As markets digest the presidential election outcome and await a final tally in races that will decide whether Republicans take control of both chambers of Congress, renewable investors are focusing on what a second Trump administration will be able to do to alter existing green energy policies, and what it cannot change.
Sunrun CEO Mary Powell spoke to Bloomberg News on Friday about the likelihood of a full repeal of the Inflation Reduction Act. Powell expects that a rollback of tax credits for home solar installations — a job creator in “many states that are Republican-leaning,” is unlikely.
Powell’s cautious optimism appears to be shared by allocators with the First Trust NASDAQ Clean Edge Smart Grid Infrastructure ETF [Symbol link GRID] and First Trust Clean Edge Green Energy ETF QCLN up 2.66% and 0.66% respectively across the past five trading sessions. These gains stand even following a sharp selloff in the immediate aftermath of the election.
Meanwhile, with only a few weeks left in power, the Biden administration is rapidly distributing funds to clean energy and infrastructure projects.
One such project is a battery recycling and recovery factory in Rochester, New York. The Department of Energy (DOE) has announced a $475 million loan for the lithium-ion battery resource recovery plant operated by Li-Cycle LICY . Shares of the small cap jumped by 20% in early trading Friday in response to the announcement.
The Biden administration estimates the new plant will create “825 construction jobs at peak construction and more than 200 permanent jobs once fully operational.” According to DOE, when in operation the factory will have capacity equal to 180,000 electric vehicles annually — the equivalent of 71 million gallons of gasoline or 633,000 metric tons of CO2 emissions.
For now, investors appear to be trying to calculate just how severe any policy setbacks could be while new federal loans and grants continue to be distributed to infrastructure projects at a brisk pace.
More stories we’re tracking at Equities:
Jefferies warns impact fund managers to brace for retaliation
Jefferies analyst Aniket Shah released a note to investors on Thursday that advised impact, ESG and clean energy focused fund managers to beef up legal teams. According to Shah, as reported by Bloomberg, the Trump administration is likely to use antitrust enforcement measures, and state fiduciary anti-ESG enforcement is likely to increase. The report concludes that greenhushing, or hiding impact goals, may become the order of the day for asset managers. “The backlash could lead to more focused and pragmatic companies, engaging in strategic discussions closely tied to their business model,” Shah warned.
California voters to decide on stricter transport emission rules
California voters are going to decide if new, more stringent measures will supplant the existing Low Carbon Fuel Standard (LCFS) legislation in place since 2011. The proposed changes will require steeper carbon emissions reduction in transport fuels by 2030, speeding up adoption of electric vehicles. California Governor Gavin Newsom supports the bill.
