Climate Change Monthly Report | April

25 April 2022

March in Review

High uncertainty and polarised views keep volatility high. Markets lack consensus on key figures, from how persistent energy related inflation will be, to the extent of a recession in the Eurozone in case of energy rationing in Germany if Putin cuts supply of natural gas, to the number of interest rates increases in the US, to the duration of the war in Ukraine and the unfolding of the pandemic. Looking back at the key events in March we believe it is easy to see why markets have been volatile. On March 7th, the CBOE S&P 500 Volatility Index climbed 115%, the same day that Brent Crude Oil picked at $139.13. On March 15th the US FED approved a ¼ percentage point increase of the federal funds rate, the first increase since December 2018. [1] In a hawkish stance, officials indicated rate increases at each of the remaining six meetings this year. The 10-year Treasury yield started the month at 1.74% and ended at 2.38%. [2] In the last week of March, China went back to lockdown and financial hub Shanghai with its 25 million inhabitants becomes the hotspot of Covid cases in the country. [3] After a month of war in Ukraine, peace talks on March 30th don’t progress as Putin demands the surrender of Mariupol. [4]

Putin to “solve climate change” versus “the war derails the energy transition”. Following the Russian invasion, Europe re-started several coal-fired power plants [5] and has looked to long term contracts for US LNG from shale gas sources [6] , to swap fossil fuel supplied by Russia. Therefore, it may seem as if climate change mitigation is no longer a priority. This narrative is misleading. Coal, crude and natural gas did not become any more investible, cleaner, cheaper or less volatile since the invasion of Ukraine. Security of supply is a top priority for all countries, the EU in particular, and the acceleration of the energy transition is undeniable. President Macron is going for re-election on April 10th, Biden must do all he can to avert a massive mid-term election fiasco for the democrats in November. We must make a distinction between the need to avert a recession, to deal with inflation and manage this energy crisis, with the mid to long term commitment of moving away from fossil fuel.

Figures for solar and wind in 2021 are out – it was record high year for both. We were already accelerating adoption of decarbonising solutions prior to the invasion because these renewable sources of electricity are the most price competitive. As independent not for profit think tank Ember recently reported, in 2021 solar generation rose 23% over previous year, while wind generation increased by 14%. Solar + Wind now represents over 10% of global electricity generation. [7] If taking all clean electricity sources (i.e. nuclear, hydro and biomass) the non-fossil fuel based electricity generated on the planet in 2021 reached 38% (more than coal at 36%). When The Paris Agreement was signed in 2015 the share of electricity produced from solar + wind was 4.6%, so the 10.3% (to be precise) figure Ember reported for 2021 represents a 124% growth – more than double in around 5 years. Ember also highlights two remarkable trends in some coal heavy countries. Between 2019 and 2021 Australia’s solar + wind rose from 13% to 22%, while their share of fossil fuels fell from 79% to 70%, and in Vietnam the participation of solar + wind rose from 3% to 11%, while their share of fossil fuels fell from 73% to 63%. The two graphs below show additional striking facts. First, note that all five of the world’s largest economies passed the landmark of 10% electricity from solar and wind (US, China, Japan, Germany and the UK). Second, three countries (Denmark, Luxembourg and Uruguay) have passed the 40% level of electricity from wind and solar. Lastly, note that for the NetZero plan IEA published last year to materialize, solar and wind need to represent 40% of all electricity generated by 2030, a four-fold increase from current levels.

New legislation to add force to the tail wind of the decarbonisation megatrend. On March 21st the US SEC released a 465-page document with its proposed rules for climate change related disclosures. The SEC is proposing for public comments, deadline on May 20th, on the language that would amend both the Securities Act of 1933 and the Exchanges Act of 1934. [8] Companies, domestic as well as foreign registrants, would be required to include climate related information in their registration statements and periodic reports, including 10-Ks. [9] Scope 1 and 2 metrics would start to be reported for Fiscal Year 2023 and Scope 3 figures starting for Fiscal Year 2024. GHG emission metrics are centre stage of the proposal, but financial disclosures are part of the goal “proposed financial statement metrics would consist of disaggregated climate-related impacts on existing financial statement line items”. The ability to determine with precision what constitutes “green” revenue and capex, and what is “brown” revenue and capex will give investors a very powerful tool to determine where companies are in the energy transition, providing a much better view on where companies are in the energy transition. The SEC mandatory disclosure is of monumental importance as it will allow for a clear distinction of businesses facing fossil fuel risks and those with solutions. iClima will be formally submitting comments to the SEC during this public hearing phase.


