Investing in the Global Transition to Renewables


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Earlier this month, we heard another announcement of plans for massive spending on renewable energy.

This time, the news comes from South Korea, where, we just learned, $43 billion will be spent to build the world’s largest wind power plant.

That cash will come mainly from the major South Korean utility companies that I’m sure will be properly incentivized by the government.

Like many other countries, South Korea has adopted an aggressive long-term economic plan to transition away from hydrocarbons and into renewables.

This $43 billion wind project is a part of South Korean President Moon Jae-in’s “Green New Deal,” which was launched in July of last year.

The goal of the Green New Deal is to make Asia’s fourth-largest economy carbon neutral by 2050 and create 1.9 million new jobs by 2025.

With the huge hit to economies delivered by COVID-19, governments across the world are jumping on the chance to create jobs and stimulate their economies by investing in the transition to renewables.

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The United Kingdom announced an $80 billion Green Industrial Revolution.

President Biden’s climate change spending plans come in at a cool $2 trillion.

In June, Goldman Sachs predicted that spending for renewable power in 2021 will exceed spending by the entire oil and gas industry for the first time ever.

It also predicted that the clean energy sector will see $16 trillion of spending through 2030.

If you were looking for a major investment trend for the next decade, there is no question… this is it.

Big Oil Is Intentionally Reducing Production

Here is something that I didn’t think I would ever see…

During its annual shareholder strategy day on February 11, Royal Dutch Shell (NYSE: RDS-A) proudly told shareholders that the company’s oil production is now in permanent decline.

Its oil production peaked in 2019 and will decline at 1% to 2% per year going forward.

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The company will do no new frontier oil exploration after 2025.

This is a memorable moment.

Since the Royal Dutch part of the business was established in The Hague in 1890 to drill for oil in the Dutch East Indies, the company has had one objective: to grow oil production.

After 130 years, it seems that this oil and gas behemoth is going in another direction.

Five years ago, this was unthinkable.

With the speed that the renewable transition is now moving, it is likely Royal Dutch Shell’s only option.

The company’s 2021 long-term strategy presentation is full of words like “renewable,” “carbon neutral” and “decarbonization.”

Those are supposed to be dirty words for people in the oil and gas business…

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Going forward, Royal Dutch Shell will be spending money to grow clean energy revenues through electric car charging, carbon capture, and storage and electricity sales.

Management believes that it can do this while also increasing its dividend by 4% annually and resuming share repurchases after meeting debt-reduction goals.

Suddenly, Royal Dutch Shell might be a clean energy play!

While this strategy shift might seem shocking, Royal Dutch Shell’s transition away from oil is less dramatic than the plans announced by its European oil peers BP (NYSE: BP) and Total (NYSE: TOT).

Mark your calendars, folks, because 2021 is the year that the age of renewables has officially arrived.

Even the oil and gas majors are going green.

Good investing,


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Read more from Jody Chudley at WealthyRetirement.com

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