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Why Clean Energy Fuels Stock Just Popped 38%

By Rich Smith - Dec 22, 2020 at 4:15PM

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Congress rides to the natural gas fueling company's rescue.

What happened

Shares of Clean Energy Fuels ( CLNE 4.25% ) exploded higher Tuesday, up a staggering 38% in the final half hour of trading at 3:35 p.m. EST. It's not hard to figure out why.

So what

In a press release issued barely an hour before, Clean Energy Fuels applauded Congress' decision to tuck into its second coronavirus stimulus bill an extension of the alternative fuel tax credit for use of renewable natural gas (RNG) -- methane captured from landfills and other locales where organic matter rots -- to produce compressed natural gas and liquefied natural gas fuel for vehicles.  

"The legislation," notes Clean Energy, "includes the Alternative Fuels Tax Credit, which extends the $0.50 per gallon fuel credit/payment for the use of RNG as a transportation fuel, and the Alternative Fuel Vehicle Refueling Property Credit, which extends the 30 percent/$30,000 investment tax credit for alternative vehicle refueling property."

Natural gas fuel pump fueling up a car

Image source: Getty Images.

Now what

Precisely how big of a benefit this will be for Clean Energy Fuels' business remains to be seen. What we do know is that the company says it's "the largest provider of RNG as a transportation fuel in the United States and Canada," which means the subsidy will benefit it more than anyone else.  

With Clean Energy already profitable ($33.8 million earned over the past year) and free-cash-flow positive ($36 million), whatever extra money Congress sends its way should drop right to its bottom line, so the company has good reason to applaud the move today.

Shareholders have good reason to applaud even louder.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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