According to a report by the World Meteorological Organization (WMO), the state of the climate in 2023 was marked by record-breaking levels of greenhouse gas emissions, ocean heat, sea level rise, and extreme weather events. The observed concentrations of carbon dioxide, methane, and nitrous oxide reached record levels in 2022 and continued to increase in 2023. CO2 levels are now 50% higher than in the pre-industrial era, trapping heat in the atmosphere and contributing to the long-term increase in global temperature.
The global mean near-surface temperature in 2023 was 1.45°C above the pre-industrial 1850-1900 average, making it the warmest year on record. Sea level rise also continued to accelerate, with global mean sea level reaching a record high in the satellite record (since 1993). This reflects continued ocean warming and the melting of glaciers and ice sheets. The rate of global mean sea level rise in the past ten years (2014-2023) is more than twice the rate of sea level rise in the first decade of the satellite record (1993-2002).
Extreme weather and climate events had major socio-economic impacts on all inhabited continents, including major floods, tropical cyclones, extreme heat, and drought. The number of people who are acutely food insecure worldwide has more than doubled, from 149 million people before the COVID-19 pandemic to 333 million people in 2023. Weather and climate hazards continued to trigger displacement, with 1.8 million people displaced across Ethiopia, Burundi, South Sudan, Tanzania, Uganda, Somalia, and Kenya in addition to the 3 million people displaced internally or across borders by the five consecutive seasons of drought in Ethiopia, Kenya, Djibouti, and Somalia.
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Hedge Funds Bet Against the Green Economy
According to a report published by Bloomberg on October 21, hedge funds are increasingly betting against the green economy despite significant global investments in clean energy and green technologies. Analysis of data from Hazeltree, which tracks disclosures from roughly 500 hedge funds, reveals that more funds are net short on green sectors such as solar, electric vehicles (EVs), batteries, and hydrogen than are net long. Conversely, fossil fuel sectors such as oil, gas, and coal have attracted more long bets. This shift reflects skepticism about the profitability and short-term viability of green investments, even as governments and scientists emphasize their necessity for addressing climate change.
Higher interest rates have made capital-intensive projects such as offshore wind farms less viable, while geopolitical tensions, particularly around China’s dominance in green technology supply chains, have deterred investments in areas like solar energy and EVs.
Solar energy has seen a sharp decline, with hedge funds shorting 77% of companies in the Invesco Solar ETF as of the third quarter of 2024, compared to 33% in early 2021, when momentum for the green transition hit a peak. However, US-based companies that avoid reliance on China-dominated technologies, are exceptions. Similarly, the EV and battery sectors have seen a slowdown, with net short positions exceeding longs on 55% of companies in relevant ETFs.
Fossil fuels, by contrast, have gained favor. Hedge funds are long on 53% of companies in the S&P Global Oil Index and 73% of major thermal coal companies. Rising global energy consumption and geopolitical instability have bolstered the case for these investments, even as green energy struggles to meet demand reliably. Hedge fund managers argue that fossil fuels remain essential for stable energy supplies.
Hedge funds have shown optimism about wind energy, with long bets on nearly 60% of companies in the First Trust Global Wind Energy ETF, supported by growing government orders. Power infrastructure, including transmission grids, has also attracted interest, with long bets outnumbering shorts on 65% of companies in the sector. This sub-sector is considered crucial for meeting increasing electricity demands, including those driven by AI data centers.
As the energy landscape continues to evolve, investors are closely watching the impact of the new administration on the renewable energy sector. With the global demand for clean energy on the rise and innovation in renewable technologies driving growth, the sector’s long-term outlook remains compelling. With that in context, let’s take a look at the 8 best climate change stocks to invest in right now.
Photo by Markus Spiske on Unsplash
Our Methodology
To compile our list of the 8 best climate change stocks to invest in right now, we sifted through internet rankings to find the 20 largest companies that focus on addressing climate change through their products, services, or operations. From that list, we narrowed our choices to the 8 stocks that analysts see the most upside to. The list is sorted in ascending order of analysts’ average upside potential, as of November 19.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
8 Best Climate Change Stocks To Invest In Right Now
8. First Solar, Inc. (NASDAQ:FSLR)
Upside Potential: 39.26%
First Solar, Inc. (NASDAQ:FSLR) is one of the largest solar companies in the United States, specializing in the production of thin-film photovoltaic (PV) solar panels for utility-scale solar power plants. The company also operates manufacturing facilities in Malaysia, India, and Vietnam.
