“Our civilization runs by burning the remains of humble creatures who inhabited the Earth hundreds of millions of years before the first humans came on the scene. Like some ghastly cannibal cult, we subsist on the dead bodies of our ancestors and distant relatives.”

That astonishing quote comes from the late philosopher/scientist Carl Sagan. The sentiment seems harsh but recent events indicate that the once-invincible mega-cap oil and gas producers have reached a day of reckoning. Below, I pinpoint one of the best plays on the trend.

“Supermajors” ExxonMobil (NYSE: XOM), Chevron (NYSE: CVX), and Royal Dutch Shell (NYSE: RDS.A, RDS.B) last month experienced shareholder rebellions and court actions at the hands of environmental activists, over the failure of the three energy companies to create low-carbon, climate friendly strategies.

Exxon’s board of directors succumbed to a coup initiated by disgruntled hedge fund activists at “Engine No. 1,” which managed to replace two Exxon board members with green adherents.

A majority of Chevron shareholders rebelled against the company’s board by voting in favor of an activist proposal from the green lobbying group “Follow This” to force the company to cut carbon emissions.

And finally, a Dutch court told Royal Dutch Shell to cut its greenhouse gas emissions by a massive 45% by 2030 in response to a lawsuit filed by seven environmental groups.

To be sure, the world will remain reliant on fossil fuels into the foreseeable future. However, “carbon stocks” such as ExxonMobil, Chevron and Royal Dutch Shell are perceived by the financial community to represent a bygone industrial past. Big Oil remains dominant, sure, but its long-term market share is in irrevocable decline.

Energy equities have been in the ascendancy this year, but keep in mind, they fell pretty hard during the nadir of the coronavirus pandemic in 2020. Overall, the COVID outbreak shattered confidence in the long-term growth prospects of the fossil fuel industry.

For the time being, though, energy earnings are mounting a comeback, largely thanks to the low comparative baseline of a year ago. Corporate earnings as a whole are soaring.

According to research firm FactSet, the estimated year-over-year earnings growth rate for S&P 500 companies in Q2 2021 is 61.9%, which far exceeds the five-year average earnings growth rate of 4.1%. If 61.9% turns out to be the actual growth rate for the quarter, it will mark the highest year-over-year earnings growth reported by the index since Q4 2009 (108.9%).

All 11 S&P 500 sectors are expected to report year-over-year earnings growth in Q2, led by the energy, industrials, consumer discretionary, financials, and materials sectors. The estimated year-over-year revenue growth rate for the S&P 500 in Q2 is 19.4%, which is above the five-year average revenue growth rate of 3.9%.

Robust earnings growth is helping keep the bull market alive. The three main U.S. stock market indices bounced back Monday from their steep losses of last week. The Dow Jones Industrial Average soared 586.89 points (+1.76%), the S&P 500 jumped 58.34 points (+1.40%), and the tech-heavy NASDAQ rose 111.10 points (+0.79%).

Monday’s rebound was driven by renewed economic optimism. The price of West Texas Intermediate (WTI), the U.S. crude oil benchmark, rose 2.7% to just over $73 per barrel. The small-cap Russell 2000 was 2.1% higher. In pre-market futures contracts Tuesday, the Dow, S&P 500, and NASDAQ were all drifting lower.

As the pandemic-era economy continues to speedily recover, the most remarkable turnaround has been in the energy patch. The benchmark SPDR S&P Oil & Gas Exploration & Production ETF (XOP) has generated a year-to-date total return of 59.61%, compared to 13.13% for the SPDR S&P 500 ETF Trust (SPY), as of market close June 21. That’s good news for Wall Street, because a strong energy sector indicates a return to economic health.

The energy sector is expected to report earnings of $13.2 billion for Q2 2021 compared to a loss of -$10.6 billion in Q2 2020. (FactSet is not calculating a specific year-over-year growth rate for the energy sector because of its massive loss reported in Q2 2020.)

Higher year-over-year oil prices, driven by economic re-openings and renewed energy demand, are contributing to the year-over-year improvement in earnings for the energy sector. The average per-barrel price of oil so far in Q2 2021 is $64.90, which is 132% above the average price of oil in Q2 2020, at $28.00.

All five sub-industries in the energy sector are projected to report a year-over-year increase in earnings. At the company level, ExxonMobil and Chevron are the largest contributors to the year-over-year improvement in earnings for the sector. These two behemoths combined account for $12.6 billion of the projected $23.9 billion year-over-year increase in Q2 earnings for the sector.

So as an investor, what’s not to like about Big Oil? It depends on your timeframe.

Wall Street no longer views fossil fuels companies as particularly appealing investment propositions over the long haul. The quickening adoption of energy technologies that reduce carbon output is a challenge to the oil giants, which have been slow to get on the green bandwagon. Environmental, social and governance (ESG) considerations are the new order of the day.

Read This Story: Energy: Understanding a Sector in Flux

Renewable power generation grew at the fastest rate for two decades in 2020, according to a new report from the International Energy Agency (IEA). The following chart tells the story:

This growth in renewable power is even more remarkable given that it happened during pandemic-caused economic disruptions and energy demand destruction. IEA expects a similar rate of growth for renewables in 2021.

Fill ‘er up, with the new stuff…

We’re currently witnessing an energy inflection point, of which a key beneficiary is a silver-white metal called lithium. As demand for green technologies explodes, lithium is among a slew of commodities that are poised for huge price gains.

Lithium is crucial for a variety of industrial applications. The biggest growth driver for lithium is the demand for lithium-ion batteries used in electric vehicles (EVs).

Some pundits refer to lithium as “the new gasoline.” Renewable energy also requires a massive amount of lithium. Among its many useful properties, lithium is a superb conductor of heat and electricity and it’s a highly reactive element. Lithium-ion batteries make a wide variety of modern technologies possible.

However, demand for lithium is outstripping supply, which is great news for the companies that mine and process the metal. For details about America’s number one lithium play, click here now.

John Persinos is the editorial director of Investing Daily. You can reach John at: mailbag@investingdaily.com. To subscribe to his video channel, follow this link.