With climate change taking hold, it might be a good idea to consider buying into ASX shares that benefit from the global transition to zero carbon.
According to Milford investment analyst Roland Houghton, the amount of money that governments and the private sector are willing to spend on this is phenomenal.
"Renewable energy generation is expected to double over the next decade," he said in a presentation at the ASX Investor Day last week in Brisbane.
"US$3 trillion [is] the annual spend required for net zero [by] 2050."
Among the biggest beneficiaries of decarbonisation are any companies involved in the production of lithium.
That mineral is a critical ingredient for high-powered batteries. And demand for such batteries will rocket in order to store fuel for electric cars and surplus electricity from renewable energy generators.
So which ASX lithium share would Houghton buy into right now?
Image source: Getty Images
Grab this lithium miner that's 'ahead of the rest'
IGO Ltd (ASX: IGO) was Houghton's pick for a play at the lithium industry.
"IGO owns high-quality Western Australia assets in lithium, nickel and copper," he said.
"[It is a] clean energy metals miner who transitioned ahead of the rest."
Although many lithium stocks have struggled this year in the face of lower prices for the commodity, IGO shares are now 10% higher than at the start of 2023.
The business, according to Houghton, is expanding its production capability, all while it's "fully funded".
"Moving downstream [on the production chain] reduces volatility and should improve valuation."
Earlier this month, the analysts at Goldman Sachs Group Inc (NYSE: GS) agreed with Houghton that IGO shares are a buy.
That team was especially glowing about the company's Greenbushes project in Western Australia.
"Greenbushes [is] the lowest cost lithium asset in our coverage," the Goldman Sachs memo read.
"IGO expects higher spodumene sales volumes in the June quarter, following the 13% fall in shipments in the March quarter."
The wider professional community is also bullish on IGO shares.
According to CMC Markets, the stock is rated a buy by 10 out of 15 analysts. Nine of those think it's a strong buy.
