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- President Biden hosted a summit with 40 country leaders on
April 22nd, the Earth Day. As anticipated, the US
made a bold pledge to halve its emissions by 2030 (versus 2005 levels). China
committed to phasing out coal use by 2026 to 2030, pledging that coal use would
peak in 2025 and fall thereafter. Japan and Canada also raised their
commitments, with Japan targeting a 46% reduction to 2013 levels (versus
previous target of 26%) and Canada targeting a 40% to 45% reduction to its 2005
baseline (previous target was a 30% reduction).
- The CEO of the California Independent System
operator announced that on Saturday April 24th
California’s main power grid hit for the first time a nearly 95% electricity from
renewable energy. Many climate change
and sustainability researchers focus a lot on the path towards 100% green grids,
critics often pointing out the many challenges in getting there. The April 24th
milestone reached by a State that, with 39 million
people and a $2.9 trillion GDP would be the 5th largest economy
(right between Germany and the UK) the California milestone is a relevant one. This
record rate lasted for just a few seconds achieved just before 2:30 PM (as can
be seen on the graph below) in a spring day with abundant sunshine and
relatively cool weather. As LA Times reported, this record is not an isolated
spike, during most of that day renewables represented over 90% of the
electricity and if taking into account the Diablo Canyon Power Plant 2,256
MW (scheduled to be decommissioned in 2025) of nuclear generation and 100% of
California’s electricity needs would be coming from zero emission sources. See
Figure 1.
- On July 14th the European Commission
is set to enact the new GHG 2030 emission target of at least 55% reduction
vis-à-vis 1990 levels. The different national governments and the European
Parliament will need to consent to make the rule binding. The European Union
tougher climate policies can also be seen on the region’s carbon market, the
world’s biggest. At the end of April, the EU carbon price passed the €50/ton mark for the very first
time (graph below), up over 50% since the beginning of the year. See Figure 2.


iClima Global Decarbonisation Enablers Index
Performance
April
|
12 Month*
|
1.22%
|
112.70%
|
Past performance is no guarantee
of future performance.
Source: Bloomberg, HANetf
*TNR
Index, in USD. 12 Month figures based on 30.04.20 -30.04.21.
Performance in April
The month was marked by several material conflicting trends
that markets have tried to price in: the reopening of developed economies, but
the worsening of pandemic in large emerging economies like Brazil and India. Progressive
green agenda by the Biden administration versus the debate on increase in
taxation – US corporate rates and capital gain rates. Also, overall macroeconomic
concerns on inflation and potential interest rate increases and solid 1Q21 earnings
reporting. At the end of the month, roughly 50% of S&P 500 has reported earnings
for the 1st quarter that were on average 22.7% above earnings
forecast (way above the historical beats of ca. 3% to 5%).
The Climate change ETF closed the fourth month of the year down [1.19%], YTD
now up [5.34%]. In April we continued to see a
correction on some of the best performing stocks in 2020, particularly in the
EV and Fuel Cell segments, with NIO (down 6.44% in the month), Workhorse
(down 22.6% in the month), Tesla (down 4.82%), Plug Power (down
31.63%), Ballard Power Systems, Blink Charging (down 18.85%) as
investors took profit, part of the rotation we are seeing in the market. Source
of all data: iClima/ Bloomberg
|
1M
|
3M
|
6M
|
YTD
|
12M
|
SI
|
CLMA iClima Global Decarbonisation Enablers UCITS ETF (Acc)
|
1.19%
|
-0.85%
|
-
|
5.34%
|
-
|
17.73%
|
CLMA iClima Global Decarbonisation Enablers Index™
|
1.22%
|
-0.81%
|
41.95%
|
5.46%
|
112.70%
|
17.95%
|
Performance before
inception is based on back tested data. Back testing is the process of
evaluating an investment strategy by applying it to historical data to simulate
what the performance of such a strategy would have been. 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 30/04/21
Newsworthy Recently Reported 1Q21 Results –
Distributed Generation Trends
Tesla (TSLA, down
6.27% YTD, down 4.82% in April) In the last week in April, Tesla reported its earnings for 1Q21, at
US$438 million, out of a $10.39 billion revenue. Revenue grew 75% over 1Q2020. In
terms of units delivered in the quarter, the company reported 184,877 of
Model 3/Y units (a 140% growth over 1Q20). The company reported a
decline in average selling price of EVs from US$ 84k back in 2017 when
production of Model 3 began, to US$38k in 1Q21. The company claims that their
Model 3, now 3.5 years in production, was the best-selling premium sedan in the
world, outselling ICE counterparts such as the 3 Series and the E Class. The
company did not give further guidance on 2021 EV
units to be delivered, but continues to expect a 50% growth (which means over
750,000 units by year end).
