Equities

The European Green Deal and COVID-19 Recovery Package

The European Union is set to officially present a recovery package next week on May 27th, with a focus on the EU Green Deal – an economic rescue plan aimed at generating jobs and private investment across the continent, while also integrating into the package policies geared towards reaching net zero greenhouse gas emissions by 2050.

Prior to the crisis, the European Commission had calculated that EUR 260 billion of additional annual investment was required to reach its 2030 emission goals, on the path to the net zero target.

Despite calls from some leaders to forget the EU Green Deal and focus instead on the virus, the EC has continued to reiterate its commitment to the Green Deal as being central to the recovery and reconstruction package. Earlier this week, a draft, unofficial document detailing the green recovery plan was published.

Considering this level of political support, we wanted to consider which sectors may stand to benefit from such green-focused policies, including renewables, building renovation and clean mobility. You can trade ESG stocks on Marketsx with ESG ETFs, as well as our unique ESG Leaders Blend.

Renewable energy

The goal of reaching net zero greenhouse gas emissions by 2050, as outlined above, could drive earnings growth for those utility companies with existing and scalable exposure to renewables in their power generation mix, and to those that are developing such exposure.

Two key renewable energy sources are wind and solar, which combined (Captain Planet, anyone?) form a complimentary mix: solar generation is largely during the sunnier, longer days in summer, while wind produces most in the winter months and typically peaks at night.

Screening for utilities with strong balance sheets could indicate that they have capacity for additional investment and growth in renewable energy sources.

Apart from decarbonising the power generation mix in a move to renewables, energy demand may also increase because of other measures, further accelerating growth in the sector.

For example, the use of electric heating in buildings is low in Europe, with the majority being gas or oil heated. Switching to electric heating, where electricity production comes from clean sources, could lower emissions while increasing power demand.

Increased use of electric vehicles could also contribute to growing power demand. It may also require the deployment of charging stations to facilitate long distance travel, where utility involvement could come in too.

Furthermore, it is not only utilities that stand to benefit from renewables growth, but also those companies involved in providing the infrastructure for renewable electricity generation and transmission.

Cleaner transport

Automobile manufacturers with a focus on battery electric vehicles (BEV) may stand to benefit from the green recovery plan. For example, consider a situation where public money is spent on subsidies that would reduce the cost for firms, or indeed cities, to cut emissions by converting vehicle fleets from combustion to electric engines.

A boost for public transport investment could have a significant impact on businesses in the sector. The report flags the importance of the European rail supply chain and supporting it and the businesses involved while it faces increased competition from China.

It is also worth noting that Volvo and Daimler recently announced a joint venture to develop and commercialise clean hydrogen technology for the truck market.

Building renovation

According to the leaked report we referenced above, buildings consume the largest amount of energy in the EU and are responsible for 36 percent of EU greenhouse gas emissions.

As previously discussed, a switch to electric heating could help in lowering emissions associated buildings.

Construction exposed companies could also be worth monitoring, such as those related to heating, ventilation and air conditioning, lighting, and electrical, as buildings are targeted for renovation to make them more energy efficient.

Seneste markedsnyheder

OPEC meeting weighs on crude oil ahead of US EIA inventories data

Read More

Stocks grind higher, dollar squeeze continues

Read More

IPO market coming back to life?

Read More

OPEC meeting preview: record production cut to be extended?

Read More

Stocks nudge up, GBP breaks higher

Read More

May’s top Blends: Einhorn rises, Corona falls

Read More

Stocks rally, dollar offered, OPEC meeting may be brought forward

Read More

Week Ahead: Central banks on tap, NFP faces massive Covid hit

Read More

ECB preview: Welcome to Japan?

Read More
Previous
Next

Tilmed dig Markets.com

Velkommen til en mere individuel strategi for en verden med handel. Med VIP-service, der behandler dig som et menneske, og ikke et nummer. Tilmeld dig i dag for at se en verden af finansmarkeder, på din måde.

Opret konto

CySEC (EU)

  • Kundemidler holdes i adskilte bankkonti
  • FSCS investorgaranti op til 20.000 EUR
  • Beskyttelse mod negativ saldo

Produkt

  • CFD
  • Aktiehandel
  • Quantranks

Markets.com drives af SafeCap Investments Limited (”Safecap”). Reguleret af CySEC under licensnr. 092/08 og FSCA under licensnr. 43906.

FSC (GLOBAL)

  • Kundemidler holdes i adskilte bankkonti
  • Elektronisk verifikation
  • Beskyttelse mod negativ saldo

Produkt

  • CFD
  • Strategy Builder

Markets.com drives af TradeTech Markets (BVI) Limited ("TTMBVI”) Reguleret af BVI Financial Services Commission ("FSC") under licens nr. SIBA/L/14/1067.

FCA (UK)

  • Kundemidler holdes i adskilte bankkonti
  • FSCS investorgaranti op til 85.000 GBP *afhængigt af kriterier og berettigelse
  • Beskyttelse mod negativ saldo

Produkt

  • CFD
  • Spread Bets
  • Strategy Builder

Markets.com drives af TradeTech Alpha Limited ("TTA”) Reguleret af Financial Conduct Authority (‘FCA’) under licensnr. 607305.

ASIC (AU)

  • Kundemidler holdes i adskilte bankkonti
  • Elektronisk verifikation
  • Beskyttelse mod negativ saldo

Produkt

  • CFD

Markets.com drives af TradeTech Markets (Australia) Pty Ltd ("TTMAU”) Er indehaver af Australian Financial Services licens nr. 424008 og reguleres med hensyn til leveringen af finansielle tjenester af Australian Securities and Investments Commission ("ASIC”).

FSCA (ZA)

  • Kundemidler holdes i adskilte bankkonti
  • Beskyttelse mod negativ saldo

Produkt

  • CFD
  • Strategy Builder

Markets.com drives af TradeTech Markets (South Africa) (Pty) Limited ("TTMSA”) Reguleret af Financial Sector Conduct Authority ("FSCA") under licens nr. 46860.

Valg af en af disse tilsynsmyndigheder vil vise de tilsvarende oplysninger for hele webstedet. Hvis du gerne vil vise oplysninger for en anden tilsynsmyndighed, vælges denne. Klik her for yderligere oplysninger.