Grunge Meets Grid: How Pearl Jam’s Carbon Price Led Me to Battery ETFs

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The world is electrifying at an accelerating tempo, and whereas photo voltaic panels and wind generators seize many of the headlines, the actual energy behind the transition lies buried in rocks and embedded in chemistry. Batteries and the vital minerals that go into them are the plumbing of the clear vitality transition. They’re not the shiny bits on rooftops or the generators on hills, however the important connective tissue that makes decarbonized transport and renewable-powered grids work. And in a world the place governments, automakers, and utilities are all betting massive on electrification, long-term buyers are asking the correct query: How can we get significant, diversified, fossil-free publicity to the core of this transformation?

At the very least, that’s the query I’m asking as I rebalance my private portfolio, and a query I used to be not too long ago requested by Pearl Jam. That’s proper, the grunge rock heavy hitter not too long ago reached out to me to ask how they might make investments their private carbon pricing of their live performance travels at $200 per ton. They’ve been doing that for a very long time, with guitarist Stone Gossard main that focus. Their efforts have included supporting tasks like Amazon rainforest reforestation, sustainable fuels, and photovoltaic expertise. As an example, throughout their 2018 US and European excursions, they offset roughly 3,500 tons of CO₂ emissions by conservation work on Afognak Island in Alaska, house to old-growth coastal temperate rainforests.

However after they reached out, they had been pivoting a bit. Like just about everybody, they’ve realized that it’s potential to take a position sooner or later and get a monetary return. A mutual contact knew of my work assessing startups, dissecting portfolios like these of Breakthrough Vitality Ventures (far too many obvious thumbs down investments) and advising funding funds, and related us.

One reply I’ve been taking a look at is exchange-traded funds (ETFs) that concentrate on batteries and demanding minerals. In contrast to particular person mining shares or battery startups, these ETFs bundle a number of exposures into one instrument, spreading danger throughout geography, firm maturity, and place within the provide chain. For buyers with a buy-and-hold mindset who wish to again the structural drivers of electrification with out dancing out and in of speculative trades like me, these ETFs might be strategic anchors. However not all ETFs are created equal, and even fewer tick the bins of world diversification, clear tech purity, and significant publicity to China’s dominant gamers.

Notice a few issues. I’m not a registered monetary advisor and this isn’t me telling you to spend money on one thing. That’s so that you can determine together with your advisers. That is me as an knowledgeable individual doing my very own quixotic analysis for my very own portfolio and sharing the outcomes.

Let’s begin with fairness ETFs, as a result of for many buyers they’re essentially the most accessible and easy path to long-term thematic publicity. Three ETFs stand out: International X Lithium & Battery Tech (LIT), VanEck Uncommon Earth/Strategic Metals (REMX), and Amplify Lithium & Battery Tech (BATT). Every covers a distinct phase of the battery worth chain, and every comes with its personal danger profile.

LIT is the flagship lithium and battery tech ETF, with about 47% of its portfolio in Chinese language firms like CATL, BYD, and Ganfeng Lithium. It supplies publicity throughout the total lithium cycle, from mining to refining to battery manufacturing. Its five-year annualized return clocks in at a formidable 13.1%, albeit with severe volatility—a peak in late 2021 adopted by a pointy pullback that worn out greater than half its beneficial properties. Nonetheless, for long-term holders, it’s been a rewarding experience. The fund fees a 0.75% expense ratio, increased than common however justified by its focused publicity and deep liquidity. It’s a core holding for anybody severe about lithium and battery applied sciences.

REMX, against this, is a deep dive into vital minerals, particularly uncommon earth components. It has roughly 29% publicity to Chinese language corporations and focuses on miners and refiners of strategic metals like neodymium, praseodymium, and tungsten—important for EV motors, wind turbine magnets, and protection applied sciences. It’s not a battery ETF per se, however a pure play on the uncooked materials shortage that underpins clear tech. Its five-year annualized return sits at round 9.4%, and its expense ratio is a modest 0.56%. Volatility is excessive, with a 60% drawdown from its 2021 peak, however the thesis is robust: these metals are uncommon, geopolitically delicate, and more and more beneficial.

BATT takes a broader method. With about 33% of its portfolio in Chinese language firms, it contains not simply lithium miners and battery producers, but in addition EV automakers, charging networks, and next-gen battery startups. Its five-year annualized return is round 7.1%, and it fees a 0.59% payment. BATT is a little more diluted in focus, and its inclusion of pre-profit EV corporations introduces speculative danger, however it gives breadth that the opposite two lack. For these wanting diversified publicity throughout the EV worth chain, it serves a helpful position.

As a word on the give attention to China publicity, frankly I’d prefer it to be increased, however these are the ETFs out there to western buyers. China is closely dominating the battery business globally and is investing way more in battery innovation than the remainder of the world. They personal the battery minerals business as properly. I’d quite have increased exposures to them, however with out stepping into selecting particular person shares, that is what I’ve. And additional, Europe and North America try, with suits, begins, setbacks and a few wrong-headed performs like Northvoltto reshore no less than some battery manufacturing.

