BNP Paribas head of sustainability research Trevor Allen joins Julie Hyman on Market Domination Overtime to discuss the state of sustainability-focused investing and how investors can approach solar energy and electric vehicle (EV) plays.

Allen tells Yahoo Finance he is “absolutely seeing as much interest in the market” with investors considering sustainability. He says, “We really need to start to depoliticize the issue [of sustainable energy], and the reason that solar and wind have really become attractive, particularly for utilities, is that they're economically competitive with natural gas or with nuclear” in China, Europe, and the US.

Allen says that a diversified approach to energy could serve most households. “When you're looking for a bit of relief from the heat, in most places in the US, something like solar is going to be a very effective and cheap form of electricity to provide for that air conditioning, and likewise, when you move into a situation in December when it's very cold…you're very much going to be more likely to rely on natural gas or a nuclear source that is nonintermittent. So the important part here is that we're very much seeing opportunities as a portfolio approach.”

Allen says there is “no doubt that on a pure scale basis, China is clearly the leader” in sustainable energy. “China manufactures around 90% of the world's solar panels…That's significant. But we are seeing the numbers continuing to tick up both in Europe and in the US. So these are growing areas in terms of development. Certainly, we would look more at the investment side of developing solar farms as being the more profitable venue or approach to going into the solar market rather than the manufacturing of the panels. So I think it's important to what part of the development process you're investing in.”

The Chinese central bank announced stimulus measures to combat deflationary trends and boost the economy, which Allen says benefits the sustainable energy space given China’s dominance. “Today's stimulus is a step in the right direction,” as solar and EV spaces need consolidation to avoid oversupply.

“The more consolidation we see in those markets, the more strength we actually see out of the equity investment and equity investment into those companies in particular. So that's something we were looking for on the back of the stimulus here,” he says.

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This post was written by Naomi Buchanan.