Tesla’s energy business has also reported a solid quarter.
Solar deployed reached 92 MW (a 163% growth over 1Q20) and storage deployed
passed 445 MWh (a 71% growth over 1Q20). We would like to highlight some of the
strong points that Elon Musk made in the earnings call,
pertaining to the relevance of Tesla’s distributed generation energy business:
- On the challenges for the solar rooftop
business and the outlook of 1,000 roofs per week: Elon confirmed the
decision that solar roofs will not be sold without a Tesla Powerwall, so the
combo will be the standard configuration. The solar solution will be either the
conventional panels on the roof or it can be the Tesla Solarglass Roof. He
explained that selling a combo is extremely important for scalability as every
house will “look the same” because the addition of the Powerwall means that at
installation the main circuit breakers of a house do not need to be touched.
Moreover, this configuration makes every house “be its own utility”.
- On the Powerwalls operating as a “giant distributed
utility”: In Elon’s view, the Powerwalls will give users energy security.
Moreover, it will give the ability for Tesla (with consent from the owners of
the installations) to release power onto the grid to take care of peak power
demand. Elon refer to this ability as “profound”. As countries electrify
transportation and heat, the demand for electricity is to increase
significantly, putting pressure on the utilities that will face increasing risk
of “failing to serve their customers”.
- On the importance of solar + battery at local
level: Elon made the point that increase in demand for electricity in
combination with more extreme weather events, makes it “very important to have
solar and batteries at the local level (at the house)”. He said - “It needs to
occur at the local level and at the utility level. If it doesn't occur at the
local level, what will actually be required is a massive increase in power
lines in power plants. So they have to put long distance and local power lines
all over the place. They'll have to increase the size of the substations, is a
nightmare. This must occur. There must be solar plus battery. That's the only
way.”
SUNRUN (RUN, down 17.4% in April, down 34.72% YTD) The
largest solar rooftop installation company in the US reported solid results in
the first quarter. CEO Lynn Jurich stated that the 4Q20
momentum has continued, and that “now is the time for us to move to a
distributed energy system to meet the increased demands placed on our energy
system from broad-based adoption of electric vehicles and improve the
resiliency of our aging energy system”. With that, the company increased its
growth guidance to 25% to 30% (from 20% to 25%). They expect their Brightbox
(Sunrun’s home solar battery storage solution) to grow 100% in number of
installations in 2021 (versus 2020). Total revenue in 1Q21 was U$334.8 million,
up $124.1 million, or 59%, from 1Q20.
- On Investment Tax Credit (ITC) extension:
The company made the case that ITCs were extended by two years in December
2020, and that “within the first 100 days of being in office President Biden
has proposed a 10-year extension of the ITC as part of his infrastructure plan”
Lynn made the point that US Congress have proposed specific legislation that
would extend the ITC for 10 years and make standalone or retrofit storage eligible
for the ITC.
SUNPOWER (SPWR, down 32% in April, down 13.12% YTD) The
California based competitor to SunRun also reported 1Q21 results, showing the
continued solid demand their solar and storage solutions in both residential
and commercial markets. Residential bookings are up 25%, with 55% of the sales
in 1Q21 being full systems. Bookings for commercial & industrial (C&I)
users are up 50% over 1Q20 with revenue up over 20% for C&I segment. This
month was also when new CEO Peter Faricy assumed his position, as Tom Werner
retired after 18 years as CEO.
Past performance is no guarantee of future performance.
Source of all data: Bloomberg. Data as of 30.04.21
The Climate change ETF fund page