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How the Clean-Energy Revolution Is Sweeping Through Markets

Updated on March 10, 3:53 PM EST

What You Need To Know

Despite the recent slump, clean-energy stocks have delivered billions of dollars of trading profits to investors across the globe during the past several years and led to the creation of dozens of funds designed to prosper from the surge in prices. Whether it's electric-vehicle makers like Tesla Inc. and its lesser-known rivals, or companies such as QuantumScape Corp. that are developing next-generation lithium-ion batteries, or solar companies like Enphase Energy Inc., these stocks have mostly risen over time.

Until recent months, the gains have been absurd, with many clean-energy stocks up more than 100% since the start of 2020. Bloomberg Green’s Carbon Bubble series seeks to capture how investors are navigating the markets. While there’s no doubt climate-tech is a growing asset class, there’s also little question that some investors are going to get burned by chasing companies with excessive market valuations and questionable product offerings.

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By The Numbers

  • 87% The advance of the S&P Global Clean Energy Index since the start of 2020, including reinvested dividends
  • More Than $1 Trillion Wind and solar asset financing since 2016
  • -$74.2 Million This year's net outflow from the iShares Global Clean Energy ETF

Why It Matters

Governments, companies and other organizations have raised more than $740 billion since the start of 2020 selling bonds where proceeds are earmarked for “green” projects; investors have plowed more than $20 billion into U.S. exchange-traded funds that track the clean-energy markets; a venture fund led by billionaire philanthropist Bill Gates (in which Michael R. Bloomberg, founder of Bloomberg News, also invests) has committed billions of dollars to the sector; and funding for battery companies and electric-vehicle companies has skyrocketed. These are just some of the financial factors.

The deluge of money flows has raised questions about whether it’s a market bubble. Some say the high valuations are a clear sign of overpricing, while others say the markets are bound to bounce around, but the underlying clean-energy technology is improving all the time and is here to stay.

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