Displaying items by tag: climate change

A blend of hope and fear has given hydrogen stocks a boost over the last few days. The UN just released the first of a six-part series on climate change, which has been described as sounding a "code red for humanity." But at almost the same time, the US Senate passed President Biden's $1 trillion Infrastructure Bill, including significant investment in decarbonization and green hydrogen, offering hope that leaders will hear the wake-up call[1].

The UN report states that within 20 years, the world will exceed the Paris climate accords' target of limiting global warming to 1.5℃ above previous levels, and without harsh, swift action, temperatures could rise by 2.7℃ by 2100.[2] The report's timing, while wildfires are destroying thousands of acres and millions of homes in the US, Greece, Turkey, and Italy, and floods have hit Turkey, India, and parts of the US, makes it impossible to ignore.

Green hydrogen offers hope for the future

There's no single solution to the climate crisis. Planting trees and cutting energy usage are important, but we also need to replace carbon-heavy fuels with alternatives like green hydrogen.

Hydrogen fuel is produced using electrolyzers to harvest hydrogen molecules for conversion into fuel. Until recently, most hydrogen was "gray hydrogen," made using fossil fuels, but today's "green hydrogen" uses renewable energy sources, resulting in energy that's pollution and emissions-free.

Hydrogen is ideally suited as a replacement fuel source. It's abundantly available across the planet in the form of water; it's energy-dense, giving it a long-duration discharge cycle that can store energy and release it later at times of peak demand; it's more stable than solar or wind power, and as a molecule-based fuel, it can be used by high-polluting industries that can't switch to electrification.

All eyes are turning to green hydrogen

Private investors and national leaders alike recognize the importance of investing in hydrogen stocks to support the development of green hydrogen production. The US government’s Infrastructure Plan includes[3]:

  • Building 15 decarbonized hydrogen demonstration projects
  • Funding R&D in advanced hydrogen electrolyzers
  • Redirecting tax credits from fossil fuel producers to industrial decarbonization
  • Incentivizing adoption of hydrogen-powered fuel cell (FCEV) and electric vehicles (EV)

That's not the only legislation pushing green hydrogen ahead. In June, the US Energy Secretary

Jennifer Granholm announced a "Hydrogen Shot" program to lower the costs of clean hydrogen by approximately 80% to $1/kg by 2030.[4] In Granholm's words, “Clean hydrogen is a game changer.”[5]

Last week, a bipartisan Clean Hydrogen Energy Act was presented to the House of Representatives, proposing a hydrogen R&D program that would focus on driving down the costs of hydrogen production, transportation, and storage.

“In the fight against climate change, hydrogen has the potential to be the best tool we have,” said Mike Doyle (D-PA), one of the 3 co-sponsors of the bill. “Hydrogen can decarbonize transportation, power generation, and the industrial sector all while utilizing existing infrastructure and fuel supplies.”[6]

Green hydrogen projects have mushroomed over the past few months. Leading hydrogen cell producers Plug Power broke ground on a $84 million hydrogen refinery in Georgia, USA[7], and hydrogen company FuelCell Energy secured $15 million to build a 7.4 megawatt fuel cell project in Connecticut[8]. Cities are adopting hydrogen FCEV buses and trains; the Port of Los Angeles rolled out five hydrogen-powered FCEVs and opened two hydrogen fueling stations[9]; and even big oil and gas companies are ramping up investment in green hydrogen production[10].

Green hydrogen stocks are benefiting from the mood of the moment

All of this makes investors sit up and take notice of  hydrogen companies stock. For example, hydro stocks like Plug Power, Ballard Systems, Bloom Energy, and FuelCell Energy all rallied over the past week[11].

Investors looking to spread their exposure to hydrogen across as many of the potentially best hydrogen stocks as possible could consider a hydrogen ETF like Defiance's HDRO ETF. HDRO is a relatively low cost, accessible way to gain exposure to a number of leading hydrogen companies' stocks. It is just one of Defiance’s suite of disruptive ETFs.

