Climate Change Monthly Report | March

08 March 2022

Putin invades Ukraine and the Energy Transition Accelerates

  • Monday February 28th was the day markets realized that green growth is a theme of its own: On the last trading day of the month, while the broader market fell, DGEN rose 4.52% and CLMA was up 3.25% the S&P500 fell as much as 1.6% and then recouped to finish at 0.2% lower, while the Dow Jones fell 0.5%, while CLMA closed up 3.25% in the day and DGEN 4.52%.. The war in Ukraine is having a profound impact on the global economy, and with no end in sight, risk and uncertainty abound. It has been heartening, however, to see investors finally decoupling green growth from this troubled picture. Energy inflation only makes the competitiveness of clean energy and decarbonization solutions more compelling Fossinflation will persist even if peace talks are successful. A prolonged war in Ukraine could shake global GDP and decelerate global economies, which means the US FED and ECB would be unlikely to keep up their most recent hawkish stance. 
  • Solutions to the energy crisis accelerate the low carbon transition. Our view is that there are only two sufficient solutions to the current energy crisis: energy efficiency improvements and consumers embracing self-production, which means behind the meter solutions like solar panels and batteries. This is not the first fossil fuel energy crisis, but it is the first time where effective and price competitive solutions are available. In this way, the crisis should only entrench the energy transition, as shown by Germany, which just announced legislation that brings forward the goal of achieving a 100% renewable grid to 2035, 15 years earlier than previously planned. In America, we hope to see a revised Build Back Better Bill put forward in the summer. While senator Manchin infamously blocked the original bill, he has said he is not opposed to the $0.55 trillion of climate change mitigation investment, which included an extension to the Solar Investment tax Credit (ITC) for 10 years at 30%, which would provide momentum to key solutions such as distributed renewable energy.  
  • "We are in an emergency headed for a disaster.” This was the reaction of the Director of the UN Environmental Program (UNEP) in response to the second part of the UN Intergovernmental Panel on Climate Change’s (IPCC) 6th Assessment Report, released on the 28th February  

The purpose of the report is to provide scientific information that can guide governments in their climate policy development. The first report, released in 2021, focused on physical changes, while this second report considers how such changes could impact humans and ecosystems. Anthropogenic emissions have already caused a 1.1°C temperature rise in the last 170 years. The report warns that at 2°C of global warming, droughts leading to chronic water scarcity could impact 800 million to 3 billion, while at 4°C the figure could climb to 4 billion people. In September, the IPCC will release the concluding synthesis report, which will include reports on climate change mitigation.

  • Prior to the invasion, the month was marked by enhanced concerns over inflation: Europe was already in an energy crisis prior to Russia’s troops invading Ukraine on the 25th February. The energy crisis has been fundamentally about natural gas, with liquefied natural gas (LNG) dispatched internationally to the highest bidder at historically high prices and a major component of persistent, global inflation. The Consumer Price Index in the US reached 0.6% in January, with the 12 month urban CPI reaching 7.5%. The consensus was that the US Fed would be increasing the short term benchmark rates at the 15th/16th March meeting, potentially as much as a half point rate hike. However, sanctions to Russia could cause a global slow down to GDP growth and although fossinflation will persist, hawkish sentiments at central banks may subside. In two weeks, we will have an indication of the Fed’s revised views on inflation and interest rate increases. 
  • Our view is that “green growth” in a world of volatility and uncertainty is the investment theme likely to do very well: Green growth has suffered severe drawdowns since mid-November last year (as shown below). Given the recent selloff amongst CLMA and DGEN companies, we believe this is now an incredible entry point in terms of valuation for this incredibly relevant, secular and global theme. 