Performance in March and Looking Ahead

Coexistence of green growth and brown value will persist. US shale gas is a short-term winner of the European energy crisis, but so are the green short-term solutions like energy efficiency, heat pumps, solar rooftops and local battery. Consumers of electricity want security of supply and are embracing the alternatives readily available at fast pace, finding in the solutions a way to reduce electricity and heating costs. But make no mistake, fossil fuel is not any more viable in the long run and more long-term decarbonising technologies, like offshore wind, long duration energy storage and green hydrogen are the true winners of the energy crisis. Green and brown will coexist for a while. It is just inevitable for we are in a transition. As shown in the table below, March is an example of this coexistence, with iClima Global Decarbonisation Enablers Index up 1.69% while the iShares Oil & Gas E&P ETF was up 9.4%.

Monthly performance of Selected Indices and ETFs. The table shows the performance of the iClima indices against commonly cited benchmark indices (S&P 500, NASDAQ Composite), competitor renewable energy products (SMOG, ICLN, LIFE) and a fossil fuel company ETF (SPOG).

Past performance is not an indictor of future performance. When you invest in ETFs, your capital is at risk.

In April we expect recession concerns to be top of mind. As the first quarter came to an end, the yield curve inverted, in what is often seen as a sign of possible recession. [10] On March 29th the yield of the two-year Treasury Note rose above the yield of the ten-year, an event that had not been observed since August 2019. As economists often point out, in the last 50 years the inversion of the yield curve happened every time before the US economy entered into a recession. In Europe the recession fears will escalate if Putin indeed cuts the gas supply to Germany in retaliation for non-rouble payments of the exports. A sudden cut would force the German government to ration electricity, which would cause a GDP drop.


Snapshot of CLMA Big Movers

WorkHorse (WKHS, up 59.74% in March): The last mile delivery EV company benefitted from a solid rally in 2020, shares picked in January 2021 and has since suffered a massive drawdown. Share performance in the month is being attributed to the overall expectation that high gasoline prices will accelerate the adoption of BEVs. In addition to the trucks, the company also develops electric drone technology and a pilot program with US Department of Agriculture, that started in August last year, is showcasing the application of drones for wetland supervision and data collection. [11] The company has been vocal about its intention to push their aerospace solutions.

Arcimoto (FUV, up 12.41% in March): The fun utility electric three wheeled producer is another beneficiary of higher gasoline prices and the expected acceleration of adoption of more sustainable transportation alternatives. The company announced full year 2021 results, output nearly tripled, to 331 vehicles. [12] Their new manufacturing plant is now in operation and at full capacity will be able to produce 50,000 vehicles a year. The company is pushing the rental model, with the first company owned rental facility opened in San Diego with more rental partnerships starting this year. Their shared mobility concept started also in CA, and the company launched three new FUV models (a pickup truck, an on-road three-wheeler, and a small fire combat equipped model).

Livent (LTHM, up 10.7% in the month), Albermale Corporation (ALB, up 12.89% in March) and Sociedad Quimica y Minera (SQM, up 29.34% in the month) are names in the Battery Supply Chain subsegment. Commodity prices related to the energy transition were already rising before the war in Ukraine, and prices of minerals like nickel, lithium and cobalt have risen post invasion, lifting the stocks of relevant producers. Securing access to supply of key battery minerals is of strategic importance and president Biden is considering using the Defense Production Act to support investments in the US mining industry. [13]

Tesla (TSLA, up 23.8% in March): There is never a shortage of news on the leading BEV maker. The company announced a stock split plan, that would come in the form of a dividend, the second split in the last two years (previous split was in August 2020). [14] Earlier in the month the company officially opened its Berlin Gigafactory (the first in Europe, located just outside Berlin) it has approval to produce up to 500,000 cars per year and 50 GWh of battery capacity at this site. [15] The plant started operations 2.5 years after the company announced its plan, a delay to the original strategy mostly caused by Covid related supply chain issues. Lastly, the company just announced a one week shutdown of the Shanghai Gigafactory, due to the surge in Covid cases. [16] Tesla sold 116,360 China made cars in the first two months of the year.

