Wind turbines at the Limestone Wind Project in Dawson, Tex., in 2023.MARK FELIX
U.S. President Donald Trump’s war against Iran has sent the price of crude oil soaring and rattled energy exports from the Middle East. It has also added one more reason to embrace renewables, such as wind and solar.
Should investors embrace Mr. Trump as the greenest president ever?
You might draw that conclusion from the stock market.
The iShares Global Clean Energy ETF XCLN-T, an exchange-traded fund that holds shares in dozens of renewable players and serves as a good proxy for the sector, has gained nearly 13 per cent this year – even as rising concerns about inflation have caused some volatility.
Since Mr. Trump began his second term in early 2025 – and immediately embraced fossil fuels and shredded commitments to cutting greenhouse gas emissions – the clean energy fund has gained nearly 66 per cent.
It has outperformed the S&P 500 by 55 percentage points over this period, reversing steep losses during the presidential term of Joe Biden, even though his policies encouraged renewables in a big way.
The BMO Clean Energy Index ETF ZCLN-T, which is priced in Canadian dollars, has delivered similar returns this year.
Admittedly, much of the rebound in renewables has had nothing to do with Mr. Trump’s energy polices.
Lower interest rates, which surged during Mr. Biden’s term, have boosted the allure. Artificial intelligence has raised demand for new energy sources to feed data centres, with renewables playing a role.
And regardless of the shifting U.S. energy policies under Mr. Trump, the cost of renewable energy continues to decline with technological advances and global scale.
About 90 per cent of newly commissioned utility-scale projects are more cost-effective than fossil-fuel alternatives, according to the International Renewable Energy Agency.
This upbeat backdrop should drive new renewable power capacity of 4,600 GW by 2030, which is about twice the pace of growth over the previous five years, according to the International Energy Agency.
But hats off to Mr. Trump. His war in Iran may have added a sense of urgency to demand for alternatives to crude oil and natural gas as prices spike.
West Texas Intermediate, the U.S. crude oil benchmark, surged above US$100 a barrel earlier this week – up from about US$67 at the end of February – as Iran intensified threats against oil tankers using the Strait of Hormuz.
In Europe, natural gas prices have soared more than 50 per cent since the war began.
The case that the spike in energy prices would be brief is now looking precarious as the conflict intensifies. Iran struck several ships on Wednesday, adding to what the IEA has called the biggest disruption to global energy supplies in history.
If wind and solar power looked good before this ugly turn of events, they look even better now.
To be sure, you can’t fly a plane with solar power or drive diesel trucks with wind. But rising transportation fuels can drive demand for electrification in general and electric vehicles in particular, said Martin Grosskopf, portfolio manager of the AGF Global Sustainable Growth Equity Fund.
“I would expect that prolonged high prices will reinvigorate EV demand (and potentially incentives) which then draw on grid power – and further supports new supply,” Mr. Grosskopf said in an e-mail.
Though natural gas – a fossil fuel – is one potential source of new supply, renewables and battery storage systems have an advantage because they can be added to the electricity grid relatively fast. Nuclear power takes longer to develop, but offers an attractive alternative that has managed to cut through the U.S. political quagmire.
Canadian investors have plenty of options if they want to bet that Mr. Trump will continue to raise the allure of renewables.
Cameco Corp. CCO-T is a uranium producer that has soared 159 per cent over the past 12 months. But Anita Soni, an analyst at CIBC Capital Markets, believes the shares are undervalued given strong demand.
Among independent power producers, Northland Power Inc. NPI-T struggled last year after it slashed its dividend. But the stock has rebounded 32 per cent since late November.
Boralex Inc. BLX-T has also endured a bumpy ride but looks attractive given robust growth prospects, according to Brent Stadler, an analyst at Desjardins Capital Markets.
And if you want a company that operates a portfolio of diverse renewable assets and pays an attractive dividend, Brookfield Renewable Partners LP BEP-UN-T is worth a look (full disclosure: I own units).
Mr. Trump’s policies toward renewables are hardly worth celebrating if you believe in a future dominated by cleaner energy. Nonetheless, he seems to have the magic touch.