A report titled The Million Jobs Plan released yesterday by climate change think-tank, Beyond Zero Emissions has suggested a move toward zero emissions could create 1.78 million jobs in Australia over the next 5 years.
This comes after the Australian Bureau of Statistics reported earlier this month that 835,000 jobs have been lost due to the coronavirus-induced recession.
If Australia were to make an accelerated move toward zero carbon emissions, it could provide a huge boost to companies already thriving from exposure to clean energy and emission reduction.
The companies outlined below are well-positioned to benefit from any move toward emissions reduction.
Infigen Energy Ltd (ASX: IFN)
Infigen operates renewable energy assets in Australia. The company owns 7 wind farms in Australia and 1 solar farm. It also owns a grid-scale battery in South Australia. Additionally, Infigen has a further 3 renewable energy projects under development.
In the first half of the 2020 financial year, Infigen sold 1071 GwH of renewable electricity. This was a 17% increase on the same period in 2019. The company had net profit after tax of $26.2 million in the first half of the 2020 financial year. Infigen has recently been subject to 2 takeover offers, however, the company has not recommended that shareholders vote in favour of either bid.
If additional government investment is placed into renewable energy, Infigen will be well placed to take advantage of this. Further, additional subsidies for renewable energy producers could provide a boost for Infigen.
Australian Ethical Investment Limited (ASX: AEF)
Australian Ethical Investments is a fund manager which has an ethical charter that guides it to invest part of its funds into renewable energy. The company invests in solar, wind, tidal, geothermal and hydro renewable energy assets with none of its funds under management invested in coal or oil.
The company expects its full-year underlying profit for the 2020 financial year to be between $6.8–$7.8 million. This is a 10% increase on the 2019 financial year. Australian Ethical Investments has no debt and boasts a liquid balance sheet.
If stimulus goes ahead to work toward carbon reductions, this could provide a huge benefit to the renewable energy companies that Australian Ethical Investments holds an interest in. If these companies see higher profits this will mean an increase to returns on Australian Ethical Investments funds under management and will mean higher profits for the fund manager.
Envirosuite Ltd (ASX: EVS)
Envirosuite is an environmental consulting services company that helps its clients to monitor and control their effect on the environment. According to a company presentation, there’s been a 38 fold increase in global environmental laws in the regulation of pollution. Envirosuite’s clients include cities in China, airports and companies.
Envirosuite aims to be earnings before interest, taxes, depreciation, and amortization (EBITDA) positive by the end of Q3 FY21. It also aims for revenue of $100 million per year by the end of the 2023 financial year.
If Australia moves towards zero emissions, there will likely be incentives pushing companies towards reducing their emissions. As the economy becomes more conscious of its carbon use there will be a greater need for environmental consultancy services. This could see Envirosuite experience a positive surge in demand and bring it closer to producing profits for shareholders.
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Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Australian Ethical Investment Ltd. The Motley Fool Australia has recommended Australian Ethical Investment Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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