Fund managers believe the outlook for clean technology stocks is increasingly positive following the US Environmental Protection Agency’s declaration carbon dioxide is dangerous to human health.
The announcement means the Obama administration can now regulate to reduce emissions under the Clean Air Act, even if US Congress fails to pass legislation.
Schroder Global Climate Change fund manager Simon Webber says while the EPA is now likely to get bogged down in legal challenges, the government is showing it has the commitment and tools to implement a serious effort to reduce greenhouse gases.
"New high emission power or industrial plants will now face considerable regulatory uncertainty, until either the legal challenge is resolved, or Congress passes new climate legislation," he says.
"Either way, the costs of carbon are increasing in the US, and the economics of cleaner technologies from natural gas to electric cars and wind farms is getting considerably more attractive."
Henderson head of SRI research Seb Beloe adds: "The ruling clearly makes cap and trade more likely and will be seen as bearish for carbon intensive businesses, particularly coal-fired power generation."