Acceleration of Adoption:  Australian “Local Solar” is already material; Wind in the UK, THE Netherlands and Ireland shows its strength; THE UK National Grid reveals forward thinking on V2G; California supports LDES; and Germany does not let a crisis go to waste

Since the Biden administration returned to the Paris Agreement, we have observed an increase in the adoption of a variety of climate change solutions, from positive consumer sentiment towards battery electric vehicles (BEVs) to long-term investment into green hydrogen. We have observed a material acceleration of relevant climate change solutions, and the current geopolitical tension only puts more impetus on energy importing countries to transition away from fossil fuels. Here, we share the following positive news and developments observed in February - from California to Germany, the UK and Ireland to Australia:

  • Australia provides a strong example of the significant role “local solar” can play, with almost 8% adoption. PV Magazine announced that Australia reached 25 GW of solar capacity at the end of 2021; as a country of ca. 25 million people, that is nearly 1kW of PV installed per capita, a world record. Within this, rooftop solar or ‘local solar’ plays a key role, representing 7.9% of the National Electricity Market (NEM) supplied to this large grid (covering five regions) in 2021. Almost 8% of all electricity supplied in this large grid (covering 5 regions) came from behind the meter solar. Bill Nussey in his very well researched book Freeing Energy (available on Amazon) explains why - Australia benefits from a single set of national regulations that are "reflected in a simple, standardized, and automated process". With soft costs low, adoption increases. The magazine also shared that last December, South Australia ran for 156-hours powered almost entirely by wind, rooftop solar and utility-scale solar farms (firmed up by fractional amounts of gas). At the end of February, the Australian Energy Market Commission announced a package of new rules that allow distribution network businesses to supply customers using NEM with solutions such as microgrids and individual solar plus battery systems, whenever price competitive. As we like to say, the solution to the energy crisis is very local, as behind the meter renewable sources are embraced by users looking for security of supply and energy savings. 
  • UK National Grid clears the path to a 100% renewable grid and show the potential scale of V2G: On 14th February the UK became the first country to change its “Grid Code” to allow renewable generators to provide stability services to the National Grid, previously only delivered by conventional fossil fuel-based generators. The Grid Code defines all the electricity providers that can connect to the grid to provide stability services to the Electricity Supply Operator (ESO), such as inertia and frequency support. From this month, UK wind, wave and solar generators will be able to offer those services. Tony Johnson, head of the National Grid ESO’s markets team, said: “This is a breakthrough moment, a key piece in the energy transition jigsaw.” The UK National Grid also grabbed media attention as Octopus Energy disclosed it is running a Vehicle to Grid (V2G) trial together with the ESO, so that in the future the grid can rely on excess electricity stored inside bidirectional Electric Vehicles (EVs). The average EV can transfer 7 kWh of power while the average UK house uses 3 kWh at peak time. That leaves 4 kWh free to be exported to the grid at a rate of 15p per kWh (so 60p per hour). As the article suggests, multiply that unit figure by one million and a total of 4 GWh (equivalent to over 5,000 onshore wind turbines) and we can see why the ESO is interested in V2G as a solution to meet peak needs. 
  • Ireland, the UK and the Netherlands show that with strong winds the grid is mostly green: In another example of a grid becoming predominantly non-hydro renewable was provided during a windy month for the region. On 6th February more than 85% of the electricity demand in Ireland was met by wind energy alone, around 4.5GW, as recorded by the grid provider EirGrid. The country is working towards an 80% target for renewables to meet electricity needs by 2030. Incidentally, in the same windy week, Scotland and northern England saw winds at 160 km/h and wind supplied more than half of the UK’s electricity (more than 19.5 GW). Across the channel in the Netherlands, wind generated 42% of the country’s electricity.
  • California parks its solar rooftop tax proposal and sets procurement indication for an unprecedented amount of new clean energy investment: The California Public Utilities Commission (CPUC) decided to “indefinitely delay its decision” on the highly  criticized net metering laws that proposed a $8/kW per month tax on solar rooftop installations. Also, on 16th February, the Commission unanimously approved plans to add ca. 19 GW of utility scale solar, ca. 6.7 GW of wind and 15GW of battery energy storage systems in the state by 2032 (as well as 1,000 MW of demand response resources). That would bring renewable resources to represent 73% of CA’s energy mix by 2032.
  • Germany brings forward its target of a 100% renewable grid by 15 years: A country that depends on Russia for over half of its natural gas imports and  that has also decided to decommission its nuclear power plants has to accelerate renewable energy adoption. That is what the new Economy Ministry, that also oversees energy and climate policy, is pursuing. In a new piece of renewable-energy legislation, the target for onshore wind capacity will grow from 3 GW this year to 10 GW of annual additions in 2027, while solar energy is to increase from 7 GW of annual additions to 20 GW a year in 2028. 


