NEW YORK (Dow Jones)--Shares of companies in the natural-gas vehicle industry, particularly Clean Energy Fuels Corp. (CLNE), gained Thursday, boosted by a proposal in a new Senate climate-and-energy reform bill that could significantly expand that market.
A proposal to double the current federal tax credits for the purchase of certain natural gas-powered fleet vehicles for the next 10 years prompted the stock gains even as passage of the bill, which was introduced Wednesday, remains very uncertain.
The stock gains also came despite the fact that a proposal to boost the natural-gas transportation industry had been widely expected.
Clean Energy Fuels, a provider of natural gas for transportation, was recently up 5.2% to $17.71. Meanwhile, peers Canada-based Westport Innovations Inc. (WPRT), a developer of technologies that enable vehicles to operate on clean-burning alternative fuels, climbed 2.4% to $19.76 and alternative-fuel components and systems company Fuel Systems Solutions Inc. (FSYS) rose 3.5% to $32.60.
Clean Energy may have been getting more of a lift Thursday because it has been underperforming the group recently and also because Chief Executive Andrew Littlefair appeared on CNBC's Mad Money program on Wednesday night, analysts noted.
The natural-gas transportation industry has been gaining momentum as it's seen as an environmentally friendly way for the U.S. to reduce its dependence on foreign oil. Also, with a big surplus of natural gas in the U.S., supplies are considered relatively cheap.
Fuel Systems Chief Financial Officer Matthew Beale sees the bill as an encouraging development, but he said the passage isn't necessary for growth in the U.S. industry to continue.
"We continue to believe in the adoption curve with or without this bill," he said.
Fuel Systems makes alternative-fuel components for industrial uses and for the transportation industry. Its transportation division generates the majority of its revenue from international operations, and the company's expansion in the U.S. depends on the development of necessary infrastructure, like more places to refuel natural-gas vehicles, Beale said.
"In some ways the U.S. is the emerging market," he said.
Factors including the abundant supplies of natural gas and the need to reduce foreign oil use are creating a strategic shift in the energy industry that should result in strong growth for Clean Energy for the next several years, Craig-Hallum analyst Robert Brown wrote in a recent note.
"We believe the company sits squarely in front of a mega-trend," he said.
National Bank Financial analyst Rupert Merer also sees strong growth prospects for the natural-gas transportation industry, but was more cautious about Clean Energy and its peers.
Currently Clean Energy has the advantages of scale and operational excellence, but the barriers to entry in this industry are relatively low, Merer said, and government incentives could attract more players.
"If the market is made in the U.S., they'll find competition quickly," Merer said.
-By Jennifer Cummings, Dow Jones Newswires; 212-416-2474; jennifer.cummings@dowjones.com