On September 26, First Solar, Inc. (NASDAQ:FSLR) celebrated the opening of its new $1.1 billion fully vertically integrated thin-film solar manufacturing facility in Lawrence County, Alabama. This advanced facility adds 3.5 gigawatts (GW) of solar manufacturing capacity in the United States. The expansion will allow the company to meet the growing demand for its solar panels more effectively. Additionally, First Solar, Inc.’s (NASDAQ:FSLR) planned 3.5 GW plant in Louisiana remains on schedule for completion in the second half of 2025, reinforcing its status as a leading solar panel manufacturer.
The company stands to benefit significantly from the Inflation Reduction Act (IRA), which incentivizes solar energy production through tax credits. The solar industry is poised for continued growth, driven by rising demand for renewable energy and falling production costs.
As of Q3, First Solar, Inc. (NASDAQ:FSLR) boasts an impressive backlog of 73.3 GW, with orders extending through 2030. Its production capacity expansion plans further strengthen its growth outlook. With the Alabama factory now operational and the Louisiana facility set to begin production in late 2025, First Solar, Inc. (NASDAQ:FSLR) is on track to achieve its goal of 14 GW of U.S. capacity and 25 GW globally by 2026. This increased capacity, coupled with a potentially favorable interest rate environment and stabilized global solar panel prices, positions the company to capitalize on strong demand tailwinds.
7. Aptiv PLC (NYSE:APTV)
Upside Potential: 48.02%
Aptiv PLC (NYSE:APTV) develops and integrates advanced automotive technologies for vehicle’s electrical systems, ranging from autonomous driving technology to the systems that distribute electric power in hybrid and electric vehicles. Aptiv PLC (NYSE:APTV) is at the forefront of transforming transportation into a more sustainable industry by offering cleaner and smarter mobility solutions.
On October 31, Aptiv PLC (NYSE:APTV) reported financial results for the three months ended on September 30. Despite a 5% decline in revenue compared to the prior year period, the company’s Adjusted Operating Income margin improved to 12.2%, up from 11.0% in the prior year period. Aptiv PLC (NYSE:APTV) is also actively investing in electrification, autonomous driving, and vehicle connectivity. The company recently expanded its facility in Chennai, India by investing over $45 million to produce advanced cockpit controllers, radars, and electronic control units for local and international markets.
According to Mordor Intelligence, the electric vehicle parts and components market is valued at $124.5 billion in 2024 and is forecasted to reach $323.5 billion by 2029, growing at a CAGR of 21.22%. As the adoption of electric vehicles (EVs) accelerates, the demand for Aptiv PLC’s (NYSE:APTV) components will continue to rise, positioning the company as a key beneficiary in this expanding market. Additionally, the company’s emphasis on smart vehicle architecture (SVA) enables it to capitalize on the transition to software-defined vehicles. These vehicles require fewer wires but rely on more sophisticated electrical components, an area where Aptiv PLC (NYSE:APTV) excels.
6. Array Technologies, Inc. (NASDAQ:ARRY)
Upside Potential: 63.58%
Array Technologies, Inc. (NASDAQ:ARRY) manufactures solar tracking systems that enhance the efficiency and output of solar power plants. The company’s trackers optimize the alignment of solar panels with the sun, boosting energy generation. The company plays a critical role in making solar energy more viable and cost-effective by maximizing solar energy efficiency and reducing dependency on fossil fuels.
On November 18, Array Technologies, Inc. (NASDAQ:ARRY) announced a strategic $3 million investment in Swap Robotics, a pioneer in utility-scale solar robotic operations, maintenance, and automation solutions. The investment in Swap Robotics aligns with the company’s goal of driving automation in the solar industry, particularly in photovoltaic (PV) installation technology. Swap Robotics is developing cutting-edge technology that enables automated module installation, which has the potential to significantly reduce project costs and enhance efficiency.
