Report: Investments in renewables are far better than investments in fossil fuels

The downward trend in investment in fossil fuels is already on the agenda. This is also evident from the new report of the Center for Climate Finance and Investment of Imperial College Business School, written in partnership with the International Energy Agency (IEA). According to the data, renewable energy has reported significantly higher overall returns over the last ten years.

It claims that the annual volatility of green investments is lower than fossil portfolios in the global and developed economies, but higher than fossil investments in China and "emerging markets and economies," according to Renew Economy.

Dr Charles Donovan, Executive Director of the Center for Climate Finance and Investment at Imperial College Business School, said: “Our research shows that renewable energy is outperforming fossil fuels worldwide. This has been happening for more than a decade, but overall investment is still lagging behind. National regulators, especially in the United States, need to address the reforms needed to level the playing field for clean energy investors.

The report finds that renewable energy is resilient to the effects of COVID19, while the fossil fuel industry has problems with the corona crisis. "Under normal and volatile market conditions, the renewable energy portfolio shows improved benefits of diversification due to their lower correlation with the wider fossil fuel market," the authors note.

"We don't see enough global investment in low-carbon energy. Doesn't that make financial sense? The answer is no. It clearly outperforms them, ”Donovan told Bloomberg, where they estimate that current rates of investment in renewable energy are still insufficient to limit global warming to less dangerous levels by 2100.

The scope of the study was limited by variations in sample size by region, lower market capitalization and liquidity for renewable companies and key differences between renewable and fossil portfolios, which in practice complicates comparisons.