Common Tragedies

Thoughts on Environmental Economics

NEX returns show just how good 2007 was for clean energy

Posted by Rich Sweeney on January 16, 2008

The WilderHill New Energy Global Innovation Index (NEX) is an index of global clean energy companies published by New Energy Finance and WilderHill. You can read more about its components here. In the chart below, I’ve pegged daily Nasdaq, S&P and Amex Oil returns to the January 3, 2006 price for comparison purposes. I think the trends are clear enough.

nex chart

The more important question, of course, is not how clean energy has done in the past but how it’s going to do in the future. Though not on the graph above, anyone who follows clean energy has witnessed what might be the beginning of a market correction on clean energy stocks so far in the new year (First Solar and Clipper come to mind). I’m no financial analyst, but it seems that the emerging consensus that the US is heading for a recession (or at least a considerable slow down) probably doesn’t bode well for the sector. The American experience has shown that people’s enthusiasm for environmental protection is positively correlated with the health of the economy. While the Democratic candidates have recently tied “green jobs” into their spiels about avoiding recession, I have to think that economic downturn will dampen public enthusiasm for policies that will increase costs, at least in the short run. Not that there’s a whole lot on the table in ’08 anyways, given that W is still in office and congress already passed an energy bill (albeit a relatively toothless one).

Ok I’m gonna stop rambling now.

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