Green Aviation

In terms of sustainability, the aviation industry courts considerable controversy for its high volumes of CO2 emissions. In 2019 alone, the global aviation industry produced an estimated 915 million tonnes of CO2 emissions, according to a report published by the Air Transport Action Group.

Though this represented just 2% of global CO2 emissions for the year, with an estimated 43 billion tonnes of CO2 released into the Earth’s atmosphere in 2019, 2% is still 2% too much. The UK Government recently prioritized the transition to greener technologies, earmarking £400 million in funding for green aviation.

Throughout 2020 air travel fell substantially due to the global Covid-19 pandemic. Nevertheless, in preceding years, flight numbers increased consistently. In fact, a study conducted in 2019 by the International Council on Clean Transportation showed that between 2013 and 2018, air travel created 70% more emissions than experts had previously anticipated.

The UK Government recently announced that the national shift to green aviation is now a top political priority. Matthew Stone, Renovare Fuels’ Chairman, recently discussed the issue with AltEnergyMag, identifying how the answer could lie in specialist, carbon-neutral liquid fuels.

Although the aviation sector is currently engrossed in issues sparked by the COVID-19 pandemic, conservationists and industry experts alike warn that addressing sustainability issues is imperative to the air travel industry’s mid- to long-term viability. Even amidst the COVID-19 crisis, the necessity for long-term change and a shift towards sustainability remains an industrywide talking point.

The UK Department for Transport’s Net Zero Board recently announced that the UK Government would be addressing international aviation and shipping sustainability as part of its Net Zero Target in the coming years, driving a transition to greener aviation. To support the industrywide evolution of aviation, the UK’s Department for Business, Energy & Industrial Strategy (BEIS) invested £400 million in green aerospace research and technological development.

Many aviation companies and end-users have adopted measures put forward as part of the United Nations Carbon Offsetting and Reduction Scheme for International Aviation. Various strategies are available to airline companies seeking to offset emissions. Perhaps the most impactful is the incorporation of biofuels into their fuel stock.

Whereas natural gas, coal, and petroleum are all finite fossil fuels, biofuels are usually derived from organic products. Instead of taking millions of years to form, biofuels can be developed from sustainable materials.

To be renewable, an energy source must be easily replenishable, without a finite limit. In other words, if it is possible to run out of an energy source, it is not renewable. Whereas fossil fuels like natural gas, coal, and petroleum are all exhaustible, energy sources for biofuels can be replenished as readily as they are used, making them a sustainable, renewable energy source.

Biofuels produce less particulate when they are burned, i.e. soot and smoke, and emit fewer pollutants such as sulfur, the leading cause of acid rain. They also produce less ozone, a primary component of smog.

One of the biggest drawbacks of biofuels is that they can require significant amounts of water to produce; up to 84 times as much as fossil fuels. Subsequently, the production of some biofuels can threaten food supply, reducing the amount of water available to support crops. This is a particular issue for developing nations since the increased use of farmland for the production of biofuel energy sources reduces the amount of land available for crop production, which in turn can drive up the price of food.

Led by a management team including renewables industry expert Duncan Clark, Renovare Fuels has circumnavigated many of the challenges of traditional biofuels, developing its products from biodegradable waste materials produced by other sectors such as agriculture. Since Renovare Fuels’ new biofuel is derived from waste materials, its production does not compete with food production or crops and does not require additional energy input.

In addition, by utilizing waste from other sectors, this biofuel actually removes carbon from the environment throughout its production, creating a positive carbon footprint. For aviation companies, Renovare Fuels offers an objectively carbon-neutral fuel source.

By partnering with companies like Renovare Fuels, airlines can easily create sustainable supply chains which significantly offset emissions. Many believe that Renovare Fuels’ breakthrough in generating this new generation of biofuels could have a significant impact on the aviation industry, potentially marking the start of a new era of sustainable air travel.

It is no secret that the renewable energy sector is growing bigger every year because we are trying to diminish the effects of climate change. According to experts, we are slowly running out of time and we should increase our efforts to save the planet by a large margin if we want our great-grandchildren to live to see the change. All this just depicts the bright future green energy companies should have. Hence, now may be the perfect time to acquire some of the 5 most popular green energy stocks among hedge funds.

