Here Is What You Do When Cap and Trade Arrives

The Environmental Protection Agency is set to release new rules to address climate change and may be paving the way for cap and trade in the U.S. In its simplest form, cap and trade would allow renewable energy producers to sell credits to those using dirtier forms of energy, leading to more renewable development where it's already economical. 

If cap and trade goes through, it would be a boon for a number of companies already heavily invested in renewable energy. First Solar and SunPower are not only two of the largest solar panel producers in the world, but they are also two of the largest power plant builders. With cap and trade, those power plants would be worth even more than they are today, meaning higher returns. 

SolarCity's solar lease could also become more attractive, allowing the company to sell credits. If the residential solar installer can keep projects on its balance sheet, SolarCity could be one of the biggest beneficiaries of cap and trade. 

On the utility side, there may not be a lot of winners in cap and trade, but NRG Energy would be one of them. The utility has put billions into renewable energy projects and would see incrementally more revenue if it could sell energy credits. 

Solar specialist Travis Hoium gives his thoughts on cap and trade -- and the companies that would benefit -- in the video below. 

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Travis Hoium manages an account that owns shares of SunPower and is personally long SunPower shares and options. The Motley Fool recommends and owns shares of SolarCity. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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