CLMA in February – We Rebalanced both CLMA and DGEN. Broad market sell off continues but green growth had strong trading days indicating potential recovery.

In the first week of February, we rebalanced both of our indices. Five new names were added to the iClima Global Decarbonisation Enablers Index, namely Fluence (FLNC, down 27.65% in the month), Li-Cycle (LICY, up 2.51% in February), NIU Technologies (NIU, down 11.46%), Samsung SDI (6400.KS, down 7.71%) and Volta (VLTA, down 8.54% in the month). Two of these were added to the iClima Distributed Renewable Energy Index (FLNC and VOLTA).   inflation and indicating future rate increases. As Buffett said many times, interest rates are like gravity. What followed the hawkish comments was more than risk free rate repricing on both sides of the pond. The Russian invasion of Ukraine exacerbated the energy crisis in Europe but also added to the need to accelerate the energy transition and the decarbonization of the power sector. As a consequence, green growth is now on sale. We see current valuations as a very attractive entry opportunity for the companies in our universe. We see evidence of incongruent valuation levels. Markets have rotated towards value, and some large cap names now trade at high valuation. For example, Microsoft is trading at a ca. 12x P/S, having reached close to 15x earlier in the year. As we show below, most of the companies in our universe trade at P/S multiples below that of Microsoft. In line with the rotation towards more stable, larger cap names, within the decarbonisation index we observed more severe correction in the small cap and mid cap stocks versus large cap ones. We argue that green growth is the only theme with effective solutions to the energy crisis, benefiting from both short-term and long-term tail winds.

Drawdowns from 52 week High x Current P/S Multiples in the iClima Decarbonisation Universe:

Source: iClima Research, figures as of Thursday Feb 24. For illustrative purposes only. Please note that all performance figures are showing net data. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. 

  • CLMA Currently ca. 43% of constituents are US based companies.
  • The weighted drawdown from the 52 week high for sub $1 bn market cap companies was 63.3%, and 47.5% for $1 to $2 bn market cap names.

Source: iClima Research, figures as of Thursday Feb 24. For illustrative purposes only. Please note that all performance figures are showing net data. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product.

  • The weighted drawdown from the 52 week high for mid-cap names, in the $2bn-$10bn market cap range was 33.98%.

Source: iClima Research, figures as of Thursday Feb 24. For illustrative purposes only. Please note that all performance figures are showing net data. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product.

  • The weighted drawdown from the 52 week high for $10bn- $200bn market cap companies was 29.01%.
  • Companies with market cap above $10bn represent over 57% of CLMA (TSLA is the only Mega market cap stock in the Index, representing X% as of the portfolio as of 24/2).


Solid Earnings Season Started With TSLA reporting in January. Growth is robust, but supply chain troubles remain. Five examples and the summary of key annual reports