Think of it this way, not only that investing in green energy companies benefits our planet, but it also has enormous profit potential for you. Intergovernmental Panel on Climate Change predicts that carbon emissions will have to be halved by 2030 in order to avoid having more expenses to deal with the same problem. In other words, the faster we act upon it, the less we will have to pay. According to International Energy Agency (IEA), through 2050 global spending on lowering carbon emissions may reach $1 trillion on average annually, from $400 billion annually, which is the current spending. IEA also estimates that renewable energy will account for 40% of global power generation by 2040. When it comes to the portion of electricity produced by renewables around the world, it is expected to increase considerably fast in the next couple of years. In France, they are already setting up solar roads, and Japan plans to follow this trend ahead of the 2020 Olympic Summer Games that are going to be held in Tokyo.

We just hit the iceberg of the climate change issues because of which green energy stocks are going to thrive in the near future. Hence, now, may be a good time to take a look at those companies that represent an attractive investment opportunity. According to Insider Monkey’s hedge fund database, here are the 5 most popular green energy stocks among hedge funds.

  1. TPI Composites Inc (NASDAQ:TPIC)

The fifth most popular green energy stock among hedge funds in our database is TPI Composites Inc, which had 17 investors with long positions at the end of the third quarter. It has experienced a small increase having 16 smart money investors by its side at the end of the previous quarter. TRI Composites Inc belongs to the wind industry, being the biggest US-based producer of composite wind blades. Over the past 17 years, the company has produced more than 43,000 wind blades with a fantastic field performance record. According to the company’s third quarter financial results report, it had net sales for the quarter of $255.0 million, compared to $263.5 million in the same period in 2017. It also disclosed a net income of $9.5 million, compared to $21.7 million in Q3 2017, and diluted earnings per share of $0.26, versus $0.62 in the same period in 2017. TRI Composites Inc has a market cap of $835.86 million; on a year-to-date basis, its stock gained 17.74% and it is currently trading at $24.56.

13530930-wind-turbines-and-solar-panels-in-a-rapeseed-field

  1. Covanta Holding Corp (NYSE:CVA) and Enphase Energy Inc (NASDAQ:ENPH)

Two green energy stocks had the same number of bullish investors in the third quarter, 19 to be precise, and those two companies are Covanta Holding Corp and Enphase Energy Inc. Covanta has seen an increase of 5 in the number of investors with long positions in the recent period, whereas Enphase Energy has gained 1 more investor with a long position in the third quarter. Covanta Holding is a big global corporation that offers a broad range of waste management and incineration services, having more than 70 facilities around the globe. In its third quarter 2018 financial report, it has disclosed a revenue of $456 million, compared to $429 million in the same period in 2017, and a net loss of $27 million, versus a net income of $15 million in the same quarter in 2017. It has also reported a loss per share of $0.21 versus an EPS of $0.11 in Q3 2017. Over the past 12 months, the company stock lost 8.57%, and at the moment of writing, it is trading at $15.04. Covanta Holdings has a market cap of $1.91 billion.

Enphase Energy is a Fremont-based company that produces a variety of software-driven home energy solutions covering the home energy storage and solar generation among others. For the third quarter ended on September 30, 2018, the company disclosed a net loss of $3.47 million, compared to a net loss of $6.85 million for the quarter ended on September 30, 2017.  It has also reported a Basic loss per share of $0.03, versus a loss per share of $0.08 in Q3 2017. The company’s market cap is of $589 million, and in the last six months, its stock lost 7.87%, and it is now trading at $5.62.

  1. Atlantica Yield PLC (NASDAQ:AY)

20 smart money investors from Insider Monkey’s database were bullish on Atlantica Yield at the end of the third quarter, up by 1 from Q2 2018. Atlantica Yield is a sustainable total return company that runs a diversified portfolio of contracted renewable energy, electric transmission, water, and power generation assets. For the third quarter 2018, Atlantica Yield disclosed a revenue of $323.8 million, compared to $292 million in the third quarter of 2017. Over the last 12 months, Atlantica Yield’s stock lost 5.72%, hence it is currently trading at $19.94. The company has a market cap of $1.97 billion.

  1. Renewable Energy Group Inc (NASDAQ:REGI)

Renewable Energy Group Inc. is the second most attractive green energy stock in our database, and also the company which has experienced the largest increase in the number of bullish investors among the stocks on this list. The company had 21 smart money investors with long holdings at the end of the third quarter, up from 13 in Q2 2018. Renewable Energy Group is a company that produces biomass-based diesel, develops renewable chemicals, and provides a plethora of green services. This is North America’s biggest manufacturer of advanced biofuel. In its third quarter financial report, the company reported adjusted net income of $19.8 million or $0.43 per share, compared to adjusted net loss of $15.1 million, or $0.39 per diluted share (not including allocation of the federal Biodiesel Mixture Excise Tax Credit for 2017). Since January until now, the company’s stock has gained 102.6%, and it is now trading at $24.11. It has a market cap of $902.28 million.

