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Homesustainable energyGoldman Sachs picks 20 stocks to ride Europe's push toward a greener...

Goldman Sachs picks 20 stocks to ride Europe’s push toward a greener future

  • The EU Green Deal, which Goldman termed the "largest economic stimulus Europe has seen since the Marshall Plan," aims to achieve net zero carbon emissions by 2050 and a 50%-55% cut in emissions by 2030, compared to 1990 levels.
  • Goldman analysts suggested that the boost to capital expenditure brought about by the 27 EU member states' National Energy Plans (NEPs) could see a spike in earnings for European utilities much sooner than expected.

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This image shows Vestas' V126-3.3MW turbines at a site in Finland. Courtesy of Vestas Wind Systems A/S

The European Union's landmark plan to become climate-neutral by 2050 promises to overhaul the bloc's economy, and 20 regional companies are well placed to capitalize on these changes, according to Goldman Sachs.

The EU Green Deal, which the U.S. investment bank termed the "largest economic stimulus Europe has seen since the Marshall Plan," aims to achieve net zero carbon emissions by 2050 and a 50%-55% cut in emissions by 2030 compared with 1990 levels.

Along with protecting long-term wealth by tackling climate change, Goldman analysts believe the plan — which they "conservatively estimate" will cost in the region of 7 trillion euros ($7.9 trillion) — will boost short-term GDP (gross domestic product) and employment thanks to a "major investment wave in power infrastructure, buildings renovation, automotive and industrials."

Utilities

Goldman analysts suggested that the boost to capital expenditure brought about by the 27 EU member states' National Energy Plans (NEPs), the action plans for countries to hit the bloc's 2030 decarbonization targets, could see a spike in earnings for European utilities much sooner than expected.

The note projected that NEPs imply around a 65% capex acceleration in clean infrastructure (renewables and networks) in Europe versus the current run rate, with "visible effects" as of 2021.

"As the support for 'net zero' climate policies continues to gain strength, we adjust our estimates to reflect the investment tailwinds from the NEPs (we now capture about two-thirds of this capex in our bottom-up estimates), with our new forecasts implying c.2.5% upgrades in 2025-30 estimated earnings per share (EPS) on average," the note said.

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