 


 

N.b. This is sponsored content and not FINSUM editorial

 

Important Disclosures:

Read more about HDRO here, including current holdings and performance:  https://www.defianceetfs.com/hdro/. Fund holdings are subject to change and should not be considered recommendations to buy or sell any security.

 

The Fund’s investment objectives, risks, charges, and expenses must be considered carefully before investing. The prospectus contains this and other important information about the investment company. Please read carefully before investing. A hard copy of the prospectuses can be requested by calling 833.333.9383.

 

Investing involves risk. Principal loss is possible. As an ETF, HDRO (the “Fund”) may trade at a premium or discount to NAV. Shares of any ETF are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. The Fund is not actively managed and would not sell a security due to current or projected under performance unless that security is removed from the Index or is required upon a reconstitution of the Index. It is not possible to invest directly in an index.

 

A portfolio concentrated in a single industry or country, may be subject to a higher degree of risk. Specifically, the Index (and as a result, the Fund) is expected to be concentrated in hydrogen and fuel cell companies. Such companies may depend largely on the availability of hydrogen gas, certain third-party key suppliers for components in their products, and a small number of customers for a significant portion of their business.

 

The Fund is considered to be non-diversified, so it may invest more of its assets in the securities of a single issuer or a smaller number of issuers. Investments in foreign securities involve certain risks including risk of loss due to foreign currency fluctuations or to political or economic instability. This risk is magnified in emerging markets. Small and mid-cap companies are subject to greater and more unpredictable price changes than securities of large-cap companies.

 

HDRO is new with a limited operating history.

Opinions expressed are subject to change at any time, are not guaranteed, and should not be considered investment advice.

HDRO’s gross expense ratio is [0.3%] Commissions may be charged on trades.

 

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[1] https://www.cnbc.com/2021/08/10/senate-to-pass-bipartisan-infrastructure-bill.html

[2] "AR6 Climate Change 2021: The Physical Science Basis", released August 9, 2021 https://www.ipcc.ch/report/ar6/wg1/

[3] "Biden Details $2 Trillion Plan to Rebuild Infrastructure and Reshape the Economy" March 31, 2021 https://www.nytimes.com/2021/03/31/business/economy/biden-infrastructure-plan.html

[4] "Biden administration launches program to cut cost of climate-friendly hydrogen production" June 7, 2021 https://news.yahoo.com/biden-administration-launches-program-cut-121558346.html

[5] "Plug Power Is Still Undervalued as the Good News Keeps Coming" June 10, 2021 https://www.nasdaq.com/articles/plug-power-is-still-undervalued-as-the-good-news-keeps-coming-2021-06-10

[6] "Reps. Doyle, Fitzpatrick and Lamb introduce clean hydrogen energy act" August 6, 2021 https://dailyenergyinsider.com/policy/31424-reps-doyle-fitzpatrick-and-lamb-introduce-clean-hydrogen-energy-act/

[7] "Plug Power breaks ground on $84m liquid green hydrogen plant in Georgia, US" August 10, 2021 https://www.h2-view.com/story/plug-power-breaks-ground-on-84m-liquid-green-hydrogen-plant-in-georgia-us/

[8] "Why Ballard Power, Plug Power, Bloom Energy, and Especially FuelCell Energy Stocks Popped Today" August 9, 2021  https://www.fool.com/investing/2021/08/09/why-ballard-plug-bloom-fuelcell-stocks-popped/

[9] "Port Of Los Angeles Demonstrates Hydrogen Fuel Cell Electric Trucks" June 10, 2021 https://www.fleetequipmentmag.com/port-los-angeles-hydrogen-fuel-cell-electric-trucks/

[10] "Big Oil Companies Push Hydrogen as Green Alternative, but Obstacles Remain" July 26, 2021 https://www.wsj.com/articles/big-oil-companies-push-hydrogen-as-green-alternative-but-obstacles-remain-11627297201

