Clean tech stocks rally hangs on Democrats chances to retain the Senate

Plus, the latest from COP27 in Egypt

In today’s issue:

— Stocks traditionally favor a gridlocked Congress, but a recent rally in cleantech rests on Biden’s agenda moving forward

— Lou Del Bello at COP27: Can a ‘loss and damage’ deal be done in time to prevent a global financial crisis because of climate change?

— Ken LaRoe: The need to finance climate adaptation grows with each passing storm

— Here come the ESG hearings on Capitol Hill (if the GOP takes the House)

— Private equity investment in electric vehicles soared 50% in the third quarter, and is threatening last year’s record

iShares S&P Global Clean Energy Index Fund: On Tuesday, shares of iShares S&P Global Clean Energy Index Fund ICLN 0.00%↑ had risen 5.78% over the past month, including a gain of about 2.7% on the day. Shares of Invesco Solar ETF TAN 0.00%↑ have risen 5.22% in the past month and were 3.68% higher late in the trading day. Chart and data: Nasdaq.

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Stocks on Wall Street traded higher this Election Day, extending a thin rally on expectations the Republicans will make enough gains in Congress this week to force gridlock on President Joe Biden’s last two years of office. One of the most reliable traditions on Wall Street is that stocks usually rise after midterms reset the process.

But one sector, the cleantech sector, is hanging onto slim hopes that the Democrats retain the Senate, as the major spending tied to Biden’s signature climate agenda, the Inflation Reduction Act, will depend on a guiding hand from the left preventing legal and administrative obstacles being thrown in its way.

In trading earlier today, these stocks were jumping, led by SunPower Corp. SPWR 0.00%↑, Energy Recovery ERII 0.00%↑ , and Albemarle Corp. ALB 0.00%↑ , before diverging as the uncertainty of Election Night approached.

As our own Mark Hulbert wrote two weeks ago, clean tech stocks have demonstrated a surprisingly close correlation to the political polls for Democratic Senate candidates in the past several weeks, suggesting that investors are nervous about the climate plan. In no scenario will the opposition be able to kill the plan, as it won’t have the support to override a Biden veto. But there are lots of ways to stall it in its tracks.

As it’s likely that we won’t have a firm answer on the Senate for a few days — or in the scenario of a Georgia runoff, weeks — stocks may bounce around for a time. But soon, investors will have a clear idea where the bull market is for the next two years: either the clean energy stocks or more rallies in oil companies. For the climate, as for Democracy, there’s a lot at stake tonight.

More insights below . . . .

Don’t forget to contact me directly if you have suggestions or ideas at dcallaway@callawayclimateinsights.com.

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'Loss and damage' financial movement erupts at COP27

Entrance to COP 27 in Sharm el-Sheikh, Egypt. Photo: Latvia President's Office/Valsts prezidents/flickr.

. . . . The United Nations annual climate summit, COP27, opened in Egypt this week with a historic agreement to discuss financial reparations for the first time for poorer and smaller countries hurt by climate change. Lou Del Bello, our partner from the Lights On newsletter in India, is on the ground in Sharm El-Sheikh and argues that while a deal remains elusive the prospect of a global financial crisis caused by climate change is adding more urgency to the talks this year then ever before.

• Follow all the COP27 news and highlights in real time with the Independent’s COP27 live blog.

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SPONSORED STORY

Need to finance climate adaptation grows with each passing storm

. . . . While the world argues about financial reparations at COP27 in Egypt, the need for the private sector to start financing climate adaptation in communities grows with each passing storm, argues environmental banking entrepreneur Ken LaRoe in a sponsored column for Callaway Climate Insights. Better data on financial vulnerabilities for banks and a change in mindset about the opportunities in adaptation investment are required to speed up lagging participation, says the founder of Climate First Bank. . . .