Twelve Green Investment Themes From Putin’s War on Ukraine

Spread the love

By Tom Konrad, Ph.D., CFA

Horrific, Tragic, Unprovoked, Heartbreaking.  There is no lack of adjectives to describe Putin’s war on Ukraine.  And while there probably can’t be too much coverage of the tragedies and war crimes, many others can write those far better than I.

As an economic and stock market commentator, the adjective I will focus on is world-changing.  There is no doubt that the first land war in Europe since World War II, piled on top of a global pandemic, is already reshaping the economy in dramatic ways.

Some of those changes, like Europe switching away from Russian gas and back to coal for electricity generation, will cause environmental harm.  Others, like Europe’s longer term efforts to wean itself of dependence on Russia, will accelerate the transition to a clean economy.  Below are twelve ways I believe green investors can help the beneficial changes along, while staying out of the way of the financial impacts of the harmful ones.

heat pump with colors of the Ukranian glag
The indoor unit of an air source heat pump against the colors of the Ukrainian flag. Electrifying building heat with heat pumps will be a core strategy for countries looking to wean themselves off Russian gas. Photo by author.

Substituting for Russian Oil and Gas Imports

In the immediate term, Europe is switching back to coal from Russian natural gas, and looking to import more fossil fuels from the US and other friendly countries.  Clearly, green investors should

  1. Avoid shorting US fossil fuel companies.
  2. Consider the benefits to biofuel producers, especially fuels like wood pellets and some biodiesel and renewable natural gas with non-food feedstocks such as agricultural residues like the corn stocks left in the field after harvest, waste from food processing, such as peels and shells, as well as the organic components of household waste.
  3. Although recycled plastic will probably remain more expensive than virgin plastic made from fossil fuels, the price differential will fall.  Plastic recyclers and producers of bioplastics may benefit as rising oil and gas prices erode the price premium for their products.

Food Shortages

The war is sending food prices soaring, and they will remain high for at least a year or two.  Not only are Russia and Ukraine two of the largest producers of wheat, but agriculture is heavily dependent on nitrogen fertilizer, which is largely made from natural gas.

Green investors should

  1. Not get too excited about the rising prices of biofuels if those biofuels use food commodities as a feedstock.
  2. Consider investments in organic farming and farmland.  Not only will the prices of their products rise, but the fact that they don’t use inorganic (fossil fuel based) fertilizer and pesticides will mean that their costs will rise less than their conventional competitors.

Europe’s Long Term Shift Off Fossil Fuels

While in the short term, Europe will simply be substituting fossil fuels from other sources for the ones it imports from Russia, in the longer term the continent’s move to get off fossil fuels entirely will only accelerate.  The means they will use to accomplish this shift are myriad, and most are investible.

  1. European renewable energy developers will benefit.  This will not just include wind and solar, but also renewable natural gas.
  2. Europe’s push to develop a hydrogen economy will also accelerate, benefiting hydrogen companies.
  3. High gas prices and policy will accelerate the shift to electric vehicles (but beware supply disruptions for critical minerals such as nickel, cobalt, and rare earth elements.
  4. Also driven by high fuel prices, expect a shift back to public transit, like rail and buses. Train and bus manufacturers should benefit.  Public transit ridership was hurt badly by the pandemic, but for the most part, governments have stepped up to help fill the revenue gap this caused.  While many workers may continue to work from home, others must commute to work, and high fuel prices will accelerate their return to public transit from private vehicles.
  5.  Heat pumps and heat pump water heaters are two of the quickest and simplest ways to cut fossil fuel use in buildings.  These devices are so efficient at producing heat that, even when operated with electricity generated with natural gas, the overall use of gas declines compared to heating directly with gas.  Manufacturers and installers will benefit. 
  6. Insulation and air sealing. Building energy use can also be slashed by improving the building envelope by sealing air leaks and improving insulation.  Firms that upgrade buildings, as well as insulation manufacturers should benefit. 

Critical Minerals

All the new investment in fossil free technologies will only worsen the shortages of critical minerals mentioned above in the note on electric vehicles.  Wind and solar also use rare earth elements, not to mention large amounts of copper and steel.

Even though the price increases the additional demand will be good for mining firms, I am not a fan of the significant environmental trade-offs that are involved in mining.  Also, since much mining takes place in unstable countries with unsavory regimes, many mining firms also face significant political risks, and can contribute to funding wars like the one in Ukraine. 

  1. One way to benefit from rising materials prices without these environmental, political, and moral compromises is by investing in recycling.  Given the expected increase in demand for all sorts of metals, minerals, and other materials, recycling will not be able to meet more than part of the world’s demand for decades to come.  But that will not stand in the way of recycling of all sorts to rapidly expand the slice of materials it does supply, and for recycling businesses to rapidly grow both their size and profitability.


Although we cannot ignore  the tragedy of the war in Ukraine, investors (green and otherwise) also cannot afford to ignore the changes and opportunities it is bringing to the investing landscape.

Fortunately, we do not have to compromise our morals to do so.

ABOUT: Tom Konrad Ph.D., CFA is the Editor of and the manager of the Foundation Green Income Fund.


DISCLAIMER: Past performance is not a guarantee or a reliable indicator of future results.  This article contains the current opinions of the author and such opinions are subject to change without notice.  This article has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product.  Information contained herein has been obtained from sources believed to be reliable, but not guaranteed.


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.