  • Fluence Energy: FLNC (down 27.65% in February) is a new name in both our indices. The 14 year old company went public via a traditional IPO last October, when it raised $1 billion in new capital). A JV between US IPP AES Corporation and Siemens, Fluence is a global leader in energy storage solutions.  It has 3 GW of energy storage deployed in 30 different markets and more than 4 GW of storage assets optimized for renewable energy plants using the Fluence IQ service platform. The company now has a market cap of $2.1 billion, significantly below the $4.7 billion market cap at the time of its IPO. During this time, the company reported many positive results that make this drop in market cap a puzzle.  In January, Fluence announced a JV with Indian ReNew to cater to a market projected to reach 27 GW/108 GWh by 2030, as India targets a 50% renewable grid by 2030. Fluence also announced a partnership with Quantum Scape to introduce solid-state lithium-metal battery technology to stationary energy storage applications. Finally, Fluence closed its fiscal year in September with total revenue of $681 million (up 21% YoY), and announced 1Q22 earnings on 9th February with revenue guidance for FY2022 of $1.1 billion to $1.3 billion (TTM at $739 million). The company’s current cash position (after a $100 million debt repayment) is $850 million, representing 41% of its current market cap. Fluence is a company with strong capital structure, in an industry expected to grow over 100x in the next 10 years, with a solid moat in their IP and robust track record. At a 1.6x forward P/S multiple, it is therefore one of many examples of a company in our universe that is oversold, though it is not immune to short term headwind likely to come from shipping and supply chain disruptions. 
  • Li Cycle: LICY (up 2.51% in February) is a new name in our GLCLIMUN Index that was listed via a SPAC at the beginning of 2021 in a deal that valued the company at $1.67 billion. The current market cap of $1.3 billion is ca. 54% of its 52-week high. The Canadian-based recycling company focuses on the recovery of critical materials in all types of lithium-ion batteries. FY21 results reported in the last week of January show Revenue increased 831% YoY to $7.4 million, and EBITDA was a loss of $25.4 million for the year. The company has two operating facilities, in Canada and NY, and five under construction (three more in the US, one in Germany and one in Norway). At the end of the fiscal year, the company had a cash position of ca. $597 million. The acceleration in EV sales and adoption provide incredible growth prospects for LICY.
  • EVGo: EVGO (up 25.7% in the month) is the largest fast charging network in the USA. The company now trades at a $2.7 billion market cap, which is 53% below its 52-week peak, despite much success over the past year? The company expanded its partnership with both Uber and GM, with customers growing from 250,000 in May to 310,000 in September. Revenue guidance for the year was increased, to $20 to $22 million (revenue grew 29% between 3Q21 and 2Q21), with EBITDA projected at a loss of $54 million for the year. At the end of 3Q21, the company had a cash position of $520 million. This is another company with solid growth prospects, growing in line with the EV adoption acceleration (in 2021 global sales of BEVs went up by 112%, from ca. 2.3 million to ca. 4.8 million units). Earnings release for the year at end of March.
  • Sunrun: RUN (up 5.21% in February) epitomizes the idea of “local solar”, as the largest residential solar rooftop player in the US. Shares were up over 400% in 2020 but are now 59% below 52-week peak and market cap is now at $5.86 billion. RUN has a Solar-as-a-Service model, with USP being the financing of the panels (a zero down payment solution). Total revenue in FY2021 reached $1.6 billion, up $687.8 million, or 75%, from 2020 sales. Cash & restricted cash as of December 31st, 21 reached ca. $850.3 million. Currently, only 3.5% of the 77 million addressable homes in the US have solar, indicating a lot of growth potential as homeowners are increasingly interested in solar + battery solutions for security of supply and savings. What turned sentiment against RUN? Uncertain legislation. Length of US Federal solar tax credits is under question (currently at 26%, reduced to 22% in 2023 and ending in 2024) due to Build Back Better debacle (tax credit was to be extended & raised in BBB, until 2034 and raised to 30%), and California legislator that considered a $8/kW per month as solar tax has hurt prospects for RUN (CA is home to ca. 40% of all US residential solar and is the largest market for RUN). Sunrun moon-shot is to become a VPP leader and the company has 12 VPP contracts in place. 
  • Orsted: ORSTED.CO (up 23.2% in February, down 30% from its 52 week peak) reported annual 2021 results in early February. For FY2021 revenue reached DKK 77.7 billion (ca. $11.6 billion), up 47.7% YoY and an EBITDA margin of 31.3%. Installed capacity at year end arrived at 13 GW and the company has a new ambitious target of getting to 50 GW by 2030. This almost 4x growth is to be achieved mostly by new offshore wind (30 GW of the 2030 target) and a bet on green H2. Orsted will start operation of their first “offshore wind to H2” project this semester, a 2 MW facility. Orsted had a terrible share performance in 2021, down 32.8% in the year. The company currently trades at $50.3 billion market cap, 1.58% dividend yield and EV/EBITDA of 15.2x. 

Please note that all performance figures are showing net data. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product.

Summary of Reported Revenue for the CLMA Universe:


Source: Company filings, aggregated by iClima Earth



Climate Change ETF Performance (As of 28.02.22)








CLMA iClima Global Decarbonisation Enablers UCITS ETF (Acc)







CLMA iClima Global Decarbonisation Enablers Index







Performance before inception is based on back tested data. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. Source: Bloomberg / HANetf. Data as of 28/02/22. Please note that all performance figures are showing net data.


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