A new financial crisis is unfolding before our eyes, with unsustainable levels of debt in the energy industry under the spotlight. So how did investors react on Monday 9 March to the oil supply shock? At first blush, renewable energy (RE) share prices showed some defensive properties, falling about half as much on as their fossil fuel brethren. In one way, that's surprising given smaller cap stocks tend to get punished in market downturns. On the other hand, the market moves on Monday may indicate that most investors still don't know what to make of renewables. For example, natural gas futures closed higher on Monday, actually improving the competitiveness of solar and wind. The problem is that with so few listed names in the RE space, a clear interpretation of the resilience of energy business models to market downturns is extremely difficult. What's clear is that many US oil & gas producers have put themselves in jeopardy by loading up on debt to juice returns. A round of bailouts is coming and it would be an inexcusable disaster for governments to reward bad behavior. #climatechange #risk #investing
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