As Global Renewables Surpass Coal, This ETF Offers Smart Exposure
Since the advent of commercially available electricity, the world’s primary generation source has been coal. And despite natural gas overtaking the combustible black sedimentary rock as the foremost source used in the United States in 2016, coal has remained king globally. That was until the first half of 2025.
According to a report published by energy think tank Ember, renewable energy sources collectively contributed 34.3% of all global electricity generated in the first six months of the year compared to coal accounting for 33.1% of all generation.
While fossil fuels and the companies producing them continue to play a large part in the global energy landscape, this monumental and historic shift toward clean energy marks a turning point in electricity generation. For investors looking to gain exposure, one ETF provides access to a basket of global renewable energy stocks, and so far this year, the fund has outperformed the S&P 500 by more than 28%.
While the U.S. Lags, China and India Forge Ahead With Clean Energy
The United States remains heavily reliant upon fossil fuels for electric power production. According to the U.S. Energy Information Agency, in 2024, natural gas led the way with roughly 38% of the total energy production, with crude oil contributing another around 27% and coal adding about 10%.
Renewable sources, on the other hand, have been slow to take hold. Last year, biofuels, wind, and solar energy production built on a record 2023 with each source setting a record in 2024. Biofuels production increased 6% year-over-year (YOY), while wind and solar increased by 8% and 25%, respectively. But despite those gains, renewables still lag natural gas, crude oil, and coal by a considerable margin.
Abroad, however, the electricity generation landscape tells a different story. The world’s two most populous nations—India and China—have leaned heavily into sustainability projects, with China not only dramatically increasing its use of renewables but simultaneously decreasing its reliance upon fossil fuels.
Ember’s report cited how in the first half of 2025, China accounted for 55% of the total global solar generation growth. The United States, for context, accounted for just 14% of the global total. Meanwhile, the Asian nation was also responsible for 82% of wind energy growth while its electricity generation from fossil fuels has begun to plateau.
India, for its part, saw solar and wind grow at record paces in the first half of the year, with solar specifically growing by 25% YOY. Ember also stated that in the United States, renewables are failing to keep pace with strong demand growth. That, in particular, is why investors looking to add clean energy exposure to their portfolios should be looking at funds that focus on global companies operating in that space.
A Market-Beating Global Renewable Energy ETF
As its name suggests, the iShares Global Clean Energy ETF (NASDAQ: ICLN) seeks to track the investment results of an index composed of global equities in the clean energy sector.
The fund’s 129 holdings include companies based in Brazil, China, Denmark, Germany, India, Indonesia, Japan, New Zealand, Portugal, South Korea, Spain, the United Kingdom and the United States.
While some investors may assume the ETF is entirely leveraged to renewable energy stocks, the fund’s construction paints a much different picture. By industry, its top five allocations are:
- Electric utilities: 29.25%
- Renewable electricity: 21.01%
- Heavy electrical equipment: 19.79%
- Semiconductors: 11.46%
- Electrical components and equipment: 10.82%
With the fund’s two top holdings being First Solar (NASDAQ: FSLR) and Bloom Energy (NYSE: BE), it’s no wonder why ICLN—and its nearly 42% YTD gain—has handily outperformed the market in 2025.
First Solar is the largest U.S.-based solar panel manufacturer and the company has improved its margins by providing end-of-life photovoltaic recycling operations at each of its facilities.
Meanwhile, Bloom Energy designs and manufactures solid oxide fuel cells that independently produce electricity onsite for power generation in AI data centers. That line of business has resulted in shares of BE surging more than 388% this year.
The ETF’s relatively low expense ratio of 0.41% is entirely offset by the fund’s dividend, which yields 1.52%, or 25 cents per share annually.
On a quarterly basis, ICLN’s dividend payout has increased more than 92% from Dec. 30, 2020, to June 16, 2025, when it made its last distribution.
What Wall Street Thinks of ICLN
Based on 175 analysts’ ratings issued over the past year covering seven of the companies held in ICLN, or slightly more than 28% of the total portfolio, the fund receives a Moderate Buy rating.
Institutional ownership saw more sellers than buyers in the past year. Despite that, inflows of $143 million have exceeded outflows of $114 million over the same period. Short interest stands at an unimposing 3.41% of the float.
Investors looking to capitalize on the global shift to renewable energy sources for electric power consumption should consider opening a position.
Learn more about ICLN