  1. NextEra Energy Inc (NYSE:NEE)

The most popular green energy stock among hedge funds in Insider Monkey’s table is NextEra Energy, which had 32 bullish hedge funds on September 30, up by 1 from the previous quarter. NextEra Energy is a Fortune 200 energy company that provides energy-related services and products. One of its many subsidiaries, NextEra Energy Resources (NEER) is one of the world’s biggest generators of renewable energy from wind and sun. For the third quarter ended on September 30, the company disclosed net income of $1.039 billion, or $2.18 per share, compared to $875 million, or $1.85 per share for the same quarter in 2017. NextEra Energy has a market cap of 83.95 billion, and over the past six months, its stock has gained 11.63%, hence, at the moment of writing it is trading at $179.08.

Fine for Indian Electricity Distributors

In the latest from the Indian power sector, the Power Ministry has announced to fine electricity distributors for avoidable power cuts from April 2019. It has also made it compulsory for the companies to install prepaid or smart meters to prevent any theft of electricity. The fines would be imposed in the financial year starting April 2019. The distributors would be exempted if the shutdown was caused by factors like bad weather conditions or due to any other reason/ disaster that was beyond a company’s control.

On the other hand, the distributors are crying horse saying that they run short of cash to pay generating companies. The root cause of this problem is power theft prevalent in areas due to unauthorized grid links. Also, an efficient bill collection could also reduce this problem. Few Indian states suffer from collecting payments for more than half of the power they supply.  Power theft is one of the looming issues in the Indian power sector.

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India has already achieved its ‘One Nation’-‘One Grid’-‘One Frequency’ objective in 2014 and the Indian power system is one of the largest operating synchronous grids in the world today.

The above mentioned initiative will guarantee a more consistent power supply in India. The country has more than20% of its population still living in darkness. The problem is starker in rural areas where there is no grid connectivity. Many of these areas are now powered by micro-grids. The government will also be distributing solar panels with battery packs to households which are not grid connected. India targets to install 100 GW of solar power by 2022 and is also aiming at renewable power sources to constitute 40% of installed capacity by 2030. A majority (almost 60%) of the country’s power is still generated from coal, diesel, and gas. Renewables like wind, solar, biofuels and hydropower account for nearly 18% of the current installed capacity.

Also, read Penalty for Indian Solar Power Developers If Caught Cheating

India is a growing nation with increasing population and demand for power. India has deployed $11 billion rural electrification program, called Deen Dayal Upadhyaya Gram Jyoti Yojana, which targets delivering power to 18,452 villages by 2018.

The government has also vowed to provide the whole population with power by the end of 2018 and has launched a $2 billion project in September in this regard.

Slow and Steady Won’t Win The Race

Oil and gas giant Shell which had sold off its solar energy division in the last decade is planning a slow return once again. The prospects for oil and gas over the long term is not that great with the rapid evolution of solar, wind and EV technologies. The main demand drivers for oil are dying down and there are no new demand drivers. With “low carbon” theme gaining traction and more and more energy applications using solar or a mix of solar plus storage, the long trend for oil and gas is declining. Now even the large oil and gas majors are realizing the new reality. Shell has acknowledged that oil may stay at the $40 level for a long time and is preparing for it.

Also, check out Most Oil And Gas Producers Could Go Bankrupt Over The Next Decade

Solar Vs Fossil Fuel generation

Solar Vs Fossil Fuel generation

The company has formed a new energy division to look into renewable energy, EVs etc. as it looks to find new revenue sources. The company plans to invest a whopping $1 billion every year into new technologies and fuels such as biofuels and hydrogen. The company thinks that the prospects of oil for shipping and aviation will remain for a long time even if the main demand category of vehicles will decline in the future.

Take a look at the Oil & Gas Companies in India 

BP was another giant which had sold off its large solar panel manufacturing division as the Chinese gained ascendancy. However, the company may again be forced to look into how to make a play in the “energy transformation” story that is rapidly changing the staid energy industry all over the world. Shell has also bought a stake in a Singapore based solar energy developer which is developing rooftop solar and utility scale solar power plants in the island country.

Shell plans to get into newer energy slowly as it does not want to burn its fingers since the company thinks that the solar energy area is not very profitable, which is true. However, given the massive advances in scale and processes made by the incumbents, Shell has lost any chance of getting into this area. If it waits too long, it will go the Kodak way!

“We want to be part of shaping the future … in the face of growing environmental challenges,” said Van Beurden (CEO – Shell). “We believe our current strategy provides much greater scope to play a wider role in that energy transition (to a lower carbon future).”

