He says hydrogen is the energy source that, in investment terms, is at the earliest stage of development, comparing it to where online shopping was in 1997.
Harrison says “all an investor can do at this stage is look at the track record, and we try to avoid the big bets”.
Martyn Hole, equity investment director at Capital Group, says one of the biggest dilemmas facing sustainable investors in the future is around electric vehicles.
He says that while electric vehicles are part of the process of achieving net zero, such vehicles are made using a greater amount of copper than non-electric vehicles, and as such the growth in electric vehicles will mean a greater demand for copper.
He says the investment opportunity may come from the fact that many of the companies that mine copper would be excluded from sustainable investment funds, and so will trade at relatively lower valuations in a world where demand for sustainable investment funds is rising.
Matthew Tillett, manager of the Brunner Investment Trust, says the investment case for companies such as wind farm providers are “well known” and so he prefers to invest in lesser-known themes such as electrification – he is invested in Schneider Electric with this in mind.
Ingrid Kukuljan, head of impact and sustainability at Hermes, says the next phase of activity in the sector is likely to be consolidation, which she believes will lead to more certainty around the pricing of renewable energy and this will boost the investment case in future.
Mark Hume, co-manager of the BlackRock Energy and Resources Income Trust, says: “We believe the scale of the growth opportunity for the sector as a whole over the coming years has been under-appreciated, both as a play on capital allocation and attractive long-term investment exposure.
"Broadly speaking, we believe that the energy transition will gather pace in the coming years as regulators, corporations and investors mobilise capital towards decarbonisation. By definition, we would expect investments to reflect this longer-term trend. Indeed, we see the theme accelerating, with economic stimulus post-Covid likely to be focused on green industries, as evidenced by the EU Green Deal and increased focus from the US.”
He adds: “Also supporting the transition is the fact that renewable energy costs for onshore wind and solar PV are now at grid parity in certain markets and such power generation now represents the most economic technology choice, which is driving rapid adoption. We see similar cost competitiveness trends in other areas such as energy-efficient lighting and energy storage solutions in automotive electrification.”
