The shift off fossil fuels is here to stay, even as high interest rates create short-term headaches for renewable energy giants like Florida-based NextEra Energy, German wind turbine maker Siemens Energy, and Danish wind developer Ørsted A/S, a recent news analysis concludes.
“Soaring interest rates and grim headlines have hammered the stock prices of solar and wind companies recently, capping a grim couple of years when the rising costs of borrowing and materials have made capital-intensive renewable projects more expensive and less attractive to investors,” writes Bloomberg opinion columnist Mark Gongloff. “It’s a huge stumbling block for the clean energy transition when it should really be sprinting if humanity is to have any hope of limiting global warming to non-catastrophic levels.”
But even with no immediate prospect that high interest rates will ease, “renewable energy has far too much going for it to give up on it now,” Gongloff says, and “given that the stock market is a mechanism for betting on the future, renewable stocks won’t wait around for rate cuts.” Already, David Oxley, head of climate economics at Capital Economics, is predicting those assets will bounce back in 2024.
Gongloff adds that the U.S. Inflation Reduction Act is still pulling investment dollars into clean energy, despite high interest rates. The totals include more than US$100 billion for electric vehicles and batteries in North America alone, and $16.6 billion funnelled into climate technology start-ups between July and September, nearly a two-year high for quarterly investment.
New York Times finance writer Jeff Sommer points to a different risk, citing investors’ failure to respond to the International Energy Agency’s urgent call for reductions in fossil fuel extraction.
Read more of this essential climate and energy finance analysis here.
