The Investment Opportunities of the Green Economy
Going Green isn’t just about saving the planet. It can help you save your retirement, too.
Ric Edelman: It's Thursday, January 12th. Today, we're talking about the green economy and the incredible investment opportunities that this is going to be representing. I'm talking about hydrogen, global decarbonization, autonomous and electric vehicles, solar disruptive materials, lithium and battery technology, climate change, wind, clean tech, US infrastructure development, renewable energy. That's a big list, isn't it? That gives you an idea of what's coming down the road. Why is all this happening now? Why is it such a big deal?
Well, two basic reasons: we've got government policy focusing on this and corporations that are supporting and embracing all of it. All of this is supported by both voters and shareholders. And we're also seeing very big improvements in technology that's improving the performance of this tech while lowering the costs of it.
So a lot's going on. Let me just give you a couple of quick examples. 135 countries have set a target of net zero emissions by 2050. So there's a big push to make this happen. Meanwhile, solar costs are down 88%. The cost of lithium-ion batteries are down 89% in the past 10 years. The demand for these products is skyrocketing. We sold 10 million electric vehicles in 2022. That was a 57% increase over the prior year. And they're projecting that annual sales of electric vehicles will be 63 million of them over the next decade.
Congress has allocated $7.5 billion for charging stations. The US, China, India, Europe are all offering tax breaks and other incentives to encourage people to buy electric vehicles. So yeah, we've got favorable government policy behind all of this and it translates into big investment opportunities or also investment opportunities even in the raw materials themselves - copper, zinc, nickel, lithium, cobalt, manganese. There's 160 pounds of these metals in a single battery pack for an electric vehicle. That's six times more of these metals than in an internal combustion engine.
So as we shift from internal combustion to electric, we're going to need these metals in greater and greater supply. You add it all up, we're talking about a 42X increase in the demand for lithium over the next 25 years. A 5X increase in mining revenue. The lithium industry is now $50 billion. It's going to be $250 billion over the next two decades. Meanwhile, by the way, coal revenues are down 60% because we're shifting to green technologies. Copper is a big deal for wind and solar power as these alternative energies grow in usage, so will the demand for copper. And you have to assume, therefore, the impact on copper prices.
It's also big news for uranium in the US and all over the world as governments are embracing once again nuclear power for the first time in a long time. And that means we're going to need more uranium.
And let's not forget the infrastructure bill that Congress approved and the president signed last year, $550 billion in new federal funding for projects all across the US. Another $105 billion in state resources. 10% of this money is specific to water, like replacing lead pipes, building new dams and so on, and that is related to the global sea water desalination market that's expected to grow $22 billion over the next five years.
The Climate Change Investing Opportunity
Then there's global decarbonization. It's all part of the 2015 Paris Climate Accord. I mentioned that 135 countries have set their emissions targets to be zero over the next couple of decades, while on top of those 135 countries, 500 corporations worldwide have also signed on the same thing. By 2050, cumulative investment across clean technologies is projected to reach $100 trillion. You know, I grabbed all this data from Global X ETFs. They have just produced a special report in partnership with the Wall Street Journal on their outlook for 2023 and beyond, and how these new waves of exponential technologies are going to be changing every aspect of our lives.
So this is a really big investment opportunity. It's not only going to make our planet cleaner and safer, but it also has incredible investment opportunities as well. And that's why I own a lot of Global X ETFs that are in the thematic approach of green technology. They include:
The Global X Clean Tech ETF, the symbol is CTEC.
The Global X Clean Water ETF, the symbol is AQWA.
The Global X US Infrastructure Development ETF, the symbol is PAVE.
The Global Green Building ETF, the symbol is GRNR.
The Global X Lithium and Battery Technology ETF, the symbol is LIT.
The Global X Solar ETF, the symbol is RAYS.
The Global X Wind Energy ETF, the symbol is WNDY.
And the Global X Auto and Electric vehicles ETF, the symbol is DRIV.
These ETFs give you the opportunity to have exposure in your portfolio to the companies that are developing the technology, creating the products that we're going to be using to live in a greener environment. And I think as a long-term investment play, it makes a lot of sense. You can read more about all of these ETFs at GlobalXETFs.com. If you want to look at the report that Global X has published with the Wall Street Journal, the interactive report is at ChartingDisruption.com and the full report is at GlobalXETFs.com. Green is in our future. I'll see you tomorrow.