Investors are growing more pessimistic about renewable energy stocks, with green energy indexes falling to five-year lows. This trend comes as the Trump Administration’s energy policies are cooling the low-carbon energy markets.
As of Monday morning, the S&P Global Clean Energy Transition Index (INDEXSP: SPGTCLEN) had risen 2% for the year, but it had dropped 13.5% over the past 12 months.
The downturn in renewable energy stocks, already struggling due to high inflation and rising costs, worsened following Donald Trump’s election in November.
On his first day in office, President Trump reversed many of President Biden’s energy and climate policies. He signed several executive orders aimed at boosting oil and gas production, expanding drilling areas, and withdrawing from the Paris Agreement again. Trump also paused offshore wind permits until an economic review could be conducted and eliminated the so-called “electric vehicle (EV) mandate,” which promoted consumer choice in the EV market.
In a further move that stopped billions of dollars in funding, the Trump Administration froze activities at the Department of Energy (DOE). This freeze included grants, loans, procurement, and studies, effectively halting the DOE’s $50 billion budget.
Earlier, Trump also froze funds tied to Biden’s Inflation Reduction Act (IRA) and a bipartisan infrastructure law, which had allocated billions for clean energy projects. Trump, who supports fossil fuels, has made it clear that climate-related spending is no longer a federal priority.
Additionally, the Interior Department has placed a freeze on leasing federal lands and waters for wind and solar projects.
The Trump Administration is looking to dismantle many provisions in the IRA, creating significant uncertainty in the renewable energy sector.
“I have never seen such bearishness in terms of the valuation for companies with structural growth,” said Deirdre Cooper, head of sustainable equity at global investment manager Ninety One, in an interview with the Financial Times.
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