As the global economy moves toward renewable energy but continues to use fossil fuels heavily, energy investors may want to consider straddling both worlds to ride the energy transition.
There’s an inherent tension between renewables and oil and gas that can work to your advantage. When oil and gas are more expensive, renewable energy companies may do better, and vice versa. It can work as a built-in hedge to an energy portfolio, though such a group of holdings probably won’t perform as well as pure-play oil and gas stocks when crude prices are high.
Additionally, government policy may favor one over the other — with different administrations prioritizing fossil fuels and others preferring renewables.
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We’re in one of those swings now, as President-elect Donald Trump has vowed to support oil and gas and has disparaged renewable energy. That contrasts with the administration of President Joe Biden, who has sought to boost renewables through the Inflation Reduction Act.
It’s unlikely that Trump will fully repeal the IRA, as it has benefited Republican-leaning states. But he may seek to undo some of the support for renewables through executive orders.
“I think that we will see a hold-off on final investment decisions coming from large renewables project developers until we see what the Trump administration does with the Inflation Reduction Act,” says John Berman, chief investment officer at natural resources investment management company Berman Capital Group. “While Trump has said he wants to repeal it, most of the job creation has been in red states, so there is a high probability that it will not be outright repealed, but it may be substantially changed.”
Trump’s promises to increase tariffs are a wild card for renewables, as boosted trade duties may make imports of solar and battery components more expensive, reducing the economic appeal of renewables projects for big companies.
“Renewables, I think, are going to be driven by trade policy in 2025,” Berman says. “Whether or not the U.S. enacts tariffs on Chinese imports is going to determine the investment case for the entire renewables sector.”
But that doesn’t mean renewables investments should be written off under a Trump White House.
“Technology and AI growth are also driving electrical demand at breakneck speeds and ginormous quantities,” says Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors. “Thus, it’s tempting to look at the renewable energy sector for substantial upside with solar and wind leading capacity additions, but we are waiting to see if there will be new tariffs on solar imports from China that could raise prices and crimp growth in an otherwise sunny space.”
Meanwhile, oil prices have been in a general downtrend over the past six months, affecting the profitability of companies in that space.
Headwinds facing the Chinese economy and how OPEC behaves will be major themes for crude prices in 2025, Berman says.
“The state of the Chinese economy will be of the utmost importance to OPEC as it decides what to do with its production cuts,” he says. “There also continues to be the ever-increasing risk of disunity within OPEC as some members are reluctant to continue the production cuts, which could ultimately lead to a price war.”
If you’re looking to build a modern energy portfolio or want to bulk up one you already have, you can consider these eight energy stocks that run the gamut between renewables and fossil fuels:
| Stock | Year-to-date return as of Dec. 13 |
| NextEra Energy Inc. (ticker: NEE) | 24.7% |
| Bloom Energy Corp. (BE) | 73% |
| Gevo Inc. (GEVO) | 32.8% |
| Quanta Services Inc. (PWR) | 56.6% |
| Darling Ingredients Inc. (DAR) | -29.6% |
| BP PLC (BP) | -10.6% |
| HF Sinclair Corp. (DINO) | -29.9% |
| Schlumberger Ltd. (SLB) | -20.8% |
NextEra Energy Inc. (NEE)
Investors looking for a large, stable play on the energy transition can consider this company, as NextEra regularly shows up in experts’ top picks for renewable energy stocks.
Its regulated utility segment generates, transmits, distributes and sells electric energy in Florida. The company also produces electricity from renewable sources, including wind and solar, in another business unit.
That latter business segment in the third quarter added more than 3,000 megawatts of new renewables and storage projects to its backlog.
Bloom Energy Corp. (BE)
Most hydrogen these days is produced using fossil fuels without carbon capture. But some companies are developing green hydrogen supply chains, in which the hydrogen is created using renewable energy.
