As vague as it is, the Green New Deal could have a real impact on Corporate America. Here’s why

18-Feb-2019

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The “Green New Deal” plan is short on specifics, but it still could be meaningful for a number of industries and their investors.

New York Democratic Rep. Alexandria Ocasio-Cortez and Massachusetts Democratic Sen. Ed Markey on Thursday rolled out a nonbinding resolutionthat calls for the U.S. to generate 100% of its electricity from zero-emission sources in 10 years. The wide-ranging measure also backs investment in “smart” power grids and zero-emission vehicles, along with the elimination of greenhouse gases and the cleanup of hazardous-waste sites.

There is not a lot of detail on particular technologies or how to pay for the proposed changes, but long-term investors nonetheless may want to pay attention to the Green New Deal, said Josh Price, an energy analyst at Height Capital Markets.

“If you start to see some more of these ground shifts in politics — veering toward renewables, veering toward addressing climate change — it’s definitely bullish for these renewable energy companies and power providers,” Price told MarketWatch.

“This isn’t a near-term catalyst for us by any means, but for some of those slow-money, long-time-horizon guys, the biofuels space and the renewables space are definitely interesting places to look,” he also said.

NRG Energy NRG, +1.00% , AES AES, -0.35%   , Xcel Energy XEL, +0.17% and other “more-forward-looking utilities” that are shifting away from fossil fuels could be winners if there is a continued focus on limiting climate change, according to the Height analyst.

Action at the state level is key, he said. The Green New Deal is likely to influence California, New York and other blue states, especially those that already have aggressive targets for their use of renewable energy. California, for example, aims to get 60% of its electricity from renewable sources by 2030. So investors in companies tied to renewable energy could feel increasingly bullish because it could help ensure state action and then eventually lead to future nationwide legislation.

The resolution’s backers want to ensure that climate-change issues remain a priority as Democratic presidential candidates ramp up their 2020 campaigns, Price also said. Contenders for the Democratic nomination who are co-sponsors include Cory Booker, Kamala Harris, Elizabeth Warren and Kirsten Gillibrand. Investors should be aware that there could be a political imperative to act on climate change if a Democrat wins the White House race next year, Price said.

While the resolution didn’t mention biofuels specifically, companies focused on these alternative fuels for cars appear set to benefit from the Green New Deal and related efforts, according to the Height analyst. Players in this area include Renewable Energy Group REGI, +0.11%  , Darling Ingredients DAR, -1.03%  and Finland-based Neste NESTE, +0.19%  . “Between full electrification and what we have now, there’s space for these biofuels with low-carbon intensities to gain ground,” Price said.

Nuclear power initially looked like a Green New Deal loser, as a fact sheet for the plan that was circulated by Ocasio-Cortez’s office reportedly called for transitioning away from such plants. Among those expressing concerns was Matthew Wald, a senior communications adviser for the Nuclear Energy Institute, an industry group whose board includes executives from American Electric Power AEP, +0.09%  , Duke Energy DUK, -0.14%  and other companies with nuclear power plants.

“Is the #GreenNewDeal meant to stop #climatechange, or simply support natural gas and renewables?” Wald said in a tweet. “We need to use every tool that works, including #nuclear, our largest source of #carbon-free energy.”

But unlike the fact sheet, the Green New Deal resolution didn’t single out nuclear power. “The resolution is silent on any individual technology,” Markey said at a press conference, when asked about that particular industry.

https://www.marketwatch.com/story/the-green-new-deal-could-end-up-being-a-big-deal-for-these-companies-2019-02-08

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