As the world population continues to grow, our natural resources continue to dwindle. But thankfully, organizations and individual investors around the world are finally doing something about it – taking action to reduce greenhouse gas emissions, fight climate change, and prioritize the utilization of renewable energy.
In 2019, renewable energy accounted for 11.4% of total U.S. energy consumption. And newly elected President Joe Biden plans to invest another $2 trillion in clean-energy initiatives over the next four years to align with the Paris Agreement objectives of zero-carbon solutions by 2030.
What is Renewable Energy?
Renewable energy, or clean energy, is energy derived from natural sources or processes that are continually replenished on a human timescale, and include sources like sunlight, wind, rain, tides, waves, and geothermal heat. With more widespread use of energy from renewable sources, we can lower our future carbon dioxide (CO2) emissions, which is the primary cause of global warming.
Often thought of as a new technology, utilizing the power of nature for heating, lighting, and transportation isn’t a new thing at all. We have used windmills to grind grain and wind to navigate boats for centuries, but since the 1600s, we have unfortunately looked to easier, cheaper, and nonrenewable energy sources such as oil and coal.
With renewables becoming an increasingly important power source and now accounting for more than one-eighth of U.S. power generation, we have gotten increasingly more efficient at capturing and retaining renewable energy. And this expansion is happening on both a macro and micro level, from solar panels on single homes to giant offshore wind farms and even entire communities working together to utilize and rely on renewable energy. As the need for renewable energy continues to skyrocket, modernizing America’s electricity grid will be crucial, making it smarter, more secure, and an integral part of the infrastructure across regions.
How to Invest in Renewable Energy
1. Directly Invest in Renewable Energy Projects – Investors building resilient portfolios can achieve diversification through the allocation of renewable energy assets. Solar and wind are the two of the fastest-growing sectors with the largest market share as thousands of business operations across the world prioritize renewables, leading to a higher demand for the products of green energy companies.
2. Invest in Clean Energy Mutual Funds or ETFs – Mutual Funds and Exchange-Traded Funds (ETFs) allow investors to get involved with multiple companies that directly support clean energy through the use of renewable resources or energy efficiency. This option appeals to investors wishing to diversify their portfolio among a many companies involved in the renewable energy industry.
3. Buy Shares of Renewable Energy Companies – For those investors with higher risk tolerance, directly buying shares of companies that focus entirely on renewable energy is an option. The advantage of buying shares of renewable energy companies provides you with the flexibility of directly supporting companies that align with your values.