Why Renewables Alone Can’t Replace Fossil Fuels

Aggressive climate goals call for the significant reduction, if not outright elimination, of fossil fuels. Yet, as we navigate this journey, we must confront the formidable challenges that stand in our path. The intermittent nature of renewable technologies such as solar and wind, coupled with the looming specter of resource limitations, present formidable hurdles. In this dance toward sustainability, it's becoming increasingly apparent that fossil fuels may not simply fade into obsolescence, but instead find a place alongside renewables, offering a complementary role in our collective push toward a greener tomorrow.

Renewables Are Intermittent

Renewable energy sources are intermittent. The sun does not always shine brightly enough, and the wind does not always blow strong enough to generate sufficient energy.

A report in Nature Communications highlighted the potential inability of renewable energy systems to meet electricity demand. The report noted that, due to their intermittent nature, there may be times and locations when there is a mismatch between supply and demand. 

If we imagine flawless transmission and annual electricity generation equal to demand, but without energy storage systems, renewable energy will satisfy 72%-91% of hours of demand. If 12 hours of energy storage is added, then renewable energy may satisfy 83%-94% of hours of demand. Even if renewable energy sources can satisfy 90% of hours of demand, that would leave many hundreds of hours of unmet demand annually.[1]

Storage is Not Efficient

Fossil fuels can be stored to generate electricity at a later date, so they are better able to provide a consistent supply of energy. However, it is currently not as efficient to store renewable energy for future use. Renewables require large batteries to save any additional electricity they produce.[2]

Not Enough Land in the Right Locations

The potential for renewable energy generation varies across different landscapes. Wind power thrives in regions with ample breezes, often found atop hills or out at sea. Meanwhile, solar panels thrive under direct sunlight, limiting their effectiveness to certain locales.

Additionally, renewable energy requires the use of significant amounts of land. Solar requires 10 to 20 times more land than gas, and onshore wind takes up to 200 times more land to generate the same amount of electricity.[3]

Resource Constraints

Additional constraints, including access to material and minerals critical to their execution, an insufficient electrical grid, and financing limitations, may further curtail renewable energy deployment. 

How May Investors Gain Exposure to Fossil Fuels?

Range ETFs aim to capitalize on the enduring importance of nuclear and fossil fuels in the energy sector. These ETFs look to offer investors an opportunity to navigate the evolving energy landscape.

Explore our Range ETFs today as you consider your position in the energy sector.

• Range Global Coal Index ETF(COAL): seeks to provide exposure to companies involved in the metallurgical and thermal coal industry
• Range Global LNG Ecosystem Index ETF (LNGZ): seeks to provide investors with exposure to companies involved in the Liquified Natural Gas (“LNG”) ecosystem
• Range Global Offshore Oil Services Index ETF (OFOS): looks to provide exposure to companies in the offshore oil services ecosystem
• Range Nuclear Renaissance Index ETF (NUKZ) looks to provide exposure to companies in the nuclear energy sector including utilities, construction, services, fuel, and advanced reactors
  
   

[1] Geophysical Constraints on the Reliability of Solar and Wind Power Worldwide, Nature Communications, 10/22/21
[2] Why Can’t We Switch to Using More Renewable Energy Sources?, Inspire Clean Energy website, Retrieved 10/25/23
[3] The Role of Natural Gas in the Moe to Cleaner, More Reliable Power, McKinsey & Company, 9/1/23

Risk Disclosures:

Carefully consider the Fund's investment objectives, risk factors, charges and expenses before investing. This and additional information can be found in the Fund's full or summary prospectus, which may be obtained by visiting www.rangeetfs.com/investor-materials. Read it carefully before investing or sending money.

Investing involves risk, including possible loss of principal. There is no guarantee the Funds will achieve their stated investment objectives.

Investments in the energy industry are subject to significant volatility due to changes in commodity prices. Additional risks include changes in exchange rates, government regulation, world events, economic and political conditions in the countries where energy companies are located or do business, and risks for environmental damage claims.

The Funds are non-diversified. Their concentration in an industry or sector can increase the impact of, and potential losses associated with, the risks from investing in those industries/sectors.

International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles or from social, economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Investments in smaller companies typically exhibit higher volatility.

The Fund may invest in securities denominated in foreign currencies. Because the Fund's NAV is determined in U.S. dollars, the Fund's NAV could decline if currencies of the underlying securities depreciate against the U.S. dollar or if there are delays or limits on repatriation of such currencies. Currency exchange rates can be very volatile and can change quickly and unpredictably.

Because the Funds are new, investors in the Funds bear the risk that the Fund may not be successful in implementing their investment strategy, may not employ a successful investment strategy, or may fail to attract sufficient assets under management to realize economies of scale, any of which could result in the Funds being liquidated at any time without shareholder approval and at a time that may not be favorable for all shareholders. Such liquidation could have negative tax consequences for shareholders and will cause shareholders to incur expenses of liquidation.

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Exchange Traded Concepts, LLC serves as the investment advisor of the funds. NUKZ, LNGZ, COAL, and OFOS ETFs are distributed by SEI Investments Distribution Co. (SIDCO, 1 Freedom Valley Drive, Oaks, PA 19456), which is not affiliated with Exchange Traded Concepts, LLC, or any of its affiliates.