Most online consumers don’t consider the environment when they click buy for their latest desire. And if they do, it’s because they lament the overflow of cardboard boxes in their trash and tell themselves they’re saving on gas. But the continued growth of eCommerce has had an interesting side-effect: renewable energy is in greater demand than ever throughout the entire supply chain. The eCommerce impact is but one factor that has made renewable energy the fastest growing sector of the energy industry.
Amazon’s (Ticker: AMZN) latest announcement that it is pledging to reach 80% renewable energy usage by 2024 and 100% by 2030 is quite significant to say the least. In addition, Amazon will also purchase 100,000 electric delivery vans that will be on the road by 2021 from private company Rivian which was paired with a $440 million investment. Amazon is committed to be completely carbon-neutral by 2040.
What consumers and investors often don’t realize is that beyond Amazon, from the moment an order is placed, nearly every portion of the supply chain is becoming greener. Datacenters, warehouses, distribution centers and, of course, the shipping and logistics companies that deliver that coveted box to your doorstep, have all made increasingly aggressive commitments to renewable energy.
In addition to Amazon’s massive datacenter footprint, other big datacenter firms that process all those eCommerce orders are also transitioning to powering their electricity-hungry servers with renewable energy. Iron Mountain (Ticker: IRM) is offering 100% renewable energy datacenters for its customers and Equinix (Ticker: EQIX), which has 200+ datacenters in 24 countries around the world, has committed to becoming 100% renewable across all its properties.
Likewise, the growth in warehouses and distribution centers that hold all these products for faster customer delivery are newbuilds or retrofits that are considerably more energy efficient and using alternative sources of power. Walmart (Ticker: WMT) has not only committed to reaching 50% renewable energy use by 2025 but also deploys hydrogen-powered fuel-cell forklifts in many of its warehouses. Nike (Ticker: NKE) made headlines last month when it announced it just opened a 1.5 million square foot distribution center that operates completely on renewable wind, solar, geothermal, hydro and biomass power.
Ultimately, those online orders need to make it to destinations. Behemoth Amazon has thrown down the gauntlet with its massive electric van target, but its competitors are not standing still. UPS (Ticker: UPS) has pledged to reach 25% renewable electricity usage by 2025, a dramatic increase from only 0.2% in 2016, and have 40% of its fuel needs met from alternatives as well. UPS has been using some natural-gas powered deliver trucks for years, but consumers, as well as the market, are seeking more renewable solutions. Fedex (Ticker: FDX) had installed 23 on-site solar installations by the end of 2018 and targets 30% of its jet fuel to come from alternative fuels by 2030. And given the latest moves by Amazon and UPS, we would not be surprised to see additional aggressive Fedex announcements in the future.
From click to delivery, online shopping is changing more than the retail sector. Its side effects ripple throughout many different industries, including energy. eCommerce is only one variable that is driving the rapid global growth in demand for renewable energy. As investors consider investing in the renewable energy thematic, we believe a holistic approach through investing in the entire value chain will not only reduce volatility but better capture the long-term growth potential of the sector.
The Pickens Morningstar® Renewable Energy Response ETF (ticker: RENW) is the only renewable energy ETF that tracks the entire value chain of the theme, including producers and consumers as well as green transportation/infrastructure companies.
The Pickens Morningstar® Renewable Energy Response ETF (ticker: RENW) is the only renewable energy ETF that tracks the entire value chain of the theme, including producers and consumers as well as green transportation/infrastructure companies.
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