If you want strong stock market growth, invest in renewable energy.
Research from Griffith University and Jiangxi University, described as “the exact opposite of what we’ve been lead to believe”, shows there’s a positive correlation between renewables and the market – a potential boon for the economy as a whole.
The paper, called ‘The effects of stock market growth and renewable energy use on CO2 emissions’, was published in Energy Economics.
Dr Rakesh Gupta
Dr Rakesh Gupta from Griffith Business School said he was sceptical when the idea was first floated but “shocked” at the final results.
“We tested our findings and analysed different models to ensure it was, indeed, true.”
Dr Gupta said the implications for emerging economies were also significant, as it could potentially lead to more foreign direct investment.
“There’s a whole perception out there that investment in renewable energy hurts the economy and takes away jobs – but that’s simply not true.”
The paper calls for decision makers to initiate policies that promote renewable energy sources to meet public demand, eventually replacing the use of conventional energy such as coal, gas and oil.
“This will help to reduce emissions and ensure sustainable economic development in G20 nations,” Dr Gupta said.
He added that the findings also demonstrate a need for publicly listed firms to adopt energy efficient and greener technologies in their production activities.
Dr Gupta acknowledged that producing renewable energy in the current environment may be expensive as the technology simply isn’t there, particularly in developing nations.
But with investment, perhaps assisted by incentives in the first place, renewables will become much more efficient from both a cost and production viewpoint.
“We knew it made sense socially,” Dr Gupta said.
“Now we know it makes sense on an investment and return basis too.”
