Weekly Buzz: A bright year for renewables

09 June 2023

💡 Good news for renewables! 

On Monday, the global community celebrated World Environment Day, and just before the weekend, a new report from the International Energy Agency (IEA) predicted that 2023 will be a bright year for renewable energy.

What does this mean?

Pandemic-induced supply chain headaches put the brakes on renewables for a while – but now it’s full steam ahead once again, thanks to a little nudge from high oil and gas prices, and some serious energy security concerns. That’s all led the IEA to predict that global renewable energy capacity will swell by a third in 2023, amounting to the biggest yearly boost we’ve ever seen, equivalent to the power capacity of Germany and Spain combined. And while this is a concerted worldwide effort, China remains the pack leader thanks in part to its promotion of massive solar projects.

Working, but winded 

If the world keeps up this pace, we could have enough solar manufacturing capacity to meet the IEA’s net-zero emissions scenario come 2050 – but it won’t be a cakewalk either. Infrastructure is still lagging at the moment, which means that government support will be crucial to keep things on track, plus investors are paying a lot of attention to profitability right now. 

That’s got companies like Shell re-evaluating underperforming green assets, even ones that might have potential in the long run. The bottom line is that we’re still not shifting to renewables fast enough, especially with scientists warning that the Earth’s past certain safe limits for human health.

If you’re looking to add exposure to renewable energy to your investment portfolio, there are a couple of ways you go about it:

  1. Our Environment and Cleantech thematic portfolio makes it easy for you to invest in green sectors like renewables without excessive risk.
  2. Under the Green asset class in our Flexible Portfolios, you can get targeted exposure to clean energy, as well as related sectors like energy storage and smart grids. We have already done the hard work of picking the best ETFs for you.

This section was written in collaboration with Finimize.

📈 A mixed bag of US jobs data

The latest batch of US jobs data sent mixed signals on the state of the labour market. On one hand, nonfarm payroll gains far exceeded estimates, with the addition of 339,000 jobs in May (the median Bloomberg forecast was for 195,000). On the other hand, unemployment rose to 3.7% from 3.5%, while wage growth moderated. Put together, the data point to signs of a weakening labour market and further relief on inflationary pressures (next week’s CPI data will offer a clearer picture on that). Ultimately, that could lead the US Federal Reserve to keep interest rates steady at its meeting next week. 

🎓Jargon buster: Supply chain

A supply chain is like a game of “pass the parcel” but with products instead of music. It's all about getting stuff from point A to point Z, involving a bunch of companies who do things like provide raw materials, manufacture products, maintain warehouses, and distribute goods to customers. Effective supply chain management can lower a company's overall costs and boost its profitability. If one link breaks, it can affect the rest of the chain and increase prices. In fact, that was one of the reasons behind last year’s surge in inflation.

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