Clean Energy Investments Gain While Oil and Gas Fund Declines
Two investment funds operated by New York-based investment managers BlackRock point to the best of times and the worst of times in energy commodity markets.
“BlackRock is in the unusual position of marketing two funds which offer polar opposite views for the future of the global energy industry,” writes consultant Gerard Wynn on the Energy and Climate Blog. “The Black Global Fund (BGF) World Energy Fund invests in companies whose business is the exploration, development, production, and distribution of conventional energy, and mostly oil and gas,” while the BGF New Energy Fund “invests in companies specializing in energy efficiency, biofuels, and wind and solar power.”
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Since 2012, the New Energy Fund has increased in value by 20.3%, while the World Energy Fund has fallen by 15.4%.
“Of course, we should not get carried away,” Wynn writes. “A big part of the reason for slumping shares in oil and gas companies is a supply glut, rather than structurally weaker demand. That glut will disappear as investment falls.”
Still, “there are structural hazards out there for fossil fuels, including falling costs for wind and solar power, the scourge of air pollution in emerging economies, consistent climate science, and hopes pinned on low-carbon innovation for global gains in productivity, returns, and growth.”
Wynn adds: “One of the central objections to fossil fuel divestment among institutions such as Harvard University has been the potential negative impact on investment returns. Evidence that such an impact may be smaller than feared may give a further boost to clean technology stocks.”