With strong support from solar stocks, clean energy stocks and related exchange-traded funds surged on Thursday following news that China was considering a major economic stimulus and amid talk that the United States would cap tariffs on Canadian solar products.
Among the ETFs that reacted to these headlines, the SPDR Kensho Clean Power ETF (CNRG) jumped nearly 5%. CNRGwhich tracks the S&P Kensho Clean Power Index, is not dedicated solar ETFs, but it has credible exposure to the industry, including among its top 10 holdings. In other words, CNRG has sufficient leverage on positive solar news, including trade between the United States and neighboring Canada.
These two nations are among the leaders in the adoption of renewable energy and have “shared goals and commitments to combat climate change”, and the removal of tariffs will bring “stability and predictability to our renewable energy sector and will strengthen North American competitiveness,” said Canada’s Minister of Commerce. said Marie Ng.
A warm trade relationship, especially with a neighboring country, is positive, but some factors could be catalysts CNRG and renewable energy assets in the future. For example, data from the US Energy Information Administration (EIA) indicate that April was the first time that solar and wind, in April, generated a larger share of US electricity than nuclear. In the fourth month of the year, renewable energies represented 29.3% of the electricity produced in the United States, a record.
“U.S. solar generation between January and April 2022 increased 28.9% year-over-year, the analysis found, while coal-fired generation declined 3.9% and the nuclear by 1.8%”, reported Jules Scully for PVTech.
However, coal remains the main source of energy in the United States, which confirms that there is still enough room for growth to CNRG components exposed to sun and wind. Solar rollout has been somewhat delayed in the first three months of 2022 due to previously existing tariffs, but ahead of news from Canada, the White House has said it will lift commercial levies on certain solar products made in the Southeast Asian countries.
As for China’s potential impact on renewable energy assets, Beijing is floating the idea of a $220 billion infrastructure stimulus package via debt sales to prop up the world’s second-largest economy.
“The government’s growth target for 2022 looks increasingly challenging amid Covid resurgences and a housing downturn. Economists polled by Bloomberg expect the economy to grow 4.1% this year,” according to Bloomberg.
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