What happened

Monday is turning into a busy day in the clean energy space, with shares of Clean Energy Fuels (CLNE 1.47%) exploding (in a good way), up 31.2% as of 11:45 a.m. EST. Chinese car battery maker CBAK Energy (CBAT -2.54%) is down 10%, and fuel cell company Bloom Energy (BE 4.31%) is up, but only a modest 1.7%.

Let's see if we can unpack all of that for you.

Red arrow goes down and green arrow goes up

Image source: Getty Images.

So what

This morning Clean Energy announced that it has signed a multi-year contract with the Los Angeles County Metropolitan Transportation Authority to supply an estimated 47.5 million gallons of renewable natural gas (RNG) "to fuel the nation's largest transit bus fleet."

Over the next five years, says Clean Energy, LA Metro intends to transition its bus fleet from diesel fuel to "cleaner, low-carbon fuel." Already, 2,400 of the transit system's buses run on RNG, which is methane gas produced from organic waste. 

There's a chance this deal could get even bigger, too. For one thing, the five-year contract contains an option to extend its duration for "up to three additional years." Additionally, LA Metro is trying to get to a "100% zero-emissions bus fleet by 2030" and "net zero-emissions ... by 2050." Because RNG captures methane that would otherwise escape into the atmosphere before it burns it for fuel, releasing carbon, it is not considered to be emitting new carbon into the atmosphere. Thus, expanding future RNG purchases from Clean Energy could be one way that LA Metro continues to move toward its goal.

Now what

Just after the LA Metro news came out, we also learned that investment bank Craig-Hallum has doubled its price target on Clean Energy stock to $25. According to TheFly.com, which reported the change, Craig-Hallum believes that Clean Energy is performing a "critical role" in curbing greenhouse gas emissions, particularly through its focus on renewable natural gas -- which the analyst says will comprise 100% of Clean Energy's sales by 2025.

But the bank also highlighted a trend that it thinks may be even more important than this LA Metro deal. As the analyst points out, Amazon (AMZN 2.94%) has just ordered 1,000 natural gas truck engines from a joint venture between Cummins and Westport, thus joining UPS in what the analyst believes will develop into a multi-year trend of big transportation companies shifting their fleets away from diesel and toward natural gas.

In the analyst's opinion, this is great news for natural gas-focused companies like Clean Energy -- but augurs poorly for the prospects of fuel cell companies and battery electric companies taking over the trucking sector. It's probably no coincidence that shares of Bloom Energy are showing only muted gains today, while Plug Power (PLUG -2.86%) stock -- the bellwether for the fuel cell industry, is down a fraction of a percent.

Meanwhile in batteries, CBAK Energy announced today that it is selling $70 million worth of new stock at $7.83 per share (about 8.9 million shares), and also issuing 11.2 million warrants to buy additional shares at an even lower price (so in total, adding about 20.1 million shares-worth of dilution) in an effort to raise cash to "accelerate the Company's business plan, repay some of its outstanding debts, and fund any additional working capital needs."  

While the purpose of raising the cash sounds reasonable, it also illustrates the ongoing unprofitability of CBAK's operations, which haven't produced a profit in more than five years. If Craig-Hallum is right, and the transportation industry has decided that natural gas is the best way to move goods with minimal carbon emissions -- and that "electric" via batteries and fuel cells may not be -- then that would obviously not be great news for a battery company like CBAK.