Renewable energy and energy efficiency is rising on the global post-COVID agenda

Of the recovery bills approved by global governments during the peak of the pandemic, little focused on a green recovery. Most were attentive to quick-acting programs to protect jobs and to ensure the survival of businesses.

Now that COVID-19 has been at least partially contained, the short-term programs are being reviewed and the long-term stimulus programs are being debated and approved. As governments grapple with how best to stimulate their economies, some have already taken steps to divert significant sums to green investment. While there is a strong environmental rationale to this, as well as a deeply connected reduction in long-term financial risk, there is also evidence that investment in the green economy is a good method of stimulating well-paid jobs.

Recent analysis from Ernst & Young, looking specifically at Australia, outlined that investment in clean energy would create more than 100,000 direct jobs, nearly three times as many jobs for every dollar spent on fossil fuel developments, a riposte to the current discussions on making gas the central pillar for a recovery program. Similarly for the US, the green economy is one of the largest employers, providing nearly 9.5m jobs vs. the 900,000 in the fossil fuel industry according to a study by University College London. Furthermore, according to the Brookings Institution, mean hourly wages for American clean energy workers exceeded national averages by 8-19%.

However, as politics takes hold and the Australian and the US governments continue to debate the relative merit of stimulating fossil fuels or renewable energy progress is, fortunately, being made elsewhere.

In the EU, the proposed €750bn stimulus plans are being deliberated by member states and could include as much as €100bn for efforts to green the economy by 2050. The plan would require governments to use the funds only for projects that would be in line with the Green Deal and the EU goal of climate neutrality by 2050.

Germany announced a €130bn stimulus program in early June with two notable elements to stimulate green industries. Despite much pressure to provide incentives for buyers of petrol and diesel cars as had been done in 2008, these proposals fell by the wayside, replaced by a doubling of the subsidy for electric vehicles – now €6,000 for a car that costs up to €40,000. In addition, a €50bn ‘future package’ of investment has been agreed which focuses on greening the economy, to be spent on expanding the charging infrastructure for electric vehicles, cap the renewables surcharge customers were spending for expansion of renewable energy and the development of hydrogen production capacity.

In China at the recent National People’s Congress President Xi Jinping emphasized the need to push forward initiatives which prioritise ecology and highlights green development. While there is also continued investment and opening of coal power capacity, there have also been positive initiatives announced. An extension of subsidies for EVs was announced a few months ago, and $1.4bn is committed to expanding the EV charging network by 50% in 2020, adding a total of 600,000 new charging points. In addition this week, China announced a 7.5% increase in subsidies for renewable energy, within which the solar industry incentives will increase by 14%.

And finally in South Korea, the recently reelected government has approved a stimulus package with a significant investment in the ‘New Green Deal’, accelerating the country to be the only Asian country committed to reaching net-zero emissions by 2050. The program includes investment in renewable energy, an introduction of a carbon tax, and the phasing out of domestic and overseas coal financing by public sector institutions.


Important Information

The information contained herein is provided for discussion purposes only, is not complete and is not, and may not be relied on in any manner as, legal, tax or investment advice or as an offer to sell or a solicitation of an offer to purchase an interest in securities. QUAERO CAPITAL believes the information contained herein to be reliable and has been obtained from sources believed to be reliable, but no representation or warranty is made, expressed or implied, with respect to the fairness, correctness, accuracy, reasonableness or completeness of the information and opinions.

The estimates, investment strategies, and views expressed herein are based upon current market conditions and/or data and information provided by third parties and are subject to change without notice. There is no obligation to update, modify or amend these materials or to otherwise notify a reader in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate.

These materials include certain opinions, statements and projections provided by Quaero capital with respect to the anticipated future performance of certain asset classes.  Such opinions, statements and projections reflect significant assumptions and subjective judgments by QUAERO CAPITAL’s management concerning anticipated future events.  these forward-looking statements are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond QUAERO CAPITAL’s control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. The data as presented has not been reviewed or approved by any party other than QUAERO CAPITAL.

Nothing contained herein shall constitute any representation or warranty as to future performance of any financial instrument, currency rate or other market or economic measure. Opinions expressed herein may not be shared by all employees of QUAERO CAPITAL and are subject to change without notice.