First Trust Global Wind Energy ETF FAN, which follows the wind energy industry, is up 4% since January and 6.6% in the past year.
The coal industry, meanwhile, has been facing setbacks from the investment community for several years.
The obvious shift to clean energy sources hasn’t yet been enough to declare coal’s definitive demise, but concerns over climate change from fossil fuel burning have caused many firms and individuals to drop coal-related holdings.
However, continued dependence on coal burning abroad continues to be a lifeline for coal companies in the U.S., pushing the industry into a sharp contrast to the clean energy sector, which has struggled to outperform the market in 2024.
Is Coal Dead? Some Don’t Think So
In 2020, the market saw the shutdown of VanEck Vectors Coal ETF, which was at the time the only remaining ETF following the coal industry.
At the time, fund manager BlackRock Inc BLK said the firm’s actively managed funds would no longer hold shares of companies deriving more than 25% of revenues from the thermal coal business, Barrons reported.
In turn, many investors and firms have switched towards environmentally-friendly energy stocks and ETFs.
Yet some in the industry continue to believe there’s a case for investing in coal.
In January of this year, Range ETFs, a firm dedicated to running ETFs around niche themes, launched the Range Global Coal Index ETF COAL which provides exposure to companies involved in the production, exploration, development, transportation, and distribution of coal.
Since its launch, the price of the ETF oscillated between $21 and $26 and is $22.6 at the time of this writing, with year-to-date gains of 0.86%.
In an investment document, Range claims there is still an investment case for coal, in spite of an obvious global trend to detach from it.
Demand for coal actually grew on a global scale between 2021 and 2022, led by China and India, according to the International Energy Agency.
Coal burning represents 16.2% of the total utility-scale electricity generation in the U.S., according to the latest data from the Energy Information Administration and 36% on a global scale.
In the U.S., the firm says, “‘energy security’ as one element of national security.” This means that the government will continue to guarantee the availability of reliable energy sources to make up for possible gaps in energy supply stemming from green energy production.
In June, the coal industry was affected by election results in India, which gave investors the idea that the country might not continue with a plan to upsize its coal use, though some analysts called it a natural market correction from an “overbought” sector.
The balance between trends running against “dirty” energy sources and short-term tailwinds for the coal industry have resulted in varying performances for some of its largest players over the past year.
- Shares of Peabody Energy Corp BTU, which is the largest coal producer in the U.S. are down 7.7% since January but up 2.3% in the past year.
- The second largest producer, Arch Resources Inc ARCH has performed a lot worse in 2024, with shares down over 24% since January. According to data from Benzinga Pro, the stock appears oversold and its share price could rise this year.
- Warrior Met Coal Inc HCC shares are up 49% in the last year.
Wind Beats Solar In 2024
A Benzinga technical analysis from this week showed that EV maker Tesla Inc TSLA could be up for a rebound after losing almost 13% of its value since January.
Other companies in the clean energy sector, however, could be struggling more.
Shares in the iShares Global Clean Energy ETF ICLN are stuck in a pattern that technical analysts call the “death cross,” which occurs when the 50-day moving average crosses below its long-term moving average of 200 days. The fund is down 8% since January and 12% in the last year.
The solar energy sector has been struggling more than wind. Invesco Solar ETF TAN, which follows the solar sector, has also performed poorly in recent periods. The fund is down 22% since January and 30% in the past year.
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