Its not going to happen overnight … We will have to adapt to a more diverse portfolio to reduce carbon,” he added, saying it would take time to develop and insisting “we are not the opposition” to renewables.

Source: Guardian

U.S. Renewable Market

While the renewable market remains steady, droughts in the U.S. mid-west could put pressure on ethanol and bio-diesel. California voted overwhelmingly to extend the Cap and Trade program through 2030, which should help market sentiment. California provides unparalleled support for the renewable fuels industry and offers a stark contrast to the Trump administration’s efforts to dismantle Obama era climate policies. The LCFS credit was unfazed by the agreement and remains to trade in the $73 to $76 range.

Climate Change

Source: NASA

Parties Re-entering RIN Market

Obligated parties appear to be re-entering the market on a consistent basis again.  This is the likely driver behind the strong move in ethanol RINs (Renewable Identification Number).  There seems to be a feeling that achieving the mandate without drawing down the RIN bank is going to keep the ethanol market pretty tight. E17’s gained crested over the 80 cents mark. They have not been this high since January 3rd, 2017.  The market feels biodiesel production is in an okay spot relative to ethanol.  B17 RINs continue to hang out in the 110 to 112 range.  The move higher in ethanol RINs further narrowed the B17/E17 spread to 31 cents.

Crop Ratings Continue to Suffer due to Drought Conditions

In the latest week, 40% of the corn crop has entered is in the silking stage. This is up 21 points from last week but trails both the 5-year average of 47% and last year’s pace of 53%. Crop conditions edged lower over the past week. 64% of the crop is considered to be in good to excellent condition, 25% is rated as fair, and 11% as poor to very poor.  Current readings are down 1 point in the good to excellent category and a point worse in the poor to very poor category. Last year conditions were 76% good to excellent, 19% fair, and 5% poor to very poor.  Tennessee, Kentucky, and Pennsylvania are seeing the best crop conditions, while South Dakota and North Dakota are seeing some of the worst. 38% of the South Dakota corn crop is rated poor to very poor. This could put upward pressure on corn and ethanol.

Soybean blooming has reached 52%, up 18 points from last week and 1 point ahead of the 5-yr average. 16% of the soybean crop is setting pods, 3 points better than the 5-year average. Soybean crop conditions continue to decline. 61% of the crop is rated as good to excellent, 28% as fair, and 11% poor to very poor.  Week over week, ratings dropped 1 point in the good to excellent category, while adding a point in the fair category. Tennessee and Louisiana are showing crops with the best conditions, more than 80% rated good to excellent. South Dakota is only at 34%. South Dakota is facing horrible weather conditions. 93% of the state is abnormally dry, according to the US Drought Monitor, and 11% of the state is facing extreme drought conditions. Currently, only 29% of the South Dakota soybean crop is rated in good to excellent condition, while 33% is considered poor to very poor. This could put pressure on bio-diesel.


Abengoa declines over debt issues

The Spanish power giant Abengoa faces imminent bankruptcy proceedings, after another Spanish company failed to inject equity into the debt laden Abengoa. Note unlike SunEdison, Abengoa’s demise has been slow and painful with the company’s debt load increasing and its revenues not keeping up with the increasing interest payments. GeStamp was supposed to buy an equity stake in the company, infusing crucial cash into Abengoa’s balance sheet. Abengoa is one the largest RE companies in the world with interest in biofuels, solar thermal, solar PV as well as conventional power plants throughout the world. It has more than 24000 employees with power plants located in India as well. However, this Spanish company now seems to be in the death throes with more than $20 billion in overall debt. With massive risk aversion towards energy debt with the oil and gas price crash, it looks unlikely that the company can recover. However, there are still 4 months that the company can come up with a deal with creditors.

Like SunEdison, Abengoa had listed a RE yieldco Abengoa yieldco in USA earlier. Like the rest of this investment class Abengoa Yield also saw its stock price cratering, creating a further accounting loss of more than $200 million for its parent. This also hurt the company. The company’s stock price saw a fall of more than 50% after GeStamp said that it would not infuse money into the company. The company’s bond which were already trading at a significant discount saw a further hit.

Like SunEdison, Abengoa is both a major developer and contractor of solar power plants in the world. The company was the leading international contractor in transmission and distribution for the eighth consecutive year and the top international contractor for solar energy for the fourth consecutive year in 2014.

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The USA government will also see some significant losses as it was a guarantor of Abengoa’s Palen solar thermal project that got built 5 years ago, when USA gave $25 billion in loan guarantees to numerous renewable energy projects throughout USA.