How to profit from investing in green energy and reducing waste

The desire to look after the planet better has led to a huge rise in interest in drawing more of the energy we use from renewable and less polluting sources.

Yet, for investors this presents a conundrum.  The old energy sector – represented by oil, gas, coal and electricity – has been a rich source of profits and dividends, so will they have to forgo these in the future – or could backing the new energy sector instead deliver the returns they desire, whilst also protecting the world we live in?

A handful of investment trusts and funds offer the opportunity to try to do this, combined with the specialist knowledge needed to sift the wheat from the chaff. We speak to Chris Tanner, of JLEN, Environmental Assets Group, which invests directly into projects to deliver income for investors and currently yields 5.6 per cent, to find out more.

In our interview he explains how the trust invests, what it looks for in renewable energy and other green infrastructure investments and why its 18 per cent share price rise this year reflects a surge in interest from big and small investors.

The trust has ongoing charges of 1.3 per cent and its share price has shifted to a hefty 16.7 per cent premium to its net asset value, albeit it has often traded around 10 per cent mark over the past five years.

Dividends are paid four times a year and Chris explains that he believes the share price performance and premium is down to a combination of the search for yield, institutional and personal investing interest in renewable energy and its solid inflation-linked returns on investment. 

Yorkshire Hydropower, backed by JLEN,  consists of two operational hydro projects and an operational battery storage system

How JLEN Environmental Assets portfolio was split between types of project earlier this year

In addition to providing an income, such investments can help reduce the major carbon emissions and waste products of the traditional energy sector. 

The sun, wind and water can all provide substantial amounts of power, meanwhile technologies can be used to reduce waste and turn some of it into an energy source. Such plants can also cut rubbish going to landfill, boost recycling and produce organic fertiliser.

With pressure mounting to reduce our reliance on fossil fuels, cut carbon emissions and reduce waste, investing in the companies putting such technology into action can offer a way to tap into potential returns.

Of course, for any infrastructure investment politics can be a risk and we ask Chris how much of a concern this is for the trust and its investors. 

JLEN has seen its share price climb substantially over the past year-and-a-half but investors may be put off by the substantial premium to net asset value it now trades at