[11] "Why Plug Power, Bloom Energy, and FuelCell Energy Stocks Rallied Today" August 10, 2021 https://www.fool.com/investing/2021/08/10/why-plug-power-bloom-energy-and-fuelcell-energy-st/ "Why Ballard Power, Plug Power, Bloom Energy, and Especially FuelCell Energy Stocks Popped Today" August 9, 2021 https://www.fool.com/investing/2021/08/09/why-ballard-plug-bloom-fuelcell-stocks-popped/

Published in Eq: Tech
Monday, 11 October 2021 20:58

The Fed Prepares for Climate Change

(Washington)

Fed Governor Lael Brainard issued comments on Thursday regarding the Fed’s position on climate change. Brainard said the Fed is developing a series of scenario tools to model the risk of climate change to the financial system. The models will see how our financial system holds up to hypothetical climate change hazards such as floods, droughts, and fires. This will bring the Fed closer to the rest of the leading central banks around the world, such as the ECB and Bank of England, who already are doing this at a minimum. Many progressive Democrats have been critical of the Powell Fed for their lack of green policy and financial regulation and this is a correction step that may allow Powell to get renominated in 2022.


FINSUM: These action steps are important by the Fed, but they will not be accompanied by any regulatory steps, meaning banks won’t be punished for over-exposure to climate risks. Thus, the risk to asset prices seems lower.

Published in Bonds: Total Market

The UN's new report on climate change paints an alarming picture, warning that temperatures are rising faster than previously expected[1]. It adds impetus to President Biden's infrastructure plan, expected to be approved by the Senate this weekend[2], which includes significant dollars ringfenced for investment in green fuels.

But ramping up renewable fuels isn't the only way the infrastructure plan could combat climate change. The bill also plays heavily on 5G connectivity, which some opinion-makers hope could prove good for the planet. Erik Ekudden, CTO and Head of Technology & Strategy at the 5G stock Ericsson, says that "[5G] uses, applicable across various sectors, can drive down costs, energy usage, emissions, waste and mitigate climate change."[3]

5G can reduce emissions

By connecting remote devices through internet of things (IoT) sensors; collecting, sharing, and storing the data they gather; and powering artificial intelligence (AI) and machine learning (ML) engines, 5G can help cut emissions across a number of sectors. An earlier UN report estimated that taken together, advanced 5G-powered ICT solutions could lower greenhouse gas emissions by 20% by 2030[4].

  • In cities, tracking and charging for solid waste disposal could cut solid waste by 10-25% per capita by 2030[5], with a commensurate drop in energy used to process it.
  • Live traffic updates enable smart traffic lights to refine sequencing in real time, improving traffic flow and cutting emissions from vehicles idling in holdups by up to 21%[6].
  • 5G is a key technology behind driverless cars, which have fewer sudden braking and accelerating incidents that burn more fuel.

5G can cut waste and pollution

Advanced agro-tech solutions use 5G and IoT sensors in fields and orchards to give farmers real time, reliable information about disease, hydration, and soil and weather conditions, so they can make better decisions about fertilizer and pesticide use. AI-powered drip delivery systems allow them to apply the chemicals they do use in more accurate ways, reducing runoff into groundwater.

It's a similar story for heavy industry and manufacturing. "Lights off" production uses robotic process automation (RPA) that relies on IoT data, lag-free edge computing, and ML. Without employees on site, there's less need for lighting and temperature control.

Smart factories reduce human error that causes environmental incidents and wastes raw materials and energy. Ericsson estimates that their 5G-powered smart factory uses 5% less energy, produces 5% less waste, and is 24% more efficient overall than the baseline[7].

5G can increase food production

As well as helping farmers cut pollution, 5G is widely expected to boost food yields[8]. 5G's stronger connectivity could bring reliable internet to rural areas that are currently severely underserved, so farmers can refine planting and animal husbandry decisions.

IoT devices can detect the early signs of infestation, disease, or changes to soil conditions, enabling farmers to resolve the issue before crops or herds are seriously affected. Real time hydration information can also cut water usage; crucial when water levels are dropping, and agriculture accounts for approximately 70% of the world’s annual consumption of freshwater[9].

