Much has been made of the now-multiyear slide experienced by clean energy stocks and related ETFs. That slide has left investors thinking things weren’t supposed to be this way.

There’s validity in that argument. After all, renewable energy assets such as the ALPS Clean Energy ETF (ACES) rallied in 2020 in anticipation of then-candidate Joe Biden becoming president. Obviously, that happened. And Biden’s Inflation Reduction Act passing in 2022 represents the most sweeping renewable energy legislation in U.S. history.

There has been ample conjecture about how the two potential outcomes for the presidency could affect ACES and its peers. But the reality could prove to be something different and more positive. A case can be made that either former President Trump or Vice President Kamala Harris could benefit ACES and clean energy stocks . That’s because the former might not want to risk economic harm by rolling back the IRA. And the latter could look to expand it.

ACES Can Be Sturdy Post-Election

In theory, the “worst case scenario” for ACEs and comparable ETFs is a Trump victory. However, during his first term in office, renewable energy equities performed surprisingly. Fossil fuels stocks did not. Plus, even if Trump wins, it’s likely he’d target only specific parts of the IRA. Those parts may include tax credits for offshore wind farms.

“A Republican administration would need to balance any desire to repeal the legislation with the significant investment flow and job creation flowing to Republican districts,” noted Stephanie Aliaga, global market strategist at J.P. Morgan Asset Management.

For investors considering ACEs as a long-term tactical holding, there could be validity in that approach. That’s because, as Aliaga pointed out, the share of renewable energy consumption in the U.S. is now 8%. That’s up from 4% in 2010. While that’s an impressive growth rate, 8% implies there’s more room for long-term growth.

“The journey has just begun. Still, investors should take heed to the evolving winners and losers that can arise as policy incentives potentially change, hyperscaler demand mounts and grid inefficiencies seek new solutions,” she added.

As for how Vice President Harris could affect clean energy stocks and ETFs as president, status quo and potential expansion of some areas of the IRA could be on the table.

“(There could be) continued focus on implementation of the IRA, including new policies such as clean energy “tech-neutral” tax credits that extend to a more inclusive range of existing and potential future technologies,” concludes Aliaga.

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