Time to take another look at Green Economy investments?

In this week’s Global Macro analysis (sponsored by XTB), we ask whether the Green Economy is uninvestable,  or if the current slump could mark the start of a new recovery cycle.

Is the Green Economy Uninvestable?

The Green Economy is in retreat.

Not so long ago, the ‘Greta Effect‘ was in full swing and created masses of new green policies and corporate actions globally. The transition into a zero-carbon world was urgent; climate leadership imperative. Spearheading this green movement was the electric-vehicle (EV) maker Tesla (TSLA).

But this green transition seemed to have vanished (or banished?) from the investing landscape. Replacing it are red-hot sectors like AI, crypto, defence, precious and other speciality metals. How times have changed!

But is the green economy really dead?

Take hydrogen. A short while ago, in answering the clarion call to produce zero-carbon transportation, many corporations poured millions into developing hydrogen-powered products. But sluggish demand from consumers, due to limited hydrogen infrastructure and uncompetitive hydrogen vehicles, is delaying the mass rollout.

As of 2025, consumers are still unconvinced about these hydrogen cars. So poor is the uptake of hydrogen automobiles that Ferrari (ticker: RACE) alone outsold hydrogen vehicles (see below).

“I can have the best product on earth,” observed Jan Taschenberger of Uniper, commenting about the hydrogen sector “but if there’s no demand, it doesn’t matter.”

Source: CarbonBrief (2025)

Meanwhile, as a fuel source, green hydrogen – hydrogen produced from green sources – remains fairly uncompetitive. This stultifies the growth of the hydrogen sector, especially if fossil fuel prices keep dropping. (Check out Ceres Power (CWR) and ITM (ITM) in the UK.)

As we head into 2026, US WTI oil is still under some selling pressure. Prices touched $55 a barrel earlier this year; its long-term price trend points south (see below).

As a result, the European auto industry – and consumers – are struggling to wean off fossil fuels. Porsche (ticker: P911) recently delayed its EV rollout; Toyota is also pushing back from pure-EV vehicles in America.

Even the EV leader Tesla is suffering some sales hiccups these days, especially in Europe, where the brand suffered double-digit unit contraction year-on-year. It is due to report sales later this week.

White House is not helping the green cause either. Earlier, the republican president halted an offshore wind project halfway. The project developer, a Danish company called Orsted (ORSTED), saw its share price crash to all-time lows.

In May, the hedge-fund Bridgewater asked the same question ‘Is the Green Energy Transition Dead?’ and came to the following conclusion:

Policy has shifted to prioritize energy security and industrial competitiveness over climate leadership. This will steer investment to the most economical energy sources, driving continued growth in renewables and fossil fuels—but slower decarbonization.

Pessimism Equals Buying Opportunity?

For us investors, the key question is whether the ‘green economy’ is completely uninvestable due to unfavourable macro headwinds.

To answer this, we need to dig deeper and determine the following issues:

1. Is the green concept a temporary fad or is it a permanent social-economic transformation?
2. If the green transition is here to stay, are the current macro/market headwinds temporary or permanent?
3. Lastly, are share prices of these green stocks reflecting future growth?

Undoubtedly, the green economy is a permanent part of societies, especially given the fast-changing climate.

Net Zero continues to be a popular slogan among many governments. The United Nations recently held a summit earlier this month on climate (Climate Summit 2025, New York).  The Net Zero objective remains at 2050.

But the transition is slowing due to the Ukraine Conflict, high inflation, a slow economy and shrinking wallets. However, this does not mean the green economy has vanished. It has not.

Instead, it is evolving. Remember that technologies are improving all the time, technologies that are accelerating the reach to Net Zero.

As the Green Economy shifts, it means two things:

• One, an evolving Green Economy creates new opportunities for investors
• Two, green companies that are still in business after a boom-bust cycle suggest some durable moats, which is worth investigating further

Boom and Bust Within the Green Economy

To illustrate the above points, let me contrast two subsectors within the green economy: EV charging stocks against battery makers. 

During 2020-2021, EV charging stocks soared as investors piled into the EV sector. The then investment thesis was straightforward: Rising EV sales required more charge points. Companies that satisfy this demand would prosper mightily.

But when the EV boom receded, the sector collapsed. It still hadn’t recovered.

Why? The answer is simple: EV sales failed to grow as fast as expected. In addition, good charging points became harder to find and were more expensive to run. When the Federal grants for building EV charging network started to taper, corporate losses swelled.

Look at Chartpoint’s (US:CHPT) stock chart below. Prices suffered from a deep drawdown from $900 (dilution high) to a mere $11. Ouch!

Peers like Blink Charging (US:BLNK), EV Go (EVGO), WallBox (WBX) all developed the same bearish price trend. In the UK, the charging network company Pod Point (UK:PODP) was delisted earlier this year at 6.5p. It’s 2021 peak? 280p.

Will these stocks regain their previous glories? My best guess is probably ‘no’. Many are still loss-making, thus making stock dilutions (and possibly bankruptcies) inevitable. Another sad tale in the history of financial markets.

In contrast, battery makers are in high demand.

The EV battery technology is improving continuously, which is lengthening the mileage of a single charge. In this sector, one of the undisputed leaders is CATL, short for Contemporary Amperex Technology (HK:3750).

The company held one of the world’s largest IPOs in HKEX during the summer. Bullishness abound; and prices soon soared. CATL is now a US$250 billion company (48th largest globally). Its market share of the global EV battery sector is estimated at above 30 percent.

In other words, even though both sectors (public charging/battery makers) are part of the Green Economy, their outlook cannot be further apart.

The market casts a more favourable outlook on advanced battery makers such as CATL because their economic moats are more durable, scalable and profitable.

What About the FANs and TANs?

What about those wind, solar and other EV stocks?

Until May, wind, solar, lithium and EV stocks were all mired in depressing multi-year downtrends (see below). Their ETF charts slumped to long-term lows earlier this year.

Since June, however, these ETFs have rebounded steadily. Is this, I wonder, the proverbial light at the end of the tunnel?

Look at FAN, the ETF for wind turbine operators. In it, the largest components are Northern Power and Vestas Wind Systems (VWS). Technically, the ETF found firm support at the 2023 lows at $13 to rally through its previous peak at $18. This is a ‘base breakout’ in chart speak.

The Lithium ETF also developed the same bullish technical pattern. A failed downside breakout in May was swiftly followed by a decisive rally into the $50s. Another base breakout.

As an aside, lithium is an interesting sector to watch now because the Trump administration views this as a ‘critical mineral’ and is about to take an equity stake in the lithium miner Lithium Americas (LAC). This leaves many wondering if more deals are forthcoming.

Chartwise, it appears many green stocks are seemingly showing some signs of life.

Should you invest in the Green Economy?

Still, buying green industries now remains a ‘contrarian’ idea. Mainstream investors continue to gaze intently on AI and crypto.

Tastes, however, can change drastically in finance. What is fashionable now may not be trendy a few years down the road.

Yes, risk is seemingly high on buying green stocks these days, but so are the returns. Who knows, we could be in the first recovery phase of a green bull cycle.