Once hydrogen is separated from water using an electrolyzer powered by renewable energy, it can then be stored and used as fuel to power hard-to-abate sectors, such as shipping and steelmaking. In the case of steelmaking, hydrogen can also replace coal as the reductant for iron ore in blast furnaces. Hydrogen can also be used in fuel cells to power electric vehicles.
Bloom Energy is one of the blue chips of the green hydrogen sector. It makes fuel cell systems that can run on different inputs, including hydrogen. Its technology can be adopted by the utility and transportation industries.
Gevo Inc. (GEVO)
Another way to reduce carbon emissions is through sustainable aviation fuel, which is produced with non-petroleum inputs like food and yard waste, used cooking oil, soybean oil, and ethanol from corn.
Gevo uses biomass to create aviation fuel. That biomass includes starch by-product from high-protein animal feed that the company also produces.
The company also makes renewable natural gas. Natural gas — whether it’s extracted from the ground or, like Gevo’s, made from dairy farm manure and high-protein animal feed from non-edible corn — is expected to be a transition fuel for some time as nations around the world seek to use less coal for electricity production.
Quanta Services Inc. (PWR)
Quanta Services designs, installs, repairs and maintains energy and communications infrastructure. It works with utility, renewable energy, communications, pipeline and energy companies.
This company stands to benefit from natural gas as a transition fuel in the coming decades. It also has a strong footprint in renewable energy, making it a player for the long-term trend of electrification as governments seek a smaller carbon footprint.
For that decarbonization to happen, a lot of investment will be required in upgrading and expanding the electric grid.
But until that electric grid can rely more on renewables with battery storage or nuclear energy for baseload power, natural gas will play a part in the world’s energy mix. Quanta’s expertise with natural gas pipelines means it has flexibility as renewable natural gas takes more market share.
[READ: 7 Best Natural Gas Stocks and Funds to Buy]
Darling Ingredients Inc. (DAR)
This company turns edible by-products and food waste into sustainable products and renewable energy.
With more than 260 facilities in over 15 countries, the company says it repurposes about 15% of the world’s meat industry waste streams into green energy, renewable diesel, collagen, fertilizer, animal proteins and meals, and pet food ingredients.
Darling is involved in a joint venture with Valero Energy Corp. (VLO) called Diamond Green Diesel, which produces fuel from used cooking oil, inedible animal fats and corn oil.
BP PLC (BP)
BP is one of the biggest oil and gas firms in the world, giving it deep pockets to continue its traditional fossil fuel business while also moving into lower-carbon efforts.
The company has moved into renewable electricity generation, as well as transforming those electrons into energy molecules with hydrogen, allowing it to sell both electricity and hydrogen to customers in addition to fossil fuels.
In September, the company said it and Iberdrola greenlit construction of a 25-megawatt green hydrogen project in Spain, which is expected to come online in the second half of 2026.
In October, BP said it completed an acquisition of the remaining 50.03% interest in Lightsource BP, a leading developer and operator of utility-scale solar and battery storage assets.
HF Sinclair Corp. (DINO)
This company is involved in a wide swath of the energy industry, with refining, midstream and marketing units.
You might be familiar with the green dinosaur statues that adorn Sinclair gas stations, which are part of its marketing arm.
Its midstream unit transports and stores petroleum products and crude oil, while its refining business refines crude oil.
Schlumberger Ltd. (SLB)
Schlumberger is one of the world’s largest oilfield services companies. It helps oil and gas companies understand reservoirs, complete wells and optimize producing wells.
The company is also involved in the energy transition, with geothermal, hydrogen, energy storage and lithium operations, and this year it closed an acquisition of Aker Carbon Capture.
Schlumberger is also in the process of buying ChampionX Corp. (CHX), a company involved in chemistry solutions, artificial lift systems, and highly engineered equipment and technologies for oil and gas drilling and production.
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8 Best Energy Stocks to Buy in 2025 originally appeared on usnews.com
Update 12/16/24: This story was published at an earlier date and has been updated with new information.
