These green tech companies are planning to capitalize on President Biden’s infrastructure plan – here’s how

Virgin hyperloop test site
Inside Virgin Hyperloop’s new test facility in West Virginia.

  • Biden’s infrastructure plan could create growth opportunities for many sustainable tech companies.
  • The proposal calls for a $2 trillion commitment to clean energy, roads, bridges, transit, and more.
  • Virgin Hyperloop, Sealed, and CityZenith stand to benefit, but Depcom Power isn’t quite convinced.
  • See more stories on Insider’s business page.

When Virgin Hyperloop cofounder Josh Giegel saw the Biden Administration’s infrastructure proposal, he couldn’t help but think some details sounded familiar. The American Jobs Plan calls for “the second great railroad revolution” – trains that are faster, cleaner, and more energy-efficient, which is the kind of technology Giegel’s California-based company has been working on since 2014. As such, Giegel has little doubt the company will be able to capitalize on America’s push toward greener infrastructure.

“At the end of this decade,” he said, “I think we’ll be talking about the decade of Hyperloop.”

Read more: Meet the architects building multimillion-dollar underground bunkers for the ultra-rich, complete with secret bookcase doorways and robot security

It’s still early days for the infrastructure plan, but Virgin Hyperloop is one of many tech companies well-positioned to capitalize on it. The proposal, which will need approval from the Senate and House before it can be signed into law, calls for a $2 trillion commitment to clean energy projects, roads and bridges, transit systems, agriculture, and home and building upgrades, among other initiatives. Companies in fields ranging from artificial intelligence to construction all stand to benefit.

“The private sector will play an essential role in this,” said climate economist Gernot Wagner, associate professor at New York University and coauthor of “Climate Shock: The Economic Consequences of a Hotter Planet.” “This is about incentivizing, motivating, and providing the money for private contractors and private businesses to come and build.”

For its part, Virgin Hyperloop has been pushing to get its high-speed, magnetic levitation rails built in the US since it began as Hyperloop One in a Los Angeles garage seven years ago. The startup rebranded after Richard Branson invested and joined its board in 2017. Last November, the company held its first passenger test when Giegel and a colleague rode in a Hyperloop pod within a vacuum-sealed tube. Virgin Hyperloop has held discussions with local governments about potential routes like Seattle to Portland and Chicago to Pittsburgh.

Giegel said a fully constructed Hyperloop will be able to travel at the speed of an aircraft, with a 10th of the energy consumption. One railway in each direction could move as many people as a 30-lane highway – with a fraction of the carbon emissions, given that the system runs on electricity.

“We have an opportunity now for a seismic change,” said Giegel. “We can make decisions now that we’ll benefit from in the 2060s and 2070s and beyond.”

Greenhouse effect

Biden’s infrastructure plan calls for upgrading four million buildings and two million homes to make them more energy-efficient. Lauren Salz, cofounder and CEO of New York City-based Sealed, hopes her company would benefit from the legislation. Sealed uses artificial intelligence and algorithms to calculate savings to a potential client’s utility bill based on factors like geographic location, size, and age of the home. If an upgrade makes financial sense, the company hires contractors to perform the work, which can include sealing leaks and installing new HVAC systems, smart thermostats, and energy-efficient LED bulbs. There’s no cost to the homeowner, and Sealed keeps the cost of the energy savings.

Sealed currently operates in New York State and is looking to expand soon. The infrastructure plan might necessitate that. “Private-public partnerships are definitely a possibility with this bill,” said Salz. “If that opportunity arose, and if it made sense for us and our customers, we’d definitely be interested.”

Even if no such deals come to fruition, Salz points out that having home-efficiency upgrades included in the plan should give the industry momentum. “There’s been a lack of awareness around how important energy efficiency is, particularly in the residential market,” said Salz. “It’s pretty exciting that it’s making it into the national discussion.”

Jump-starting growth

Construction firms will be sure to get a boost from new infrastructure legislation – as will tech companies that specialize in various aspects of the building process. Chicago-based software company CityZenith builds digital twins of physical spaces, allowing engineers and politicians to study proposed and in-progress projects to see how certain materials and features would impact the project’s carbon footprint and energy usage. The firm is currently working with the organizers of a new sports and entertainment district in Orlando and the 2030 District in New York City, a set of neighborhoods being outfitted with renewable energy and more sustainable design.

CityZenith founder Michael Jansen thinks the Biden proposal would be a boon for business. “We expect to get a lot of different types of work out of this,” he said. “The plan affords a lot of opportunities for projects that address climate change. It’s bold – and right now, the nation needs bold.”

