stay.