By integrating Swap Robotics’ technology with its existing products, Array Technologies, Inc. (NASDAQ:ARRY) aims to stay ahead in the rapidly developing automation sector within the utility-scale solar industry. Under the investment agreement, Array Technologies, Inc. (NASDAQ:ARRY) has agreed to provide two additional investments of $1 million each if Swap attains certain agreed-upon milestones.
5. SolarEdge Technologies, Inc. (NASDAQ:SEDG)
Upside Potential: 70.60%
SolarEdge Technologies, Inc. (NASDAQ:SEDG) develops smart energy solutions, including inverters and energy storage systems for solar installations. The company’s innovative technologies enhance the efficiency of solar energy systems while offering real-time monitoring and energy optimization.
On November 6, SolarEdge Technologies, Inc. (NASDAQ:SEDG) reported third-quarter results for the three months that ended September 30, revealing a complex picture that may have initially disappointed investors. However, upon closer examination, it becomes clear that the company is navigating a challenging period with a clear plan to emerge stronger and more resilient. Despite a 2% decline in revenue, SolarEdge Technologies, Inc.’s (NASDAQ:SEDG) solar segment showed a 3% increase in revenue compared to the prior quarter. Moreover, the company’s non-GAAP operating expenses remained relatively stable, increasing only 1% from the prior quarter and down 9% from $128.0 million in the same quarter last year, which indicates effective cost management.
SolarEdge Technologies, Inc. (NASDAQ:SEDG) undertook an asset valuation analysis which resulted in a write-down and impairment of various assets. In total, the write-down and impairment amount was $1.03 billion. This impairment charge was a major contributor to the company’s reported losses. While this charge is undoubtedly substantial, it is a one-time event that allows the company to revalue its assets and move forward with a cleaner balance sheet.
SolarEdge Technologies, Inc. (NASDAQ:SEDG) has a strong position in the solar inverter market. While the company’s European market has been challenging, SolarEdge Technologies, Inc. (NASDAQ:SEDG) has been working to diversify its revenue streams and expand into new markets. The company has made significant progress in the US market, and its products are gaining traction in other regions such as Australia and Asia. This diversification effort should help to reduce the company’s dependence on the European market and provide a more balanced revenue stream.
4. Canadian Solar Inc. (NASDAQ:CSIQ)
Upside Potential: 75.34%
Canadian Solar Inc. (NASDAQ:CSIQ) is one of the world’s largest solar technology and renewable energy companies, offering high-performance solar modules and battery storage solutions. The company has subsidiaries in 23 countries and regions with over 26 manufacturing facilities in Asia & Americas.
On October 31, Recurrent Energy, a subsidiary of Canadian Solar Inc. (NASDAQ:CSIQ), announced that its 134 MW Liberty Solar project in Texas reached commercial operation. The project will produce enough energy to power approximately 15,000 homes annually. The Liberty Solar project has secured four major corporate customers, including Autodesk, Inc., Biogen Inc., EMD Electronics, and Wayfair Inc., who will purchase renewable energy from the project. Recurrent Energy will remain the long-term owner and operator of the project.
Recurrent Energy also announced that it has signed two new 20-year tolling agreements with Arizona Public Service Company (APS). These agreements cover the Desert Bloom Storage and Papago Solar projects, both located in Maricopa County, Arizona. The Desert Bloom Storage project is a 600 MWh standalone storage facility, while the Papago Solar project is a 150 MWac solar facility.
Both projects are scheduled to start construction in 2025 and reach operation in 2026. This announcement follows an agreement last year, with APS for the 1,200 MWh Papago Storage project, which is currently under construction and expected to commence operations in 2025. Once operational, Papago Storage will be the largest standalone energy storage project in Arizona.
The three tolling agreements with APS will total 1,800 MWh of energy storage and 150 MWac of solar capacity. This is a significant amount of energy, enough to dispatch the equivalent of 72,000 homes for four hours and enough solar to power the equivalent of approximately 24,000 homes per year.
3. Green Plains Inc. (NASDAQ:GPRE)
Upside Potential: 95.00%
Green Plains Inc. (NASDAQ:GPRE) focuses on producing low-carbon biofuels and renewable products. The company is one of the largest producers of ethanol in the United States, which is used to produce advanced biofuels such as renewable diesel, biodiesel, and sustainable aviation fuel. Green Plains Inc. (NASDAQ:GPRE) plays a critical role in promoting renewable biofuels as a cleaner alternative to traditional fossil fuels.
