By Dominic Chopping

European stocks exposed to the wind energy sector are among the biggest gainers Tuesday as new U.S. proposals to cut support for clean energy appeared more favorable than expected.

Vestas Wind Systems shares rose 9.4% in afternoon trade, while EDP Renovaveis shares rose 7.6%, Acciona Energia shares were 4.6% higher, and Orsted shares gained 3.7%.

As part of President Trump's plan to implement sweeping tax cuts, U.S. lawmakers have proposed draft legislation that rolls back tax breaks for electric cars and clean-energy production to help fund lower taxes elsewhere.

Ahead of the proposals, investors and analysts had taken a dim view of the U.S. clean energy outlook after comments from Trump ahead of his inauguration that included wanting no wind farms being built and pledging to redirect money away from so-called green energy.

Those fears were compounded last month by his administration's move to force a halt to construction of a wind project being built off the U.S. east coast.

A draft bill presented Monday proposes changes to the Biden-era Inflation Reduction Act that aimed to promote clean energy, among other things.

The proposed changes include a phasing out of tax credits for investing in and producing clean energy as well as for wind-energy components over several years. There are new limits on the sale of tax credits and projects supplied by certain prohibited foreign entities won't be able to claim the credits.

While the changes would make the U.S. wind industry in particular much less attractive, it could have been much worse, Citi analysts Martin Wilkie and Vivek Midha said in a note to clients.

"Draft changes to the U.S. Inflation Reduction Act are far better than feared for onshore wind," they said. "Relative to the prospect of a full IRA repeal, the proposals support onshore for much longer than expected."

Lawmakers also proposed an end to the tax credit for producing clean hydrogen from 2026, allowing projects that start construction this year to qualify.

"The proposed changes come as a surprise to us as a number of House Republicans had previously voiced their support for the IRA and hydrogen," RBC Capital Markets analyst Erwan Kerouredan said in a note.

"This is incrementally negative for most U.S. exposed green hydrogen names in our coverage: Nel and Thyssenkrupp Nucera."

Nel shares are 0.2% higher and Thyssenkrupp Nucera shares 0.8% lower in afternoon trade.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

May 13, 2025 06:25 ET (10:25 GMT)

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