Hot Town, Summer In The City

Jul 8, 2024 | Climate Change, Philadelphia

Dear Clients,

The summer of 2024 has been one of the hottest on record for Philadelphia. Residents have endured sweltering temperatures. The weather has been the same as the historical average in Richmond, Virginia. You know, the capital of the Confederacy. This alarming trend is not isolated to our fair city; it mirrors global patterns of rising temperatures. In fact, 2024 is shaping up to be the hottest year in recorded human history (beating, um, last year), a stark reminder of the urgency to address climate change and reduce carbon emissions. As we face the consequences of a warming planet, innovative technologies like heat pumps can help. This blog post explores whether investing in companies like Carrier and Trane, which specialize in heat pumps, can be both a sustainable and financially sound decision.

Game Changer

The rising temperatures in Philadelphia are part of a broader global trend. According to NASA and the National Oceanic and Atmospheric Administration (NOAA), recent years have consistently ranked among the warmest in recorded history. The increasing frequency and intensity of heatwaves are directly linked to higher levels of carbon dioxide (CO2) in the atmosphere. Human activities, particularly the burning of fossil fuels, have led to a significant increase in CO2 levels, which trap heat and contribute to global warming.

As temperatures rise, the demand for efficient cooling solutions grows. Traditional air conditioning units are energy-intensive and contribute to greenhouse gas emissions. Heat pumps, on the other hand, offer a more sustainable alternative. They work by transferring heat rather than generating it, making them more energy-efficient and environmentally friendly.

Heat Pumps and the Inflation Reduction Act

The U.S. government recognizes the potential of heat pumps in reducing carbon emissions and has included incentives for their adoption in the Inflation Reduction Act. Homeowners who install energy-efficient heat pumps may be eligible for significant tax credits. These incentives are designed to promote the use of renewable energy technologies and reduce the nation’s carbon footprint.

By investing in heat pump technology, consumers can lower their energy bills and contribute to a more sustainable future.

They can also make their lives better! That’s what we did! The above photo is of one of the heat pumps we installed at our home office. The office is on the second floor of our house and wow, did it get hot up here in the summer. No longer! As you can see, we set the thermostat on the heat pump at a very reasonable 75 degrees and even though it’s currently 93 degrees outside, we’re quite cool inside. Which means we’re both more comfortable and more productive. Highly, highly recommend.

We went with a Carrier model, because that’s what our HVAC guy recommended, and we’ve been very happy. Which raises the question, can you invest in Carrier? Turns out, yes you can!

Carrier Global Corporation (CARR)

Carrier (ticker CARR) is a leading provider of sustainable building and cold chain solutions. Carrier’s heat pumps are designed to provide efficient heating and cooling while reducing energy consumption and emissions. The company is based in Palm Beach Gardens, Florida (!!!) and actually makes stuff in the U.S.A., including at its factories in Tennessee and Indiana.

Trane Technologies (TT)

Carrier’s main competition is Trane Technologies (ticker TT). Trane recently won an award from the federal government for how well its heat pumps function in very cold temperatures (an environmental metric), and it won an award from U.S. News for how well it treats its employees (a social metric). You know, some research indicates that ESG is a proxy for quality, and you can really see an example of that here with Trane.

How To Invest In Carrier and Trane

For investors looking to profit from sustainable technologies like heat pumps, various exchange-traded funds (ETFs) offer exposure to companies leading the way in sustainability.

  1. iShares ESG MSCI USA Leaders ETF (SUSL) focuses on U.S. companies with strong environmental, social, and governance (ESG) practices. The fund includes companies like Carrier and Trane, which are recognized for their commitment to sustainability. By investing in SUSL, investors can support American manufacturing and gain exposure to a broad range of ESG leaders while supporting sustainable technologies. Its performance has been generally in line with the broader market.
  2. Unusual Whales Subversive Democratic Trading ETF (NANC) buys stocks held by Congresspeople, or their spouses, who are members of the Democratic party. The fund holds both Carrier and Trane, and its performance has been exceptional, beating the market consistently.

Investing For A Sustainable Future

As global temperatures continue to rise, the need for efficient and sustainable cooling solutions becomes increasingly urgent. Heat pumps offer a promising alternative to traditional air conditioning systems, providing both environmental and financial benefits. By investing in companies like Carrier and Trane, investors can support the transition to more sustainable technologies. Funds like SUSL and NANC give investors ways to make such investment while mitigating risk through diversification.

Warm regards,

Joe