The case for building back greener
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Wall Street was all aflutter last week after it was announced that Sen. Joe Manchin had agreed to back a $370 billion climate and energy spending package. The bill includes tax credits for electric vehicles, renewable energy projects, and clean hydrogen.
The plan would generate an estimated $739 billion in revenue, spend $433 billion, and reduce deficits by $300 billion over a decade. The plan is much smaller than the Biden administration's Build Back Better climate and infrastructure bill, and it would raise taxes on corporations and the wealthy.
To pass the plan, Democrats will need every single vote from within their party as well as the tiebreaking vote of Vice President Kamala Harris. This is because the Senate is currently divided 50 to 50 and Republicans are uniformly opposed to the plan. However, a special rule shields certain budget bills from a filibuster. This means that Democrats only need a simple majority to pass the bill. In other words, they just need 51 votes instead of 60. Nevertheless, it will still be a close vote and they will need to make sure that everyone is on board. Otherwise, the whole thing could come crashing down.
If successful, this spending plan would be the most significant climate action taken by congress that we've ever seen. But it's not just the scale of the plan that sets it apart--it's also the details. The plan includes a huge investment in renewable energy, which would create millions of jobs and help transition the US from its dependency on fossil fuels. It also includes measures to protect vulnerable communities, which are often first and hardest hit by the effects of climate change.
Clean energy shares soared right after the announcement
The iShares Global Clean Energy ETF's market value increased by roughly 5% on top of recent increases
Renewables giant NextEra Energy advanced about 5%
Solar stocks Sunnova and Plug Power surged close to 20%. Electric vehicle charging firm ChargePoint also did well at around 10%
Wondering how clean energy stocks can help diversify your portfolio? This post has some tips on how to invest in sustainable projects.