Image shows several people inspecting a series of solar panels. The COP26 climate change conference has put a renewed spotlight on green investments.
The eyes of the world are on Glasgow, Scotland, where nearly every nation on Earth is participating in the United Nations Climate Change Conference. While the COVID-19 pandemic postponed last year’s COP26 summit, this year’s conference marks a pivotal moment in the fight to limit the effects of climate change — and there could be impacts for investors as well.
While it remains to be seen whether world governments will rise to meet these challenges, investors should consider the potential benefits of sustainable investing as the race to net zero emissions continues. JP Morgan notes that clean energy, electric vehicles and semiconductors may be the keys to the sustainable future envisioned by the Paris Agreement, and as a result, could have a place in your portfolio.
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For the first time since the signing of Paris Climate Agreement in 2015, countries must update their emission reduction targets to limit global warming to 1.5 degrees Celsius by 2100 compared to pre-industrial levels. To slow the rising temperature of the planet, the world must cut carbon emissions in half over the next decade and reach net zero emissions by 2050.
“There’s no more time to hang back or sit on the fence or argue amongst ourselves. This is the challenge of our collective lifetimes,” President Biden said Monday in Glasgow. “Everyday we delay, the cost of inaction increases.”
Keys to a Greener Future
Image shows an engineer standing in a field of wind turbines. The COP26 climate change conference has put a renewed spotlight on green investments.
Sitara Sundar, Patricia Behling and Ian Schaeffer of JP Morgan write that clean energy is one particular industry sector that stands to benefit from the international push for net zero. Renewable energy costs, which were once “prohibitively high to adopt on a mass scale,” have declined in recent years. Solar energy costs have dropped 80% over the last decade, while wind power is now 45% cheaper.
“Given the technological innovation in the space, it is expected to be more cost-effective to build new energy capacity with solar PV (photovoltaic, or solar panels) or wind turbines than to continue using existing coal plants,” they wrote.
The renewable energy space could see a boom in coming years. The International Energy Agency (IEA) says global renewable capacity will need to quadruple by 2030 for …….