What happened

Investors in alternative energy stocks including Plug Power (PLUG -3.11%), Bloom Energy (BE -3.22%), and Clean Energy Fuels (CLNE -0.45%) had reason to celebrate this morning. That showed when the stocks popped between 12% and 25% after the market opened. As of 11:15 a.m. ET, Plug Power shares were 23.9% higher, Bloom Energy was up 18.8%, and Clean Energy Fuels shares were holding on to a 6.5% gain. 

So what

The reaction came from surprising news that U.S. Senate Democrats have come to an agreement on a new version for a reconciliation package that would include investing hundreds of billions to help promote clean energy plans and climate change initiatives.

Senate Majority Leader Chuck Schumer and key Democratic Senator Joe Manchin agreed on a package that would invest $369 billion as the single biggest climate investment in U.S. history. It intends to reduce carbon emissions about 40% by 2030. Hydrogen energy stocks like Plug Power and Bloom Energy stand to benefit, as does renewable natural gas company Clean Energy Fuels. 

Now what

Investments that were originally included in President Biden's Build Back Better initiative were thought to be cut out of any slimmed-down package. So this agreement -- which could be passed in the Senate with just the slight Democratic majority -- came as a surprise with Manchin agreeing to the spending along with deficit reduction provisions that were included. 

The new package called the Inflation Reduction Act of 2022, if passed and signed by President Biden, would help fund manufacturing clean energy projects and work to cut emissions including methane emissions and port pollution, among other funding and incentives. It would also provide $27 billion to accelerate and support clean energy technology that is intended to curb emissions.

Plug Power has been investing heavily to grow a green hydrogen network across the U.S. and globally. In the U.S. the company has announced plans for the largest facility of its kind on the West Coast along with others in Georgia, New York, and Tennessee. Plug expects its domestic plants to produce 500 tons per day by 2025. The company also announced a hydrogen fuel supply agreement with Walmart earlier this year to to supply the retailer with up to 20 tons of green hydrogen per day to fuel the material-handling trucks it uses at fulfillment and distribution centers.

Shares of Clean Energy Fuels didn't jump as much today, probably because this legislation isn't the most beneficial for its renewable natural gas (RNG) business. That stock is up 30% in July after a separate piece of legislation was introduced earlier in the month. The Renewable Natural Gas Incentive Act of 2022 could be more important for its business. As the country's largest producer of RNG, that legislation would more directly impact Clean Energy's focus on expanding that fuel in the transportation sector. 

Any new investments in clean energy would help each of these companies grow, however. That helps explain investor excitement around today's news.