5G can lower energy consumption

Smart buildings use IoT to automatically turn off lights and adjust temperature control systems to use less energy. The Empire State Building in New York, for example, implemented smart meters some years ago to help tenants optimize their energy usage. It's seen energy costs drop by 38%, and reduced CO2 emissions by 105,000 tonnes in one year.[10]

New smart grids are more reliable and energy efficient, reducing energy wasted through leaks and power surges. Better monitoring of energy consumption through IoT and ML also means energy companies can measure production against demand, and balance consumption needs with output from renewable energy to reduce their use of fossil fuels.

5G can boost disaster management

As made clear in the UN report, the next century will be marked by natural disasters such as landslides, wildfires, and floods. 5G stocks can help us cope:

  • IoT sensors can deliver early warnings about wildfires, landslides, avalanches, and flooding, helping speed up evacuation and prevent loss of life and property.
  • Edge computing and AI engines predict extreme weather events and plot the path of wildfires and hurricanes.
  • Augmented reality (AR) headsets use latency-free video analytics data streamed over 5G to give firefighters visibility into the heart of wildfires, helping them fight them more safely and effectively[11].
  • 5G enables rescue teams to use drones, GPS, and emergency communication to work more efficiently, and to bring aid where it's needed most.

Improve wildlife stewardship

On a more positive note, 5G can help safeguard protected habitats and track endangered species. For example, a pilot project in the UK's Sherwood Forest uses 5G to monitor the health of the trees and the creatures who live in and around them[12].

5G sensors monitor microbe and acidity levels in water tables to detect changes instantly, so action can be taken before serious incidents occur. IoT sensors in gas, chemical, and water pipes also check constantly for cracks to prevent leaks. It's estimated that 5G sensors and analytics on water systems can reduce water loss by up to 25%[13].

Is 5G an energy monster?

There are fears that 5G's extra computing power could raise energy consumption. A recent report from France warns that 5G networks could release an extra 3 to 7 billion tonnes of CO2[14], and in China, power consumption from 5G technology is predicted to increase by 488% by 2035[15].

But others allay these concerns. 5G networks themselves are around 90% more energy efficient than 4G networks[16], and it's only the initial stages of the rollout which need more power.  “Once the network is more mature, all energy efficiency features will kick in and energy consumption will be optimised,” said Joop Hazenberg, European External Affairs Director at GSMA[17].

According to Ekudden, much depends on the choices made by 5G providers and infrastructure contractors. 5G rollout powered by renewable and green energy shouldn't raise emissions noticeable, and once it's in place, it should drive a net reduction in power usage.[18]

Or the next ESG investment choice?

It might be too much to suggest that investors who want to support environmentally friendly causes should put their money into 5G stocks, but at the same time, investors who are excited about being part of the cutting edge of 5G innovation don't need to feel guilty about the impact it has on the planet.

Investing in Defiance's FIVG 5G ETF allows investors who want to join the 5G transformation to mitigate their exposure to risk by spreading their investment over a range of leading 5G stocks, thereby helping balance their portfolio.


 N.B. This is sponsored content and not FINSUM editorial.

[1] "AR6 Climate Change 2021: The Physical Science Basis", released August 9, 2021 https://www.ipcc.ch/report/ar6/wg1/

[2] "Infrastructure on track as bipartisan Senate coalition grows" August 10, 2021 https://apnews.com/article/joe-biden-business-c299d5d2a32188989b58cb5feec12f5d

[3] "Digitalization with 5G enables further acceleration of climate action" January 21, 2021 https://www.ericsson.com/en/blog/2021/1/digitalization-5g-climate-action

[4] "ICT Sector Helping to Tackle Climate Change" August 12, 2016 https://unfccc.int/news/ict-sector-helping-to-tackle-climate-change

[5] "The global economic impact of 5G" https://www.pwc.com/gx/en/tmt/5g/global-economic-impact-5g.pdf

[6] "FEATURE: How 5G will transform smart transportation in cities in 2021" October 14, 2020 https://www.traffictechnologytoday.com/features/feature-how-5g-will-transform-smart-transportation-in-cities-in-2021.html

