Back to top

Clean Energy Stocks & ETFs Surge on Climate Spending Deal

Read MoreHide Full Article

After a brutal first-half, stocks rebounded in July thanks mainly to better than feared results from tech giants and hopes that the Fed could end its aggressive tightening campaign sooner than previously expected.

Clean energy stocks surged last week after Senate Majority Leader Chuck Schumer and Senator Joe Manchin struck an agreement on the Inflation Reduction Act of 2022. This bill aims to boost domestic energy production and reduce carbon emissions. The Senate is expected to vote on it this week.

The bill provides 370 billion to combat climate change and would be the biggest climate spending package in US history, if passed. It includes tax credits to boost domestic manufacturing of solar panels, wind turbines, batteries, and critical minerals processing, as well as subsidies for buying electric and hydrogen-fueled vehicles.

Clean energy ETFs had delivered spectacular performance in 2019 and 2020 but have been hammered over the past few months as investors pivoted out of growth stocks to value stocks. Continued supply-chain disruptions and failure of President Biden’s Build Back Better agenda also hurt these stocks.

The cost of renewable energy generation has been falling in recent years with continued technological innovation, and that has started changing the competitive balance between clean and traditional energy.

These ETFs could see further interest from investors if crude prices stay elevated. The war in Ukraine will have a profound impact on the oil and gas markets and could accelerate the world’s transition to clean energy.

The iShares Global Clean Energy ETF (ICLN - Free Report) , the Invesco WilderHill Clean Energy ETF (PBW - Free Report) and the SPDR S&P Kensho Clean Power ETF (CNRG - Free Report) invest in companies involved in clean energy generation, advancement & conservation.

Enphase Energy (ENPH - Free Report) , First Solar (FSLR - Free Report) and Tesla (TSLA - Free Report) are among the top holdings in these ETFs. To learn more about these ETFs, please watch the short video above.