When Donald Trump first announced his intention to run for president, few believed he could win. Another contender -- fuel-cell technology -- has also inspired little hope that it has a legitimate chance of winning a place in America's energy landscape. But there's always room for one more underdog story. Could Donald Trump's success help effect a similar victory for fuel-cell stocks? 

Image source: Getty Images.

What we know

Although he didn't thoroughly address it in the debates, Trump has repeatedly emphasized his rejection -- actually calling it a "hoax" -- of climate change during his campaign. How would this view manifest itself during his time in office? For one, he has announced his intention to reject President Obama's Clean Power Plan, which seeks to reduce carbon emissions from power plants.

A lot is said before Election Day, and what one says during a campaign and what one does after an election are quite different, so let's look beyond the rhetoric.

In one of his recent moves, President-elect Trump chose Myron Ebell, a known climate-change skeptic, to lead the EPA transition team. Some people are speculating that Trump will also select Ebell to lead the EPA following the inauguration. Whether Trump selects Ebell or someone similar, it certainly appears as if the implementation of the Clean Power Plan -- currently stalled pending judicial review -- is in jeopardy. 

What to expect

Still in its infancy, the fuel-cell industry has failed to keep pace with the rapidly growing acceptance that the solar and wind industries have enjoyed. Although Plug Power (PLUG -0.60%) and FuelCell Energy (FCEL 5.27%), the two leading fuel-cell companies, have provided their products and services to some of the biggest names in business -- including Wal-Mart, The Home Depot, and FedEx -- their revenues are still meager. For fiscal 2015, Plug Power reported revenue of $103.3 million, and FuelCell Energy reported $163.1 million.

To accelerate their growth trajectories, both companies recognize that the extension of the investment tax credit (ITCs) for the fuel-cell industry is imperative. Absent from legislation that extended tax credits for the solar and wind industries, the fuel-cell industry's extension is expected to be renewed during the lame-duck session of Congress, according to the managements of both companies.

With the turnover taking place in Washington, though, the renewal of the fuel-cell ITC is not likely to be at the top of any current legislator's agenda, nor does it seem likely once the new Congress convenes. And it certainly won't receive any support from Trump once he moves into the Oval Office. He has made clear that a Trump administration "will not be in the business of government picking winners and losers."

What else to expect

Should President-elect Trump succeed in dismissing the Clean Power Plan, it would shatter the aspirations of FuelCell Energy, which is working to capitalize on carbon capture. The company has partnered with ExxonMobil (XOM -0.69%) to pursue fuel-driven carbon-capture technology. Having recently selected the site of a pilot project, the company will conduct tests to demonstrate carbon capture from both natural gas-fired power generation and coal-fired power generation.

Unlike FuelCell Energy, Plug Power is focused on the material handling equipment market, so the rejection of the Clean Power Plan would have a less material impact on its business. However, the absence of the ITC extension would still be devastating.

Image source: Plug Power corporate website.

One likely response for Plug Power is a doubling down on its attention to China. On the company's third-quarter conference call, Andy Marsh, Plug Power's CEO, identified China as a "a major long-term market opportunity." Assuming the ITC is not extended, the company may shift its perspective, recognizing the country instead as a short-term priority -- especially since Marsh claims that Plug Power "can enter the market with a technology and cost structure advantage that's not matched by anyone else."

The takeaway

Having encountered many fits and starts during the climate friendly Obama presidency, fuel-cell stocks will face more of the same during the Trump presidency. Before the election, investors of fuel-cell stocks had surely recognized the need for a long-term horizon. Now, more than ever, they will need to remind themselves of this, for it's bound to be a rocky road for the fuel-cell industry in the years ahead.