Bloomberg Market Specialists Thomas Taylor and Jessica Lin contributed to this article. The original version appeared first on the Bloomberg Terminal.
The U.S. is releasing oil reserves while China allocates $31 billion to finance cleaner coal— hardly a fitting postscript to the COP26 climate summit. However, both countries are making progress on clean energy that may weaken fossil fuel demand within three years.
U.S. climate envoy John Kerry said coal-dependent nations must move faster to less polluting alternatives, failing to mention his own nation’s world-leading oil production and steps to curb gasoline costs. By contrast, China, which won a compromise at COP26 to phase down rather than phase out coal, has since offered loans for reducing its own coal emissions and cleaning up a coal-powered Asia.
“The green sector in China, even though some of them are going to be expensive in terms of valuation, many of those companies are going to see real earnings growth. We’re quite positive on grid equipment makers and wind equipment makers, for instance,” John Lin, portfolio manager at AllianceBernstein, told Bloomberg Markets: Asia.
The issue
China has built a significant renewable energy lead over the U.S. that BloombergNEF forecasts will only widen by 2030. China’s solar and wind capacity is more than twice as large as the U.S., and BloombergNEF sees that advantage being maintained by 2030.
Twelve of the 15 billionaires on a Bloomberg Green ranking hail from China. China’s Zeng Yuqun, who ranked second, runs Contemporary Amperex Technology Co — the world’s biggest battery maker. He comes behind Elon Musk of the U.S., who owns a Shanghai factory making Teslas running on CATL batteries.
Learn about the performance impact of ESG and trends ahead.
Industry forecasts and futures are positioning for EVs and clean energy to curb the prices of both oil and coal. China’s new clean-coal lending program aims to fund methane and carbon capture technologies. BloombergNEF’s New Energy Outlook 2021 outlines a gray scenario in which coal-fired power enjoys a “renaissance” as part of a net-zero world in 2050 by using carbon capture and storage.
The Bloomberg terminal’s functionality and BloombergNEF’s forecasts and analysis can help investors understand U.S. and China energy strategies and their impacts on the markets and global economy.
Tracking
Use the Graphical Chart function to monitor China’s leadership in solar and wind capacity.
Type “solar united states forecast” in the command line and select SOLFTTUS Index - Solar United States Forecast Capacity. Select GP - Line Chart. The shortcut is {G #FFM 1442 <GO>}.
Use the new Bloomberg Goldman Sachs Global Clean Energy Index (“BGSCET Index “) to track companies with significant exposure to the clean energy sector as identified by BloombergNEF. Forecasts for renewable energy stocks suggest a more bullish outlook for China than the U.S..
Run BGSCET Index WATC <GO> to Compare China and U.S. Stock Outlook.
Type “bloomberg clean energy” and select BGSCET Index. Type “watchlist” and select WATC. Click the Group by amber box and select Countries.
China stocks had a simple average return of 34% in the past year with analysts seeing 44% gains in the year ahead. Similar figures for the U.S. members were -5% and 39%. Zeng’s CATL gained 67% in 2021, beating the 49% gain for Musk’s Tesla. The two governments may be on different paths, but those two companies are winning by working together.
The BGSCET Index was developed jointly by Bloomberg and Goldman Sachs Asset Management, using a proprietary approach informed by insights from BloombergNEF (BNEF) analysts who identify companies that are active and impactful in their respective sectors and assess their exposure to clean energy. The universe of eligible securities for the index is developed by using a data driven approach to select securities from the broader Bloomberg World Index based on BNEF estimates around their exposure to clean energy.
To take a closer look at the Bloomberg Goldman Sachs Global Clean Energy Index and additional Bloomberg Thematic Indices, go to Bloomberg Index Browser (IN <GO>), click Equity and sub tab Factors & Thematics:
A closer look at the Bloomberg Goldman Sachs Global Clean Energy Index
For more information on this or other functionality on the Bloomberg Professional Service, click here to request a demo with a Bloomberg sales representative. Existing clients can press <HELP HELP> on their Bloomberg keyboard.
