First Solar is the clean tech sector’s meme stock bet

Welcome back.

Not everyone in sustainable investing was pleased with our story this week about the outflows from ESG funds. Some readers were surprised by how much money has come out of these funds, even in Europe where sustainable investing is becoming mainstream.

Some argued that the ESG underperformance is due to underweighting of oil and gas companies, something that eco-conscious investors are proud of. Others said the fate of the ESG acronym does not matter, and that most board directors are still focused on environmental, social and governance concerns.

The truth is that markets are cyclical. While ESG funds might be struggling now, lower interest rates and continued gains by big technology companies could quickly revive ESG in the second half of this year. We are keen to hear your predictions.

But at least one company is booming in the sustainable investing world: First Solar. As I report today, the US solar company has been swept up in the recent meme stock mania.

And Simon has two items today. One about voluntary carbon offsets and the other about Europeans who say they will pay more in taxes to pay for climate action.

Thank you for reading — Patrick Temple-West

retail trading

First Solar bucks clean tech sector trend with soaring share price

“Who is making money in renewable energy?”

It was a question posed to a group that included chief executives, investors and your Moral Money correspondent.

It is a fair question. Sustainable investing is languishing, in large part because of poor performance by renewable energy companies. Earlier this year, Ørsted was forced to suspend its dividend and cut jobs and development plans. Smaller renewable energy companies are struggling to raise money from private equity funds that are wary of the risks.

But executives at First Solar are rolling in cash. The solar-panel maker’s shares are up 60 per cent so far this year and closed at $273 on Thursday. Chief executive Mark Widmar cashed out $10mn as the solar-panel maker’s share price soared more than 40 per cent in the past month. It is one of the largest single-day stock sales by a US chief executive in the past six months, according to VerityData. The company’s chief financial officer Alex Bradley cashed out $4.4mn in late May, the 10th-largest sale of the year for a US chief financial officer.

First Solar has benefited from the Biden administration’s China tariff announcements. But it has also been swept up in the “meme stock” phenomenon. This retail trading surge catapulted shares of a handful of companies — most notably GameStop — thanks to mentions on Reddit’s WallStreetBets thread.

On Thursday, GameStop’s shares surged nearly 50 per cent after Keith Gill, the “meme stock” investor known as Roaring Kitty, scheduled a livestream session on YouTube set for 12pm ET today.

First Solar is one of a handful of other stocks that are frequently discussed on WallStreetBets. 

“The magnitude of the recent move is difficult to justify and points to a potential benefit from WallStreetBets,” Morningstar analyst Brett Castelli told me.

Meme stocks are extremely volatile and buying can vanish in a flash. Renewable energy company Plug Power had its own rollercoaster ride in May, according to Morningstar. But Plug Power’s shares have dropped in recent days. 

For now, First Solar executives are definitely making money in renewable energy — even if it turns out to be a meme mirage. (Patrick Temple-West)

Carbon credits

ICVCM releases long awaited carbon credit methodology approvals

It’s been a rough couple of years for carbon credit businesses. Yesterday, some of them got a welcome piece of good news — but others should be bracing for the opposite.

The Integrity Council for the Voluntary Carbon Market, a non-profit body established to set standards for carbon credits, has published its first approvals for seven of the many “methodologies” used for projects in this space.

Four of these methodologies deal with projects that capture methane from landfill sites, and three of them with projects to destroy stockpiles of ozone-depleting substances, including refrigerant gases.

More than 100 different methodologies will be assessed under the ongoing process. The ICVCM said that by September it expects to have completed decisions covering more than 50 per cent of carbon credits in the market.

The ICVCM had already granted approval to the biggest carbon credit programmes, which are eligible to label credits under the Core Carbon Principles, a set of standards published by the ICVCM last year. Now those programmes can start applying the CCP label to credits generated using the approved methodologies.

This comes at a crucial moment for the market, which has slowed sharply amid allegations that many developers have been overstating the carbon impact of their projects. “We are facing a relentlessly negative narrative,” Annette Nazareth, chair of the ICVCM, said at last month’s Moral Money Summit Europe.

Carbon credits have been generated by projects ranging from forest conservation to renewable energy development to clean cooking stoves. Buyers have typically been companies seeking to offset their carbon emissions.

Dirk Forrister, chief executive of the International Emissions Trading Association, a business forum focused on carbon markets, told me that many companies have been holding off from carbon credit purchases while awaiting the outcome of the ICVCM’s work.

“A lot of corporate buyers pulled back and said: ‘Well, why not wait a few months and see what’s going to qualify, and channel your investments in that direction,’” Forrister said.

To be credible, this work will need to separate the wheat from the chaff, not simply give a green light to everything currently on the market. Amy Merrill, the ICVCM’s chief operating officer, gave a remark in this vein that will sound ominous for some of the less rigorous project developers. “Many methodologies under assessment are not expected to meet the threshold and will be rejected by the governing board,” she warned.

If the CCPs become accepted as the benchmark for high-integrity carbon credits, then projects without that stamp of approval may struggle to find buyers. That could be a painful outcome for some developers who have created projects with real impact, using methodologies that don’t win approval from the ICVCM.

“If the ICVCM is doing their job right, then it will be a minority of methodologies and credits that get the label,” said Teresa Hartmann, chief ratings officer at carbon credit rating agency BeZero Carbon, who previously led the market formation work of the ICVCM.

But the ICVCM was undertaking “a tightrope walk”, Hartmann added. “If the standard is too low, it won’t help instil confidence. If the pipeline is too small, it may make it hard for the market to develop.” (Simon Mundy)

Funding climate action

Are Europeans willing to pay for climate action?

It’s election season in Europe: voters across the EU are heading to the polls this week, to be followed by the UK next month. Do they care about climate action, and are they willing to pay for it?

Consulting and audit firm Deloitte looked into that through a poll of 8,000 people in eight European countries: France, Germany, Italy, the Netherlands, Poland, Portugal, Spain, and the UK. As the chart above shows, more voters supported than opposed the idea of paying more tax to fund climate action.

Deloitte found that higher-income respondents tended to be more willing than lower-income ones to pay more tax to support climate action. But there were big differences between countries, with lower-income people in southern European countries such as Italy, Spain and Portugal — which have been hit hard by drought, fires and extreme heat — more willing to pay for climate measures than their northern peers in Germany and the Netherlands. (Simon Mundy)

Interested in how the elections will change the EU? Join FT journalists for a subscriber-exclusive webinar on June 12 and put your questions to our panel. Register now for your subscriber pass, which also gives you access to a recording of the event.

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