energy crisis
The energy crisis has burst a multibillion-pound bubble in green stocks as gas prices surge and the world confronts the true cost of net zero.

Shares in renewable energy companies have tumbled to their lowest level in 16 months, almost completely unwinding gains made during a stampede into companies aiding the shift away from fossil fuels.

It comes as new figures revealed that private equity snapped up oil and gas firms worth almost £12bn last year, a huge increase from £232m in 2020 as the sector ploughs investment into renewable energy.

A basket of global clean energy shares, which includes renewable giants Iberdrola, Vestas and Orsted, has tumbled 45pc since the record peak a year ago, wiping tens of billions of pounds off their "excessive" value.

Rising material costs, frothy valuations and escalating interest rates have dampened investor enthusiasm after a flood of money into the sector.

Surging gas prices are also thought to have raised concerns, because they highlight the challenge of ditching fossil fuels.

Stewart Cook, co-head of European markets at Berenberg, said: "Clean energy stocks were caught up in the record moves higher in non-profitable, almost concept-like themes such as ESG and electric vehicles. These moves and valuations were exaggerated by huge inflows to investors and liquidity chasing these relatively small, embryonic sectors."

Renewable stocks have fallen by a fifth since the start of December after being hit by a wider shift by investors out of pandemic winners, particularly in tech, into more traditional sectors as interest rates rise.

Solar shares have slipped 45pc from their record peak, while wind firms have dropped by a quarter.

Mr Cook said there were some "excessive valuations and asset price moves" on wider markets that have "burst". However, he added that many clean energy stocks still "have great fundamental reasons to own for the long-term".

Analysts have warned that a rush into environmental, social and governance-friendly assets risks creating ethical stocks bubbles.

Buyout firms are cashing in on the gas price crisis by swooping in as listed companies flee the oil and gas sector in fear of climate campaigners.

Private equity firms spent £11.9bn on European oil and gas businesses in 2021, compared to just £232m in 2020, according to global law firm Mayer Brown. Deals involving UK firms were worth £2.4bn.

Norway's HitecVision, and the US's Postlane Partners have been among the more acquisitive firms in the sector over the latest year, its research found.

Oil and gas companies are under growing pressure from shareholders to cut their emissions and switch to renewable energy, with BP pledging to cut its oil and gas production 40pc within the decade.

James West, partner at Mayer Brown, said: "There are still excellent returns on offer in the oil and gas industry. Majors are facing pressure to divest some of their assets as part of the transition to renewables and this is creating an opportunity for specialist private equity funds to pick up assets at valuations they like."

https://www.telegraph.co.uk/business/2022/01/22/energy-crisis-bursts-green-shares-bubble/

It's a reminder that renewable energy companies only exist because of subsdies.

Meanwhile private equity investors are cute enough to have worked out that fossil fuels still have a long term future, and are buying up assets on the cheap from public oil and gas companies who are running scared from climate campaigners.