Drill, baby, drill? Clean energy stocks are faring well under Trump

[Solar and wind power]
hrui

The world's top polluter is out with new climate goals, pledging to reduce greenhouse gas emissions by 7% to 10% from peak levels over the next decade. To note, China currently produces more than 31% of the world's CO2 emissions, or nearly three times the amount of the United States, according to the Emissions Database for Global Atmospheric Research. China also didn't state what year would mark "peak levels," while many say its goals would be a drop in the bucket for a country that burns more coal than the rest of the globe combined.

_Bigger picture:_ The more concrete announcement getting the attention of investors was that President Xi unveiled plans to increase wind and solar power capacity sixfold from 2020 levels. That would result in a massive 3,600 gigawatts coming online within the next 10 years, and help it account for 60% of the world's new renewable energy capacity. China has been the world's major supplier of components and infrastructure for renewables, representing 70% to 90% of the global manufacturing of solar panels and wafers, windmills, lithium-ion batteries, and rare earth element processing.

It's a stark contrast to President Trump's speech this week at the United Nations General Assembly, where he declared that climate change was the "greatest con job ever perpetrated on the world." "I give China a lot of credit," he continued, "they use coal, they use gas, they use almost anything, but they don’t like wind, but they sure as hell like selling the windmills." While China does have the largest installed wind power capacity of any nation in the world, it does highlight an investment theme that is happening even in the U.S., where the buildout of renewable energy capacity continues at a rapid pace despite the administration's agenda.

MARKET RETURNS: The S&P Global Clean Energy Index (SPGTCLEN [https://seekingalpha.com/symbol/SPGTCLEN]) is up 32% YTD, bolstered by American renewable energy giants like Bloom Energy (NYSE:BE [https://seekingalpha.com/symbol/BE]) and First Solar (NASDAQ:FSLR [https://seekingalpha.com/symbol/FSLR]). Popular clean energy ETFs are also up significantly, like Invesco WilderHill Clean Energy (NYSEARCA:PBW [https://seekingalpha.com/symbol/PBW]) +49% YTD, iShares Global Clean Energy (NASDAQ:ICLN [https://seekingalpha.com/symbol/ICLN]) +33% YTD, and Invesco Solar (NYSEARCA:TAN [https://seekingalpha.com/symbol/TAN]) +31% YTD. In fact, 2025 is expected to be the largest annual solar build in U.S. history, as well as a record year for installed battery storage capacity. Contrast that to the S&P 500 Energy Sector Index (SP500-10 [https://seekingalpha.com/symbol/SP500-10]), which has only gained 5.5% YTD, and ironically saw depressed returns during Trump's first term in office compared to the big gains seen under President Biden [https://seekingalpha.com/news/4247582-oil-and-gas-stocks-for-a-trump-win-it-may-not-be-so-simple].

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