Not all green tech entrepreneurs agree. Johnnie Taul, CEO of Scottsdale, Arizona-based solar power plant company Depcom Power, which claimed the No. 5 spot on the 2018 Inc. 500 and expects to hit $1 billion in annual revenue by next year, isn’t encouraged. “From what I’ve seen of the plan, I don’t have any positive takeaways,” he said. Taul doesn’t believe the government should play a role in helping certain industries grow, even if his industry is one that stands to benefit. He has a different idea for how to ensure the solar industry continues its growth.

“Lowering taxes,” he said. “It allows good businesses like ours to hire more, innovate more.”

NYU’s Wagner thinks it isn’t so simple, especially when something like climate change is at stake. “If you want the outcome that’s best for society and best overall, there is a very real role for government to play,” he said, adding that he believes Biden’s plan will have a positive overall impact on the private sector. “Investing money in green infrastructure creates jobs.”

Wagner notes that entrepreneurs in any industries potentially impacted by the plan should take the time now to ensure they’re ready if it’s passed. If you’re a roofer, for example, make sure you know how to install solar panels, but also know what permits and certificates you need, how to deal with local utility companies, how to talk with customers about pricing, and what you’ll need to do to potentially earn a government contract.

“It’s better to climb that learning curve now rather than later,” said Wagner. “There’s a lot of specialized learning involved and a lot of companies looking to take advantage of this plan.”

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The broader stock market is not in a bubble, but these 5 sectors are, according to JPMorgan

NYSE trader
  • Concerns over a potential bubble forming in the stock market have been growing as equities continue to hit record highs.
  • But according to a Thursday note from JPMorgan, the broader stock market is not in a bubble.
  • Instead, five sectors in particular seem to be in bubble territory after more than tripling in price, the bank said.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

A continued rise to record highs in the stock market has some worried that a bubble is forming as valuations appear stretched and rising inflation seems imminent.

But according to a Thursday note from JPMorgan, there is no bubble to be found in the broader stock market. High expectations for historic economic growth amid a reopening of the US economy supports the move higher in stocks, according to the bank, which expects US GDP growth of 6.3% for 2021.

But within certain sectors, there does appear to be pockets of froth that are likely experiencing a bubble, JPMorgan said. These are sectors that “have more than tripled in price over a short period of time,” the bank explained.

These are the five sectors of the stock market that appear to be in a bubble, according to JPMorgan.

1. Clean Energy

Anything related to ESG has seen a boom in prices as investors continue to gravitate towards sustainable investing. Clean energy is one sector that comes top of mind to investors that are looking to invest in a green future, and the top holdings in the iShares Clean Energy ETF represent companies in the fuel cell and wind energy space.

Since its pandemic low last year, the ETF rallied as much as 324% in less than a year, meeting JPMorgan’s criteria for a potential bubble.

2. Solar Energy

The sector saw a strong boost as the prospects of a Joe Biden presidency and democratic-controlled Senate became more apparent. President Biden has pointed to solar as a core technology needed to combat climate change. The industry is expected to significantly benefit from Biden’s $2.2 trillion infrastructure bill.

Solar stocks staged a strong rebound after its pandemic low, with the Invesco Solar ETF rallying as much as 496% in less then a year.

Read more: We asked 5 renowned growth-fund managers for their favorite stock picks. These are the 4 that multiple managers think will crush the market going forward.

3. Electric Vehicles

Following the theme of clean energy and Biden’s green agenda, electric vehicles have staged monster rallies over the past year, mostly led by Tesla. Now, investors are holding out hope for more gains as Biden’s infrastructure bill includes $174 billion for the electric vehicle industry.

EV stocks have rallied by as much as 178% since its pandemic low last year, as measured by the iShares Self-Driving and Electric Vehicle ETF.

4. Cryptocurrencies

Bitcoin remain the most popular cryptocurrency, but thousands of other crypto assets exist, and many of them have seen marked price increases over the past year. Those crypto assets tend to move in tandem with bitcoin, which saw a more than 1,400% increase since last year’s pandemic low. The total market value for cryptocurrencies recently exceeded $2 trillion, and even XRP caught a bid as it faces a lawsuit from the US Securities and Exchange Commission.

While JPMorgan views cryptocurrencies in a potential bubble, the firm believes bitcoin could hit a long-term price objective of $130,000.

5. SPACs

The boom in SPACs over the past year has been unprecedented, as companies seeking to go public sidestepped the traditional IPO process in favor of the quicker and cheaper SPAC process amid the pandemic. In the first quarter of 2021, SPACs raised more money than the did in the entirety of 2020. Some estimates even suggest that the current stable of SPACs have more than $1 trillion in buying power. But the SEC is starting to set its focus on SPACs and the lofty earnings estimates firms are setting when going public.

Read the original article on Business Insider