Four Stocks That Could be Affected by the Paris Agreement Decision (FSLR, BTU)

On Thursday, President Donald Trump officially announced his plan to pull out of the Paris Agreement, a voluntary framework set out by the United Nations on controlling greenhouse gas emissions. The decision was met with condemnation from around the world, with the strongest statement coming from French President Emmanuel Macron. "If we do nothing, our children will know a world of migrations, of wars, of shortage. A dangerous world," Macron said.
It will take a matter of months and even years to gauge the fallout of the decision, but some stocks are already reacting to Thursday's decision.

First Solar

Solar panel manufacturer First Solar Inc. (FSLR
First Solar Inc
FSLR
38.33
+0.03%
) was one of many solar companies that fell Wednesday when reports first surfaced that the U.S. would pull out of the Paris Agreement. The sector shed over $200 million on Wednesday with First Solar falling by as much as 4.4 percent as the outlook for clean energy hit a speed bump.
The Florida-based company regained some losses on Thursday and financially is well equipped to stave off some setbacks with over $2 billion in cash and ST securities, but some believe that given the opportunity companies will take advantage of the reduced framework. "With Trump in office, the pressure for utilities and others to do solar is going to decline. That will negatively affect demand," Gordon Johnson of Axiom Capital Management told Bloomberg.

Peabody

In one of the more ironic reactions after Trump's decision to pull out of the climate agreement was that of Peabody Energy Corp (BTU
Peabody Energy Corp
BTU
23.40
-3.02%
). On the surface, the largest U.S. based coal company would likely benefit from the decision as Trump looks to revitalize the local coal industry. However, fears of a backlash against the coal industry from countries outside the U.S. saw the stock price fall by more than 2 percent on Wednesday, and these losses extended on Thursday as the company shed another 2.5 percent. (See also: Paris Agreement: Pulling Out May Not Help Coal Industry.)
The negative reaction may be more of a realization that despite the push to grow the coal industry, the broad historical trend remains towards renewable energy. According to Reuters, U.S. carbon emissions are near 30-year lows.

EOG Resources

Trump's decision to pull out of the climate agreement is a green light for oil companies. Trump's decision signals a commitment to oil production, which is a hit to the shale oil industry. Shares in Houston-based EOG Resources Inc (EOG
EOG Resources Inc
EOG
89.68
-0.80%
), a leader in the shale revolution fell 2 percent after the news Trump would pull out of the Paris Agreement. Since the election of Trump, EOG Resources and other shale producers have struggled for fears Trump would ramp up the coal industry. Year-to-date EOG Resources is down by 13 percent, and Continental Resources Inc (CLR
Continental Resources Inc
CLR
36.07
-4.70%
), another large player in the shale market, has fallen over 20 percent.

Exxon Mobil

Oil giant Exxon Mobil Corp (XON
Intrexon Corp
XON
22.07
+1.10%
) is a natural winner from the Paris Agreement decision with Trump's continued pledge to unleash the oil industry. Despite the bright outlook, Exxon is one of many oil companies that have condemned the move by Trump saying the climate outlook should take precedent in government policy. "Energy needs are a function of population and living standards,” Darren Woods CEO of Exxon Mobil said at company's annual meeting in January.
"When it comes to policy, the goal should be to reduce emissions at the lowest cost to society."
Former Exxon CEO and now Secretary of State Rex Tillerson was another staunch supporter of the Paris Agreement, but even he couldn't twist the President's arm Thursday. The decision was seen as a battle between Tillerson and White House chief strategist Steve Bannon and when Tillerson did not show up at the Rose Garden press conference it was clear who won.
Either way, Exxon has the resources to survive, but the plea from management is a sign of where priorities lie, and it isn't with climate change skeptics.

The Bottom Line

Despite promising to pull out of the agreement on his campaign, many had thought his recent trip to Europe had swayed him towards remaining in the voluntary agreement. However, his decision to leave has given hope for those with an investment in fossil fuels, while those on the other side of the aisle are looking for solutions to remain green. (See also: Facebook, Apple, Google, Big Business Leaders Urge Trump to Stick to Climate Accord)


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