Climate Bill May Give Green-Energy Investors a Boost

Investors were already returning to cleantech and renewable energy stocks after the Senate’s proposed $369 billion energy and climate spending package sent the sector to its best week in 18 months.

Private investors who continued to pour cash into profit-making industries like green hydrogen and carbon capture during the stock market slump earlier this year would be among the biggest beneficiaries of the tax subsidies that are part of the bill. Producers of renewable energy and batteries will be assured of tax credits lasting a decade, which they say will encourage investment.

The iShares Global Clean Energy ETF rose nearly 15% for the week, boosted by gains in companies such as solar panel maker First Solar Inc..

FSLR 12.06%

and hydrogen producer Plug Power Inc.

PLUG -1.34%

It marked the sector’s best week since its peak in January 2021, when cleantech stocks soared along with everything from cryptocurrencies to meme stocks like GameStop Corp.

GME 0.50%

Bellwether stocks like electric vehicle maker Tesla Inc.

and utility NextEra Energy Inc.

also rallied. Such stocks had already rebounded as government bond yields fell amid expectations that interest rates would start to fall next year. Rising costs, high valuations and supply chain jitters have battered clean energy stocks in the past year.

“I’m breathing a sigh of relief,” said Veronica Zhang, a deputy portfolio manager at investment firm VanEck who helps run the environmental sustainability fund. “It’s a major shift from all the ambushes we’ve faced.”

The proposed bill introduced by Senate Majority Leader Chuck Schumer (D., NY) and Sen. Joe Manchin (D., W.Va.) fueled the rally because it included tax incentives aimed at pumping billions of dollars into wind, solar and battery storage projects bringing clean energy to the grid in the US Electric vehicle subsidies are seen as another force that could boost Tesla and other green stocks.

Major investors, including leading private equity firms and players focused on green energy, have increased their stakes in promising startups despite the industry downturn. Some companies are riding large, newly raised funds and targeting industries ranging from established solar developers to battery startups.

The bill was designed to expand the country’s energy independence with provisions to increase fossil fuel production and strengthen domestic supply chains for products such as batteries and solar panels.

The Senate bill to supercharge a clean-tech rally contains tax incentives to benefit battery, solar and wind projects in the US, similar to this large onshore wind farm near Glasgow, Scotland.


Photo:

Danny Lawson/Zuma Press

If the bill passes, First Solar will evaluate expanding its production in the U.S., Chief Executive Mark Widmar said on the company’s earnings call Thursday. First Solar, which is building new factories in Ohio and India, previously said uncertainty over US tax and tariff policy had made it difficult to make domestic investments. Shares ended the week up more than 35%. Other solar companies that either manufacture parts or install projects, such as Enphase Energy Inc.

and SunPower Corp.

also increased.

The spending bill could give the biggest boost to for-profit industries that produce hydrogen using renewable energy and sequester carbon. The bill would provide funding to producers of hydrogen — seen as a potential replacement for fossil fuels in some industries — with most of the cash going to technologies that produce the fewest emissions.

Efforts to produce green hydrogen and remove carbon from the atmosphere have for years failed to become economical and reach the scale needed to limit climate change.

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Most of the hydrogen today is produced from natural gas for use in chemical refining and for the production of ammonia, a key input for fertilizers. Many major fossil fuel companies have proposed sequestering the carbon from these operations to reduce emissions. Others, like Plug Power hope to produce so-called green hydrogen by using machines called electrolytes that run on renewable energy to break down water. Shares of Plug Power are up more than 20% this week.

The bill would help preserve jobs in states like Wyoming, New Mexico and Senator Manchin’s home state of West Virginia that would otherwise have gone overseas, Australian billionaire mining magnate Andrews said through a spokesman. Forrest. The renewables unit of the Australian mining company he founded, Fortescue Metals Group Ltd.

proposed clean hydrogen projects in the US that would reuse infrastructure previously used to generate power from coal.

Both hydrogen and carbon capture are favorite green projects for fossil fuel producers because they either use their infrastructure and expertise or reduce emissions from burning their products. The bill would give tax credits to carbon sequestered by existing operations, taken directly from the air and stored, with the largest going to companies that permanently store the carbon, and with other credits for carbon reuse. Scientists say massive amounts of carbon sequestration and immediate removal from the air are needed to limit global warming despite concerns that the practices could expand the use of fossil fuels.

Some clean energy executives in areas such as energy storage said they have already received more inquiries from potential customers and partners since the bill was introduced.

“It’s a really important message for the market and companies like ours,” said Geoff Brown, CEO of Portland, Ore.-based battery storage company Powin LLC, which recently raised $135 million privately from investors. including Singapore’s Sovereign Wealth Fund.

—Jenny Strasburg contributed to this article.

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