Trump Tax Bill Slams Solar and Clean Energy ETFs
- The TAN ETF dropped 9%, while ICLN lost 3% on Thursday.
- Investors fear that rooftop solar companies and others could see a sharp drop in demand if tax credits are pulled.
Exchange-traded funds focused on solar and clean energy tumbled Thursday after the U.S. House of Representatives passed President Donald Trump’s sweeping tax proposal, which includes provisions to roll back many of the subsidies introduced under the Inflation Reduction Act.
The Invesco Solar ETF (TAN) plunged roughly 9% midday, while the broader iShares Global Clean Energy ETF (ICLN) dropped around 3%. The moves reflect investor fears that rooftop solar companies and others in the industry could see a sharp drop in demand if tax credits are pulled.
TAN & ICLN Compared
TAN, which tracks a concentrated portfolio of 38 solar-focused stocks, has $650 million in assets under management. ICLN, with a more diversified global clean energy mandate, oversees $1.4 billion and holds 102 stocks.
The narrower focus of TAN has made it especially vulnerable to solar-specific policy changes, like the ones in Trump’s bill that eliminate rooftop solar installation credits.
Despite the day’s sharp losses, ICLN is still up about 9% year to date, while TAN is down around 5.5%. That relative resilience may reflect the fact that markets had already priced in some risk after Trump’s election win last November, when many expected his administration to push back on Biden-era climate legislation.
But the longer-term picture is also sobering.
Solar's Rough Ride
Both ETFs peaked in early 2021 after President Joe Biden took office, riding a wave of enthusiasm for green energy. Between the start of 2020 and the start of 2021, TAN nearly quadrupled, and ICLN almost tripled.
Since then, it’s been a rough ride, with both ETFs giving up much of their gains. Over the past decade, ICLN has gained just 20%, while TAN is down 22%, a reflection of how policy risk and inconsistent profitability have plagued the sector.
TAN tracks the MAC Global Solar Energy Index, which focuses solely on solar names. ICLN, meanwhile, follows the S&P Global Clean Energy Transition Index, giving it broader exposure to wind, hydro and other renewable energy sources. That diversification has historically made ICLN less volatile, though not immune to major policy shocks.
With the bill now headed to the Senate, clean energy investors will be watching closely.