SunRun (RUN, up 11.33%), Sunpower (SPWR, up 19.8%) and Sunnova (NOVA, up 14.44%) are the top names in the installation of solar rooftops in the US market. Surge in oil & gas prices globally enhances the competitiveness of alternative clean energy solutions. Some investors expect a powerful rally, as producing electricity behind the meter from solar installations is one of the few short term solutions that consumers of electricity have in their hands to achieve security of supply and savings. [17] An additional boost to these companies would come from a positive conclusion to the Build Back Better (BBB) legislation, that in its original text extended the tax credits for “local solar” to 10 years and increased the rate to 30%. [18] There are three scenarios for a revised BBB: that it just simply is never approved, that democrats agree on Sen Manchin’s demand for a deficit reduction provision and pass the bill, or that lawmakers turn to bipartisan bills on key issues. The climate part of the bill always did receive support from Manchin so it is possible that some form of additional tax support for solar investment is approved before the mid-term elections.

Maxeon Solar (MAXN, up 35.58%) and Meyer Burger (MBTN.SW, up 11.15%) are producers of solar rooftop panels, Maxeon with sales in over 100 countries while Meyer Burger sells higher end panels to the European market. The new EU plans to support the adoption of one of the only short-term solutions to the energy crisis: solar panels behind the meter. The REPower EU plan aims for solar rooftops to front load around 15 TWh within a year, which would require 7 GW of behind the meter solar panels to be added to the system. [19] As a reference, according to PV Tech, in 2021 almost 26 GW of solar was added to the grids across the 27 EU Member States, bringing the total installed capacity (that is predominantly comprised of utility scale solar) to near 165 GW. [20]

Stem (STEM, up 15.65% in the month) and Fluence (FLNC, down 3.1% in March) are US based companies with clean energy storage solutions, combining hardware, software and applying AI for storage asset optimization. Stem closed the month with a $1.69 billion market cap, while Fluence at $2.25 billion (both way below valuation at time of listing, when Stem was valued at $3.97 billion [21] and Fluence at $4.7 billion [22]). The clean energy storage market in the US alone is likely to growth over 120 x until 2035 and both companies are already growing significantly. Stem’s 2021 annual revenue reached $127.4 million (it was $36.3 million in FY21), while Fluence’s revenue in 2021 was $680.8 million, $561.3 in 2020 and $92.1 in 2019.  

EvGo (EVGO, up 24.01% in the month) and ChargePoint (CHPT, up 36.91%) are two US based EV charging network companies. EVGo operates the largest public fast charging network for EVs and was the first to be powered 100% from renewable energy. The company reported annual results this month, with revenue up 52% over FY20 at $22.2 million. [23] EvGo ended the year with 850 locations, 1,900 stalls in operation and a pipeline of over 3,100 stalls, total of 3 million users across 30 states. ChargePoint announced the results for FY that ended in January 2022, revenue at $242.3 million, 65% above previous FY, reiterating guidance of revenue for the current FY between $450 and $500 million. [24]

Enphase Energy (ENPH, up 21.04% in March) is a 16-year-old company and a world leader in microinverters having sold over 13 GW since inception. The company is a global player that has evolved its offering beyond this innovative equipment, now building all-in-one solar, battery and software solutions. In FY 2021 revenue reached $1.38 billion, almost double the FY 2020 $774.4 million in sales. [25] At end of month market cap of $27 billion the company trades at P/S of 20.3, the P/S multiple was at its highest level at 38.1 in January 2021. Enphase is a solid player in the distributed renewable energy space.

Ameresco (AMRC, up 23.74% in March): The company provides energy efficiency solutions, irrefutably one of the few short-term solutions to the current energy crisis. Revenues in FY 2021 reached $1.2 billion and company reiterated guidance for what they expect to be “another year of strong growth in 2022” with revenues in the range of $1.83 billion to $1.87 billion and adjusted EBITDA between $200 million to $210 million. Energy conservation to generate cost savings is top of mind globally and Ameresco is a key player in the space.




Climate Change ETF Performance (As of 31.03.22)








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 31/03/22. Please note that all performance figures are showing net data.


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