Addressing climate change has been a top priority since day one for the Biden administration. Their longer-term agenda being to halve the U.S. carbon footprint by 2030. This sent a lot of “clean-energy” stocks skyrocketing in the early part of the year. One is Clean Energy Fuels (NASDAQ:CLNE) stock.
After trading below $4 for the last 4 years prior to December 2020, CLNE stock rocketed to a high of $18. The stock has since come back down to Earth and is trading around $8.50.
Looking at how the stock has been trading from a technical analysis perspective, CLNE seems to be in a descending channel pattern. These types of patterns can be bearish in the short term but often are contained within longer uptrends.
This aligns with the fundamental information available on Clean Energy. The company has been setting itself up to be an important player in the fight against climate change.
CLNE Stock and Climate Change
Clean Energy supplies and operates natural gas fueling stations for trucks and other heavy to medium-duty vehicles. What makes Clean Energy particularly interesting is that a significant portion of the natural gas it supplies is “renewable natural gas” or RNG. This type of natural gas is arguably the cleanest available fuel available.
RNG is created from the decomposition of waste from a variety of feedstocks such as food waste and industrial farms. As a fuel source, it has a much higher impact on reducing carbon emissions than electricity or hydrogen. This is because RNG can be zero to negative emissions. It takes what would be methane released to the atmosphere and converts that to fuel. According to the company, switching to RNG reduces harmful greenhouse gas emissions by 70% to 300%.
Clean Energy is the provider and distributor of RNG in the U.S. and Canada. As of the latest quarter, the company supplies 570 fueling stations and serves more than 1,000 fleet customers operating about 48,000 vehicles.
Amazon Partnership a Vote of Confidence
The importance of RNG is being realized by a lot of the big players in the energy and logistics industries. Due to this, Clean Energy secured a number of partnerships in recent months to help it develop the necessary infrastructure. The most recent being a partnership with Amazon (NASDAQ:AMZN).
Clean Energy inked a five-year contract to provide RNG to the massive online retailer through 46 fueling stations by the end of the year. Amazon is becoming one of the most important players in the logistics and delivery sector. Amazon aims to be carbon-neutral by 2040 and this partnership with Clean Energy is an important step towards that goal.
As part of the agreement, Clean Energy issued Amazon warrants that would allow the retailer to take up to 53.1 million shares at a price of $13.50 through April 2031.
The total number of shares that can be acquired by Amazon represents 20% of Clean Energy. However, these shares vest in accordance with fuel purchases made by Amazon.
In other words, Amazon would need to purchase RNG from Clean Energy before being able to execute its warrants virtually guaranteeing those purchases. The first tranche is for 13.3 million shares and $500 million worth of fuel purchases.
Investor Takeaway
Clean Energy is shaping up to be an important company in the fight against climate change. The company would continue to do well in the future thanks to its position as a leading provider of RNG.
Clean Energy’s partnership with Amazon and others is a very good sign.
CLNE stock is currently trading at around $8.50, which represents a 37% discount to Amazon’s exercise price. I believe investors should consider an investment in CLNE stock.
On the date of publication, Joseph Nograles did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Joseph Nograles is a part-time freelance copywriter focused on the financial industry. He has worked in a wide variety of industries from tech to consulting with one of the “big four.” He has always enjoyed analyzing businesses and has been a CFA charterholder for nearly a decade now.