The challenge of investing in solar and wind energy

Sector continues to languish

Donald Trump’s chaotic tariff policies have upended global trade and prompted Prime Minister Mark Carney to declare the long-term integration of the Canadian and U.S. economies to be over. But that’s just one of the many ways in which the iconoclastic U.S. president has fundamentally changed our world and pushed us into directions we never anticipated.

One of the most significant casualties of the Trump regime is the blow he has dealt to the fight against climate change. Mr. Trump simply doesn’t believe a warming world will lead to catastrophic rises in sea levels, creeping deserts, and even more vicious wildfires and hurricanes.

This is nothing new. As far back as 2012 he claimed: “The concept of global warming was created by and for the Chinese in order to make U.S. manufacturing non-competitive.” Ludicrous as that may sound, it’s been one of his core beliefs since. One of his key campaign slogans was “drill, baby, drill.” Last week he was praising “coal, beautiful coal.”

His actions since taking office for his second term in January have been devastating for those committed to the fight to reduce the world’s dependence on fossil fuels. His first hundred days included:

Paris Agreement withdrawal. Trump argued the accord was unfair to American workers and industries. He signed Executive Order 14162 on Jan. 20, reaffirming this stance.

Regulatory rollbacks. His administration rescinded numerous environmental regulations, including the Clean Power Plan, which aimed to reduce carbon emissions from power plants. He also lifted a moratorium on new coal leases on federal lands and weakened coal ash disposal rules.

Support for fossil fuel infrastructure. Trump expedited approvals for projects like the Keystone XL and Dakota Access pipelines, which had been blocked by the previous administration. He also rolled back methane leak detection requirements for oil and gas companies.

The impact of his actions on the environmental industry has been significant. Projects have been cancelled, jobs have been lost, and research defunded.

But here’s something unusual. While the share prices of companies engaged in clean energy development have fallen, they are doing better than in the final two years of the pro-environment Biden administration. We can see this in the performance of the BMO Clean Energy Index ETF.

BMO Clean Energy Index ETF (TSX: ZCLN). This fund invests in companies that are involved in the production of clean energy, such as solar, wind, and hydro. Its benchmark is the S&P Global Clean Energy Transition Index, which includes small-, mid-, and large-cap companies in developed and emerging markets. The fund is passively managed.

The units are up from their early April low but are still trading below their 2024 closing price. The fund has lost money in every calendar year since it was launched in 2021. The average annual compound rate of return since inception is -17.7%. The fund has about $50 million in assets under management. The management expense ratio (MER) is 0.39%.

That’s the bad news. The better news is that it may have hit bottom, despite Donald Trump’s best efforts to destroy the clean energy sector. After trending steadily down for most of the past three years, the underlying index showed a total return of 3.47% for the first four months of 2025. The fund itself was off 0.91% year-to-date.

There are 101 holdings in the portfolio, and some are large bets. First Solar Inc. is the largest position at 7.85% of the assets. Spain-based utility Iberdrola Group occupies the number two spot at 6.2%. About 19% of the assets are in the U.S. China accounts for 13%. There’s a small Canadian representation at about 3%.

In terms of sector breakdowns, 60% is in utilities. Next is 22% in industrials, and 16% in information technology.

Distributions are made annually and are small. The total for 2024 was $0.268 per unit. Based on 2024, most of the distribution is treated as foreign income, which is fully taxable if the units are held in a non-registered account. Investors receive a foreign tax credit.

Green energy is out of favour and may stay that way for some time. But the underlying index appears to be stabilizing and the fund’s loss in 2025 is minimal. BMO gives this ETF a risk rating of “high.”

The fund is philosophically appealing to those who wants to support the environment, but the financial returns are dismal. This one requires a strong commitment. It’s a fund for those who want their money to support clean energy. But as long as Donald Trump is around, investing in clean energy is going to be a challenge. As with any security, before investing consult with your advisor to ensure it aligns with your financial goals and risk-tolerance level

Gordon Pape is one of Canada’s best-known personal finance commentators and investment experts. He is the publisher of The Internet Wealth Builder and The Income Investor newsletters, which are available through the Building Wealth website.

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Notes and Disclaimer

Content © 2025 by Gordon Pape Enterprises. All rights reserved. Reprinted with permission. The foregoing is for general information purposes only and is the opinion of the writer. Securities mentioned carry risk of loss, and no guarantee of performance is made or implied. This information is not intended to provide specific personalized advice including, without limitation, investment, financial, legal, accounting, or tax advice. Always seek advice from your own financial advisor before making investment decisions.

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