Trump’s ‘brutal blow’ to clean energy has upside for Brazil and India

KEY TAKEAWAYS

• A US spending bill in the Senate could hit clean energy, potentially slowing growth and spiking power prices.
• While the US faces potential setbacks to renewables, India and Brazil are attempting to catch up and are seeking clean-tech investment.
• Asian emerging market stocks in the clean energy index are forecast to see an average of 69% 12-month earnings growth, compared to 10% for North American stocks.

Background

The US renewable energy sector faces increasing pressure and uncertainty amid sustained high borrowing costs, steep tariffs, and anti-green policy measures. Solar firm Sunnova Energy filed for bankruptcy, just days after a Chapter 11 filing from Solar Mosaic LLC, a provider of residential solar financing. While energy demand in the US is on the rise because of data centers spurred by artificial intelligence applications, a massive Republican-led bill working its way through Congress threatens to end incentives for switching to clean energy.

The “One Big Beautiful Bill” would accelerate the expiration of energy tax credits created or expanded by the 2022 Inflation Reduction Act. It would also impose new restrictions, including a mandate that projects be free of any connection to China and other “foreign entities of concern.” According to a BloombergNEF report, the version passed by the House of Representatives would reduce the amount of renewable energy capacity in the next decade by 10%, leading to higher electricity prices for US households and businesses. In its current form, the bill would cause new solar and storage capacity to shrink by 2035, with wind power suffering a 35% reduction in new capacity. The bill is now in the Senate and faces major revisions.

Brazil’s COP30 host, André Aranha Corrêa do Lago, intends to rally international support in fighting global warming despite a lack of commitment from the US. He said the challenge will be convincing countries that their economies’ future depends on embracing the climate transition.

The issue

BloombergNEF forecasts US power regions will install almost 1 terawatt of clean power between 2025 and 2035, led by Texas, assuming Congress does not slash existing tax credits. That includes 664 GW in solar builds, 150 GW in wind builds and 178 GW in energy storage. That outlook would change if the spending bill passes in its current form.

Some developing nations want to rapidly expand energy transition investment. In 2024, India and Brazil invested $47 billion and $37 billion, respectively. Brazil’s wind and solar generation has rapidly increased in recent years, with energy storage expected to soon follow. India seeks to minimize its reliance on China for critical materials and components in the renewable energy supply chain. India is seeing increased investment in a renewable power grid, with air conditioning reportedly driving demand. This comes amid increasing per capita income and rising summer temperatures.

Emerging markets like India, Brazil, Turkey and Mexico are focused on drawing cleantech investment, BNEF’s Matthew Hales wrote. Indian lithium-ion cell factory capacity is expected to double to 33 gigawatt-hours per year in 2025, and solar cell capacity is also booming, he wrote. India is on track to have fossil fuels be less than 50% of its power fleet by the end of 2025, and battery storage is allowing providers to match coal rivals’ pledges of round-the-clock generation.

This year, the Bloomberg Goldman Sachs Global Clean Energy Index has seen huge swings. To date, 34 stocks in the 193-member index have gained 20% or more, while 30 stocks have seen prices fall by 20% or more. Analysts’ 12-month price targets imply average gains of 15%, following a 3% advance so far this year. Stocks experiencing steep declines include Wolfspeed, the chip maker that’s reportedly set for bankruptcy on weak US EV demand. Asian emerging market stocks in the index are forecast to see 69% 12-month earnings growth, on average. This is the highest of any region, whereas North America ranks last, with forecasted earnings growth of 10%.

Tracking

Track clean energy stocks in emerging markets with the WATC function.  To track clean energy stocks:

• Type “bloomberg clean energy” and select BGSCET Index.
• Type “watchlist” and select WATC. The shortcut is BGSCET Index WATC.
• Click the YTD Total Return column to rank and Tick Show Hi/Low as needed.

For more information on this or other functionality, click here to request a demo with a Bloomberg sales representative. Existing clients can press <HELP HELP> on their Bloomberg keyboard.