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IEA Urges to Halt Fossil Fuel Investment, Green Stocks to Gain

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·4 min read
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In its latest released ‘special report’, the International Energy Agency (IEA) has offered a landmark roadmap, which according to the organization, is the need of the hour for the global energy sector to duly achieve its net-zero carbon dioxide emission target by 2050.  

Notably, IEA’s “Net Zero by 2050 Roadmap” advises an immediate and massive deployment of all available clean and efficient energy technologies, along with a rapid decline in the use of coal, oil and gas.  

What Does IEA Suggest?

Per IEA’s latest report, although global commitments and actions taken by governments and corporates to promote clean energy are growing rapidly, they will still fall well short of the 2050 target. So, for the effective transition to a net-zero energy system by 2050, IEA has set out more than 400 milestones, including zero investment in new fossil fuel supply projects. It also entails halting sales of new internal combustion engine passenger cars by 2035, and phasing out all unabated coal and oil power plants by 2040.

Moreover, with electricity industry having become the core of the energy sector, electricity generation needs to reach net-zero emissions globally in 2040. Further, electric vehicles (EVs) should go from around 5% of global car sales to more than 60% by 2030.

How Will Green Energy Benefit?

On the renewables front, IEA has called for a massive ramp up in installations in the coming year, for successfully meeting the zero emissions target by 2050. Notably, the report advises that annual additions should be 630 gigawatts (GW) of solar photovoltaics (PV) and 390 GW of wind by 2030.

IEA also believes that to reach net zero emissions by 2050, annual clean energy investment worldwide will need to more than triple by 2030 to around $4 trillion.  Moreover, almost 90% of global electricity generation in 2050 should come from renewable sources, with solar PV and wind together accounting for nearly 70%.

No doubt, such installation ramp up along with increasing investment trend, as suggested by IEA, would boost renewable stocks, also known as green energy stocks.

Stocks to Gain

Considering the aforementioned factors, stocks from the clean energy industry as well as stocks from other industries that are involved in renewables market should gain substantially in the coming years. Their strong fundamentals should also encourage investors to keep them on their watchlist.

Tesla TSLA: It is the market leader in battery-powered electric car sales in the United States, owning around 60% of market share. In fact, the company’s flagship Model 3 accounts for about half of the U.S. EV market. Its long-term earnings growth rate is 37.5%. It delivered a four-quarter average earnings surprise of 147.42%.

SolarEdge Technologies SEDG: It is a prominent manufacturer of solar photovoltaic (PV) inverter, with its systems being installed in more than 133 countries across five continents. This Zacks Rank #3 company’s expected long-term earnings growth expectation is 24%. It came up with a four-quarter average earnings surprise of 24.45%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

First Solar FSLR: It specializes in designing, manufacturing, and selling solar electric power modules using a proprietary thin-film semiconductor technology. The company currently operates many of the world’s largest grid-connected PV power plants. This Zacks Rank #3 firm has an annual earnings growth expectation of 18.8% for 2021. Its four-quarter average earnings surprise is 65.68%.

General Electric GE: Its GE Renewable Energy unit is one of the world's leading wind turbine suppliers, with approximately 49,000 units installed across the globe. Combining onshore and offshore wind, blades, hydro, storage, utility-scale solar and grid solutions as well as hybrid renewables and digital services offerings, it has installed more than 400 GW of clean renewable energy worldwide. This Zacks Rank #3 company has a long-term earnings growth expectation of 4.3%. Its four-quarter average earnings surprise is 60.72%.

Infrastructure Stock Boom to Sweep America

A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.

The only question is “Will you get into the right stocks early when their growth potential is greatest?”

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First Solar, Inc. (FSLR) : Free Stock Analysis Report
General Electric Company (GE) : Free Stock Analysis Report
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SolarEdge Technologies, Inc. (SEDG) : Free Stock Analysis Report
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