Renewable energy stocks: The complete guide to investing (2020)

At Carbon Collective, what do we include under the umbrella of “renewable energy?” Traditionally, this category includes: solar, wind, geothermal, biomass, ethanol, biofuel, and sometimes hydrogen. 

We have a narrower definition than some. We broadly include solar and wind energy stocks as they’re carbon neutral across the board. We would include geothermal, but there’s only one public company doing it: Ormat. They are super cool and we include them in the green utilities collection of the Drawdown index. 

Unfortunately for biomass, ethanol, biofuel, and hydrogen, you can’t yet invest across the entire category and trust that it’s currently carbon negative, or even neutral. There are certainly companies within each of those categories which are (and we include them in the Drawdown Index), but there are also companies that are not. We include some of these in the renewable “adjacent” collections.

We put together the full list of solar companies stock you can buy on the New York Stock exchange. These are the companies who are in the business of making electricity (and profit) from the sun. They include solar panel designers, manufacturers, developers, installers, investors, and operators. 

Over the last five years, many of these companies have performed well on the markets. We ranked all solar stocks based upon historical performance. 

Also, we found some folks are looking to invest specifically in solar panel manufacturers. Check out our list of all of the solar panel stocks on the New York Stock Exchange.

Like solar, harnessing wind energy is key to transitioning our electricity grid to carbon neutrality. We put together the full list of wind energy stocks you can buy on US stock markets. Unlike solar, there are fewer companies in the US focusing specifically on wind. Hopefully, this will change and we can add more over the coming decade. 

One of the easiest ways to invest directly in renewable energy is through buying shares of a Yieldco. A Yieldco is a holding company that a renewable energy company forms that allows public investors, like you and me, to invest money as silent partners. The parent company uses this investment to develop and buy projects. They also can raise debt against it, allowing them to build even faster. 

Yieldcos are known for delivering high and consistent returns. To learn more, see our full list of all of the Yieldcos you can invest in on the New York Stock Exchange.

It can get easy to get lost in the numbers. When you’re investing in renewable energy you’re also likely doing it because you believe in, and want to support, the world in which we solve climate change. 

It’s important to share the stories behind the companies and what makes them unique in the fight against climate change.

1. REGI stock. Renewable Energy Group turns used cooking oil into biodiesel. Their product has a 66% lower CO2e footprint than regular diesel and can be used in any diesel engine. Biodiesel is a key transitional fuel. It allows combustion engine vehicles to continue operating until their end of life, but with a much lower carbon footprint. Renewable Energy Group is one of the largest biodiesel refineries in America and they specialize in creating engine-ready diesel from a variety of used oils.
2. Brookfield Renewable stock. Imagine one of the largest owners of renewable energy plants in the world. That’s Brookfield Renewable. Their Yieldco owns an astounding 5,301 facilities that generate enough renewable electricity to power a city the size of London. Companies like Brookfield Renewable are important because they help pull more projects through the renewable energy development pipeline. Knowing there is an eager buyer on the other side pushes developers to build more, faster. Brookfield uses your investment to buy these plants once developed and then returns dividends to you from their profits.

While renewable energy is an important part of the solution to climate change, it’s not all of it. Project Drawdown cataloged all of the solutions we’ll need to put in place to avert catastrophic climate change.  

While not every solution has public companies working on them, some of them do. If you’re looking to invest in companies solving climate change outside of renewable energy, here are the collections of stocks related to renewable energy and decarbonization.

One part of solving climate change is to use less electricity wherever possible. LEDs generate the same amount of light as incandescent bulbs, but with 95% less electricity. They tend to pay for themselves within one year of buying them. They can last for up to 15 years. If you’re looking to invest in climate-friendly ways, installing LEDs in your home is a pretty good investment in its own right. 

You can invest in LED companies as well. Many companies make LEDs, from the chips to the bulbs themselves. See our list of all of the LED stocks you can buy on the New York Stock exchange.

Transportation is the largest slice of America’s carbon footprint pie, representing 28.2% in 2018. We burn a lot of fossil fuels in our cars, trucks, and airplanes to move ourselves around. 