[7] "Digitalization with 5G enables further acceleration of climate action" January 21, 2021 https://www.ericsson.com/en/blog/2021/1/digitalization-5g-climate-action

[8] "Agriculture’s connected future: How technology can yield new growth" October 9, 2020 https://www.mckinsey.com/industries/agriculture/our-insights/agricultures-connected-future-how-technology-can-yield-new-growth  

[9] "WATER IN AGRICULTURE" May 8, 2020  https://www.worldbank.org/en/topic/water-in-agriculture

[10] "Achieving sustainability in a 5G world" December 2016 https://www.brookings.edu/wp-content/uploads/2016/11/gs_20161201_smartcities_paper.pdf

[11] "5 Ways 5G And IoT Could Help Change The World" August 9, 2021 https://www.forbes.com/sites/tmobile/2021/08/09/5-ways-5g-and-iot-could-help-change-the-world/?sh=51adc6085557

[12] 5G Connected Forest, started March 1, 2020 https://uk5g.org/discover/testbeds-and-trials/5g-connected-forest/

[13] "The global economic impact of 5G" https://www.pwc.com/gx/en/tmt/5g/global-economic-impact-5g.pdf

[14] "Deploying 5G will lead to spike in CO2 emissions, French climate council warns" December 20, 2020 https://www.france24.com/en/europe/20201220-deploying-5g-will-lead-to-spike-in-co2-emissions-french-climate-council-warns

[15] "Superfast but not so clean: China’s 5G network is causing its carbon emissions to soar" June 4, 2021 https://www.euronews.com/next/2021/05/28/superfast-but-not-so-clean-china-s-5g-network-is-causing-its-carbon-emissions-to-soar

[16] "5G 90% more energy-efficient than 4G, Nokia study finds" December 8, 2020 https://www.smart-energy.com/industry-sectors/digitalisation/5g-90-more-energy-efficient-than-4g-nokia-and-telefonica-find/

[17] "Friend or foe? The potential climate benefits of 5G" June 4, 2021 https://energymonitor.ai/tech/digitalisation/friend-or-foe-the-potential-climate-benefits-of-5g

[18]  "Superfast but not so clean: China’s 5G network is causing its carbon emissions to soar" June 4, 2021 https://www.euronews.com/next/2021/05/28/superfast-but-not-so-clean-china-s-5g-network-is-causing-its-carbon-emissions-to-soar

Published in Eq: Tech
Thursday, 09 January 2020 15:38

The Big Risk to Muni Bonds

(New York)

There is big risk to the muni bond market that you are probably aren’t thinking about. That risk is how increasingly frequent weather-related calamities are befalling US cities as the climate changes. The market is already starting to price these risks, and according to BlackRock, many current muni bond issuers could see 1% knocked of their economic output. According to the head of muni bonds at BNY Mellon, “The risk has been identified by market participants … Looking at the severity of storms picking up . . . it will start to be factored in”. When choosing bonds, investors need to start demanding or checking on plans from issuers. “What plans are they making? Are they hardening their infrastructure . . . are they trying to insulate central services? If they’re just stating the obvious, that’s not sufficient”, says BNY Mellon.


FINSUM: This is an important consideration for all those that hold munis. Think of the weather-related calamities that have happened lately and consider the implications (e.g. Houston).

Published in Bonds: Munis
Thursday, 09 May 2019 11:37

Fed Warns of Economic Shock

(Washington)

The Fed has a big new worry that is not presently on the market’s radar. With all the worries about headline economic data and the trade war, very little attention has been paid to the potential shock equities and bonds may feel from climate change. The Fed, however, is very focused on the risk. The Fed says that climate change can have a jarring effect on the economy that may “affect national economic output and employment”. “As such, these events may affect economic conditions, which we take into account in our assessment of the outlook for the economy”, says Fed Chairman Powell.


FINSUM: Calculating climate risk is tough because it can have short-term effects, but also much longer and more challenging ones, such as migration and agricultural output. That said, no one is expecting a climate change-induced financial crisis.

Published in Eq: Total Market
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