On October 31, Green Plains Inc. (NASDAQ:GPRE) reported financial results for the third quarter that ended on September 30. The company’s ethanol sales volume declined to 220.3 million gallons during the third quarter, compared with 223.5 million gallons for the same period in the prior year. However, the ethanol production segment delivered a notable increase in crush margin, rising to $58.3 million from $52.9 million in the same period last year, driven by operational efficiency and optimization of production processes.
On October 28, Green Plains Inc. (NASDAQ:GPRE) announced the successful startup of its Clean Sugar Technology (CST) facility in Iowa. The facility, which is the world’s first commercial deployment of CST, has begun producing dextrose syrups with a significantly lower carbon intensity than existing alternatives.
The CST system produces dextrose and glucose corn syrups with up to 40% lower carbon intensity than traditional methods. These sustainable ingredients are designed for use in renewable chemicals, bio-based materials, and food and beverage formulations. The facility has already proven successful in trials as a feedstock for fermentation of various bio-products and bio-chemicals, in addition to food ingredients.
The Shenandoah facility has achieved third-party certification for current Good Manufacturing Practices (GMPs) and is expected to receive FSSC 22000 certification in the next quarter. This certification will further demonstrate the facility’s commitment to producing high-quality, sustainable ingredients that meet the needs of its customers.
2. Sunrun Inc. (NASDAQ:RUN)
Upside Potential: 95.20%
Sunrun Inc. (NASDAQ:RUN) is a leading residential solar energy company in the United States, offering solar-as-a-service solutions that allow homeowners to adopt solar power with minimal to no upfront costs.
On October 23, Sunrun Inc. (NASDAQ:RUN) announced the launch of New York’s largest residential power plant in partnership with Orange and Rockland Utilities, Inc., (O&R) a subsidiary of Consolidated Edison, Inc. This innovative virtual power plant utilizes more than 300 solar-plus-storage systems, with home batteries providing stored solar energy to stabilize the grid during peak demand events throughout the summer.
Sunrun Inc.’s (NASDAQ:RUN) synchronized batteries are designed to discharge energy to alleviate grid stress while ensuring backup power for participating customers. Through this program, the company offers free or discounted home batteries in exchange for a 10-year commitment to support grid reliability, facilitated by upfront payments from O&R based on installed battery capacity. Participating customers also receive bill credits for excess energy shared with the grid and retain at least 20% of battery power for personal backup use. Sunrun Inc. (NASDAQ:RUN) is also in discussions with data center developers to supply solar power for their operations.
Sunrun Inc.’s (NASDAQ:RUN) multi-channel strategy, which includes direct-to-consumer sales and strategic partnerships, enables the company to attract a wide customer base efficiently. This diversified approach strengthens customer acquisition efforts while enhancing Sunrun Inc.’s (NASDAQ:RUN) market position.
1. Sunnova Energy International Inc. (NYSE:NOVA)
Upside Potential: 203.56%
Sunnova Energy International Inc. (NYSE:NOVA) provides residential solar and energy storage services and is a leading player in the solar PV system market in the United States. The company plays a significant role in the adoption of clean energy by offering customers a range of financing options with 20 to 25-year terms.
On October 30, Sunnova Energy International Inc. (NYSE:NOVA) reported financial results for the third quarter and nine months ended on September 30. The company’s core business of customer agreements and incentives showed impressive growth, with a 43% increase in revenue to $121.5 million in the nine months ended September 30, compared to the previous year. This growth is driven by an increase in the number of solar energy systems in service, which has risen by 38% to 222,300.
Sunnova Energy International Inc. (NYSE:NOVA) has also seen an increase in average revenue per system, with Power Purchase Agreement (PPA) and lease revenue per system rising by 12% to $1,405 per system, driven by slightly larger average system sizes and higher battery attachment rates, which have risen to 32% for the nine months ended September 30.
As of September 30, Sunnova Energy International Inc. (NYSE:NOVA) had total cash on the balance of $473.9 million, of which $208.9 million was unrestricted cash and $1 billion was available as borrowing capacity under various debt financing arrangements.
While we acknowledge the potential of Sunnova Energy International Inc. (NYSE:NOVA) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than NOVA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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