Right here’s how the fairness ETFs examine:

Fairness ETFs are solely half the story. The opposite half is commodity ETFs—these monitoring the costs of metals themselves, quite than the businesses that extract or refine them. Right here the proposition is extra complicated. Commodity ETFs sometimes use futures contracts, which suggests they face roll prices and contango, they usually don’t generate earnings or dividends. Their efficiency relies upon totally on the value trajectory of the underlying metals. Nonetheless, they provide direct publicity to shortage dynamics and provide shocks that even the best-managed mining shares can’t totally replicate.

Now, in fact, you might be questioning, as I used to be, what the heck roll value and contango are. I may have requested my Redefining Vitality collaborator Gerard Reid, who has spent plenty of time and private cash investing in commodities efficiently, however fortunately there’s the web. In commodity markets, merchants typically purchase and promote futures contracts, that are agreements to buy a product like oil or wheat at a set value on a future date. Generally, the value for future supply is increased than the present value—that is referred to as contango. It often occurs when there are prices concerned in storing or insuring the commodity till supply. The other scenario, when future costs are decrease than at this time’s, known as backwardation, and it typically indicators sturdy demand or low provide within the brief time period. As a result of futures contracts have expiration dates, merchants who wish to keep invested should repeatedly promote their expiring contracts and purchase new ones—a course of referred to as rolling. The roll value is the distinction between the value of the contract they’re promoting and the one they’re shopping for. If the brand new contract is costlier, it prices cash to remain out there, and people small losses can add up over time.

Two commodity ETFs stand out: Invesco Electrical Car Metals (EVMT) and the WisdomTree Battery Metals ETC. EVMT tracks a basket of EV-related metals together with nickel, copper, aluminum, cobalt, and iron ore. It doesn’t embrace lithium as a result of lack of a liquid futures market, which is a notable omission. The fund is small, with round $7 million in belongings, and fees a 0.59% payment. Its three-year return is roughly -17% attributable to a commodity downturn, however its YTD return in 2025 is up 8.6%, reflecting a bounce in nickel and copper.

WisdomTree’s ETC is a European-listed product that features a comparable basket and not too long ago started incorporating lithium and cobalt futures. It’s cheaper at 0.45% and UCITS-compliant, however extraordinarily thinly traded, with underneath €2 million in belongings. For non-U.S. buyers with entry to European exchanges, it gives an attention-grabbing possibility, however it’s extra of a tactical software than a foundational asset.

Commodity ETFs are inherently more durable to carry long-term. Their volatility is excessive, they endure from structural prices, they usually lack revenue. Nonetheless, in a world the place demand for nickel and cobalt would possibly outpace provide, they’ll function high-beta hedges towards battery materials shortage.

Right here’s the commodity ETF abstract:

For many long-term buyers, the fairness ETFs provide the perfect steadiness of purity, efficiency, and scalability. LIT stays the highest choose for lithium-focused publicity, whereas REMX is the correct name for uncommon earth believers. BATT rounds out the image for individuals who desire a broader EV play. Commodity ETFs like EVMT can function tactical overlays or small diversifiers, however their structural drag and volatility make them unsuitable as core holdings.

Finally, batteries aren’t only a expertise story. They’re a supplies story. And because the world strikes from combustion to electrons, those that management the inputs—and those that spend money on them properly—stand to form the subsequent industrial age. For buyers keen to do the work, ETFs provide a method to not simply observe that shift, however to personal a chunk of it.

Personally, I divested the final of my TSLA after the US election bump. I’d purchased in three or 4 occasions years in the past at a mean of $19 on the present break up stage, so my investments had been closely multiplied. I’d divested three or 4 occasions and rebalanced my portfolio away from TSLA over time, so didn’t have an awesome quantity left. Whereas Musk serving to Trump purchase the Presidency didn’t assist, Tesla has misplaced the plot as a result of Musk has misplaced the plot. He’s pitching mediocre humanoid robots that may’t function by themselves, robotaxis and dangerous pickup vehicles as an alternative of delivering Tesla Semis and inexpensive EVs. Whereas the unique Tesla imaginative and prescient of electrifying street transportation was one I used to be totally behind technically, economically and environmentally (and nonetheless am), that’s not what Tesla has change into. TSLA had change into a meme inventory, and I used to be late recognizing it.

Regardless, I’ve a sizeable stack of money in my portfolio as I’ve been pondering the place to place it. I knew it will be within the economic system of the longer term, not the economic system of the previous, however the place, how a lot and when was the query. The when is resolving itself fairly properly, as many of those ETF’s ticket value has gone down from their earlier valuation whereas their fundamentals stay sturdy. As I stated to Laurent Segalen and Gerard in our yr finish evaluation of predictions and predictions for 2025, it’s a good time to spend money on cleantech as a result of the silly SPAC cash is out of the best way, and the worth is sweet after the correction. And Trump’s antics together with the sturdy fundamentals of the Canadian economic system have triggered the Canadian greenback to rise prior to now whereas, so my money will go additional too.

This text is a part of the reply to the how a lot and what. An upcoming article is on biofuels, one other a part of the reply.