The Biden administration passed the largest climate law in history in August, giving a boost to a handful of US-listed clean energy stocks. The $430 billion Inflation Reduction Act, also known as the Climate Act, includes $369 billion for energy security and clean energy allocations. The bill extends broadly into the renewable energy sector — it will affect nearly every region from solar to wind, hydrogen, nuclear and electric vehicles and more emerging technologies. Goldman Sachs described the bill as a “game changer” for the “clean” hydrogen economy – in the US and beyond. The investment bank and other analysts gave their top picks for global stocks and explained how they would benefit from the bill. “Clean” hydrogen Goldman said the climate law includes investment tax credits, and for the first time hydrogen has been included within the range of energy storage technologies eligible for these credits. Hydrogen can be used as a way to store energy from intermittent renewable sources such as the sun and wind. The bank noted “clean vehicle” balances for commercial vehicles, including hydrogen fuel cell vehicles. Overall, the legislation includes $9.5 billion for “green” hydrogen initiatives. According to Goldman, clean tech stocks in Europe, the Middle East and Africa will benefit. The investment bank chose these buy-rated stocks with notable US sales exposure: Nel and Industrie De Nora. Morningstar said demand for lithium – a key component in electric car batteries – will be high for the foreseeable future and is expected to outpace supply over the next decade. Moreover, the company said that the impact of the climate bill will boost demand for lithium. She noted that the law provides subsidies for electric and hybrid electric vehicles as long as they contain a minimum percentage of important minerals – including lithium – from the United States or its free trade partners. “We believe this will benefit all lithium producers due to increased demand, which should keep the market undersupplied for a longer period. This reinforces our current view that the lithium market will remain in short supply for the remainder of the decade, driving prices higher. much marginal cost of production,” the company wrote. Morningstar said many clean energy stocks have already been fully overvalued – but added that lithium producers have the potential to rally further. One of the global stocks on its list is the Chilean lithium producer Sociedad Quimica y Minera de Chile – the world’s largest lithium producer. Automakers, EV Supply Chain Morningstar, say they see opportunities in the electric vehicle supply chain. As for traditional automakers, they like those who will be able to transition to electric vehicles. Named after Volkswagen and BMW. The company also likes traditional auto suppliers that are well-positioned to supply electric vehicle makers. One of the names she chose is the German auto parts maker Continental. CNBC’s Pippa Stevens contributed to this report.
Goldman et al on the impact of the US IRA, climate bill on global stocks