Maguire: Winners and losers of the US rollback on climate policies

The repeal of the federal climate regulations that were the basis for U.S. energy regulation has thrown off the narratives about which sectors will win or lose in U.S. energy. The repeal of so-called Endangerment Findings removes the legal foundation for federal regulations of climate gas emissions, as well as a number of other rules that govern?pollution and the uptake of new clean energy technologies. Imminent court challenges are likely to cloud the picture on the impact of the repeal in the short term for various sectors. Regulators, utilities, companies, and communities will all be working to fill the regulatory vacuum that results.

It is possible to draw some rough conclusions about which sectors will benefit and which ones may be affected by the new federal pollution standards, now that they have been diluted for the near future.

CUT TO COMPLIANCE

The repeal of federal emission laws will create a less regulated environment that is expected to be beneficial for firms engaged in the mining, distribution and combustion of fossil fuels as a source of power.

The repeal of federal emissions regulations will be a big win for utilities with large coal and gas portfolios, since compliance costs and regulatory risks are likely to drop dramatically.

Investors have certainly been more positive about the sector after the news of the repeal was announced. The stock prices for American Electric Power and Duke Energy, as well as NRG, all moved higher in recent sessions.

Southern Company, and other fossil-fuel-reliant power systems, have gained ground as well since the news. This suggests that investors are seeing greater upside potential in power networks which primarily burn fossil fuels for electricity generation.

Since the announcement of the repeal, shares of Peabody Energy - the U.S.'s largest coal miner - have also gained in value.

CLEAN TECH SETBACKS

Stocks linked to clean energy technologies and EV charging networks, as well as cutting-edge energy storage capabilities, have done less well since the repeal announcement, because the federally-driven momentum towards cleaner energy has lost steam.

Vestas, the Danish manufacturer of offshore wind turbines, has seen its stock price come under fresh pressure after the news of repeal. This is likely to further erode U.S. interest offshore wind projects.

Quantumscape, a U.S.-based solid-state battery manufacturer, also saw its shares fall as investors interpreted that the regulatory pivot would likely slow down the U.S. rollout of EVs.

EVgo, the operator of charging stations, was also tarred in the same way. Shares fell to their lowest level since mid-2024 just after the news about the repeal became official.

Recently, companies that provide software and services to manage grids and store energy have also suffered as the public's attention has shifted from traditional energy providers towards industries that facilitate energy transition.

After the news of repeal was revealed, shares in STEM (an AI-driven company that helps utilities manage grid power flow) and Itron (a maker if sensors used by utilities for grid management) also suffered.

WHAT'S NEXT?

Even though investor sentiment has changed significantly in the U.S. Energy space since the Endangerment Finding repealed, there is no guarantee that fossil fuel companies are going to consistently outperform their clean energy counterparts.

The emissions from fossil fuel utilities can be a major risk.

Ironically, the Environmental Protection Agency was in charge of regulating pollution under the old federal pollution rules and not the court system.

The shield that protects heavy polluters could disappear now that the EPA is no longer in charge of this oversight. This may open the door for new lawsuits from communities that are affected by the harmful discharge from power stations and other facilities.

The threat of lengthy hearings and lawsuits could deter some utilities from continuing to operate coal plants that are decades old, even though the regulatory pressure for them to be closed has been lifted.

Many utilities who are under pressure to increase power supplies will still view combination of renewables with battery systems as the fastest way to deploy this extra power regardless of the new emission rules.

This could support the widespread adoption of solar panels, and battery storage across the country as fossil fuel producers gear up to increase?supplies.

This means that, even though the federal U.S. regulations on pollution are expected to be "quickly scrapped", the major players in the production and distribution of energy in the U.S. could prove to be much slower than most people would expect to change their course.

These are the opinions of a columnist who writes for.

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(source: Reuters)