If you’re feeling good about your renewable energy stocks, better look away from the rally in coal – by David Berman (Globe and Mail – October 8, 2021)


Renewable energy is a growing sector that sits well with investors who want to align their portfolios with environmental solutions to global warming. But have you seen what coal has been doing? Welcome to one of the great conundrums in today’s market.

Funds that conform to environmental, social and governance (ESG) principles are seeing a massive influx of investor dollars. Yet companies involved with fossil fuel extraction are being rewarded with spectacular gains this year, as demand for traditional energy surges against a backdrop of tight supplies that could last for months.

“The winter heating season still hasn’t started, but this turn of events is already lifting inflation and adding downside risks to economic growth across Europe and Asia,” Omar Abdelrahman, an economist at Toronto-Dominion Bank, said in a note this week.

Coal, a notoriously dirty fuel that is being phased out in much of Europe and North America as countries attempt to curb their carbon emissions, is enjoying a particularly strong resurgence amid strong demand in China, where dwindling supplies have led to power rationing.

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