President Biden will refocus America’s climate policy and investment

Mr Trump has left the White House and President Biden has taken his place as leader of the free world. So, what does a Biden presidency mean for climate change investment?

In an abrupt about turn after the last four years, the US now has a Democrat President, control of the Senate and the House. This should mean massive changes for climate change across the board, including investment.

What are the changes we will see from new climate policy and investment opportunities

President Biden has a lot to contend with as he takes office. From the COVID-19 pandemic and vaccination rollout to the struggling economy and fragile foreign policy.

According to CNN writing on Inauguration Day (20 January 2021), President Biden will order 17 executive actions on the same day. These include a raft of orders and directives aimed at getting the pandemic under control, and to reverse some of the former president’s withdrawal from key international agreements.

Included in these reversals are the US rejoining the Paris Climate Accord and not departing from the World Health Organisation (WHO), a process that was underway under Mr Trump. It will take 30 days to rejoin the Paris climate accord, so by the end of February, the US will be back in it.

The new President will also cancel the Keystone XL pipeline and reverse more than 100 environmental actions taken by Mr Trump. The significance of this change of leadership at such a crucial time in the fight against climate change cannot be underestimated. And it will impact not just policy but related investments too.

Aligning the Presidency, the Senate and the House to make big changes

Among the key climate pledges made by President Biden are aligned with the House Democrats plan. Most importantly perhaps is the pledge for the US to achieve net zero greenhouse gas (GHG) emissions by 2050. This is completely in line with the EU’s Green Deal deadline.

However, setting long term deadlines is the easiest part. They now have to be met and to do so many smaller and shorter-term goals must be achieved by the new administration.

Biden’s energy policy revolves around renewables and there are a number of short-term objectives to measure progress by. An example can be seen with the plans to install 60,000 wind turbines and 500 million solar panels across the country by 2026.

We can find out more detail from the plan produced before the election by Democrat legal experts. Some industries will need to reach net zero emission deadlines by 2030, with new builds and cars expected to do the same by 2035. By 2040, producers of energy will also have to be at net zero.

Infrastructure investment will alter climate change policies going ahead

In his climate related policies, Biden is clear that infrastructure is key to achieving any of the targets. And investing in infrastructure is actually one of the few policies agreed on between Republicans and Democrats in recent times. Media reports say that the President is planning to spend $1 trillion on improving the country’s infrastructure to give the economy chance to recover after the impact of the pandemic.

This money will most likely go towards bridges and roads as well as connecting people to rural broadband and implementing reliable 5G networks. There are numerous climate related policies linked with infrastructure in the new President’s plans. These include a target for providing a vast network of half a million electric vehicle charging points by 2030, for example.

However, there is also recognition that the impact of climate change is already here, with policies aiming to mitigate its impact. There is an urgent need to ensure cities and buildings that can withstand fire, flood and rising sea levels, and President Biden’s plan includes a green power grid and water infrastructure.

All of these areas will attract much greater investment over the next four years, and corporate and private investors see the value of capitalising on the direction the country is now taking with regards to climate change.

However, President Biden also plans to stop subsidies for fossil fuels, and this will have an enormous knock-on impact on the Oil & Gas industry. Not only is the energy industry going through extreme challenges due to a fall in demand from the effects of the pandemic, but many energy leaders are scrambling to find ways to incorporate sustainability into their models. Either way, this is a significant change in direction, given that Mr Trump’s base is extremely focused on fossil fuels, even with climate change.

Possibility for unification and change within America

Having acknowledged that Mr Trump’s core base is refusing to think about the future regarding fossil fuels, it seems that young Republicans are likely to be more on board with the Democrats on this issue. There have been calls from the next generation of Republicans for federal action on climate change – something that certainly would not have happened if Mr Trump had secured a second term.

Individual states have been hyper aware of the need to do more to prepare for the impact of climate change. And President Biden has been clear that these changes to energy production and to tackle climate change are also opportunities to create jobs. This is so important at a time when the pandemic has battered the jobs market in the US (as in many other countries), and so many people are struggling to get by.

More than anything else, President Biden will refocus the US as a leader in the fight against climate change. While COVID-19 has taken international attention in another direction, it’s intrinsically linked to climate change and how the world tackles it. And whether the world’s attention is on it or not, climate change is still happening.

By choosing to re-join the Paris Agreement and reverse damaging policies, President Biden will galvanise the world’s efforts and boost momentum at the most crucial time possible. A newly focused US, united with the EU will have much more strength in leading global decarbonisation.

The pace of change for tackling climate change will speed up

Economically and investment-wise the pace of change we can expect to see with these climate change measures will spur change. Energy transition is an economically important issue and would have been had Mr Trump won a second term as President.

However, there are hugely strong areas for investment with the added impetus of President Biden, a Democratic Senate and House. The outlook for growth in sectors including electric vehicle (EV) production, renewable energy, battery storage, hydrogen power and numerous other industries is impressive.

Investors should be ready for a marked acceleration of these industries and plan accordingly. And more importantly, there is the likelihood that international politics, for the most part, will align to speed up decarbonisation. The rest of the world will follow Europe and the US united, and there is finally a true opportunity to make a successful transition to a low-carbon world. This means many more investment opportunities for those who are on the ball and doing the research now.