One of the main solutions to this is electric cars. Today, even with an electric grid that still has plenty of fossil fuels on it, electric cars are 3x more carbon efficient than combustion engine vehicles. This will improve significantly as we remove fossil fuels from the electrical grid.

If you want to invest in the electric car (and truck) industry, check out the full list of electric car stocks on the New York Stock Exchange.

For modern society to continue operating and growing in the age of climate change, we need to “electrify everything,” as Dr. Saul Griffith puts it. This means not only are we going to need to replace our fossil fuel-combusting cars, stoves, and furnaces, but we’re going to need way more batteries to store electricity for them. 

From powering your electric car, to storing solar energy for after the sun goes down, batteries are an important part of the solution to climate change. 

If you want to invest in the batteries industry, check out the full list of battery stocks on the New York Stock Exchange.

Hydrogen power has been one of the most promising green energy technologies for decades. 

The good news: it’s here! There are multiple companies that make fuel cells and generate hydrogen. Toyota makes a hydrogen-powered car. 

The bad news: hydrogen has a high carbon footprint. The process of generating pure hydrogen still uses a lot of fossil fuels. 

Hopefully, we are on the cusp of that changing. Green hydrogen is made when excess solar or wind energy is used to split water molecules. Traditionally, excess solar and wind energy (when it’s too sunny/windy) gets wasted. The promise of green hydrogen is that this excess energy can be used to make hydrogen. This hydrogen can then power an ever-growing fleet of vehicles.  The technology is close. It’s being piloted at wind farms around the world. 

So while fuel cells are not yet renewable, they are close. They hold very high promise. If you want to invest in fuel cells and this promise, check out our full list of fuel cell stocks traded on the New York Stock Exchange. 

There are dozens of utility stocks you can buy on the New York Stock Exchange. Which of them should you, as a climate-focused investor, choose? 

We spent a lot of time looking at utilities. We developed pretty strict green utility criteria. You can see the full list of green utility stocks that made it through our filter.

It often surprises people that waste management companies play an important role in fighting climate change. One a base level, they help lower your emissions by recycling some of your paper, plastic, and glass waste. Additionally, in some municipalities they will compost your organic waste. 

What we don’t see though, is what happens at the landfills. If they are not managed, landfills can become major emitters of methane, a potent greenhouse gas. With proper management though, this methane can be captured and used to generate electricity and power garbage trucks. 

Here is the full list of waste management stocks from companies that have methane capture on at least 50% of their landfills in the US.  

Similarly, as mentioned above, recycling is a key part of solving climate change. We need to extract fewer resources from the earth and instead, invest in systems that turn waste back into raw materials. Here is our list of all recycling stocks from companies engaging in residential or industrial recycling.

Some people find investing individual stocks fun and satisfying. Others find it overwhelming. If you fall into that later category and you want to invest in renewable energy (and related companies), ETFs could be a good option for you. 

An ETF is like a mutual fund. It’s a collection of stocks or bonds a professional fund manager puts together. Unlike a mutual fund, they generally aren’t trying to beat the market. Given that, they tend to be much less expensive to own and have a lower tax implication. 

We cataloged and analyzed all of the ETFs related to renewable energy you could buy on US exchanges. Check out our lists of the: 

1. Best renewable energy ETFs
2. Best clean energy ETFs (includes nuclear energy)
3. Best solar ETFs

We built Carbon Collective because we couldn’t find a place to invest our retirement savings that made both ethical and financial sense in the age of climate change. 

So we built the world’s first climate-friendly, diversified, low-fee investment portfolios and teamed up with a world-class online brokerage platform to automatically manage them.

Imagine an index fund in a world without fossil fuels. That’s how we build our portfolios. We replace the high-carbon parts of the stock market (fossil fuels, dirty utilities, airlines, etc.) with the companies building solutions to climate change (renewable energy, circular economy, energy efficiency, etc.). 

Check out their historical performance, carbon footprint, and fees compared to other popular standard and ethical portfolios.