You better be ready for the ‘green revolution’

The environment may be the biggest winner of the US presidential election, as the vote could flip US policy on its head. Low-carbon energy – and investors in the technology that makes it possible – may be nearing their time in the sun.

This content is more than 6 months old now, please visit the news area of this site for more recent content

  1. Garry White

Predicting the outcome of an unpredictable election can only be a fool’s errand. But, with pollsters and bookmakers suggesting Joe Biden will win the White House in November, the seismic changes his policies will bring are now urgently in need of attention.

The Trump administration has been a standard-bearer for the US hydrocarbon industry for the last four years, but all that will change if the Democrats win in November. From his attempts to resuscitate America’s dying coal industry – to his encouragement of the old Republican mantra of ‘drill baby, drill’ – Trump’s ‘anti-green’ agenda was never hidden from view. His dumping of the Paris Agreement, a global climate accord, in July last year was an act of political theatre that didn’t really shock. The drama was obviously coming.

Equity markets overall are unlikely to cheer a Biden win. His proposals for increasing corporate taxes will easily see to that. But it is his environmental agenda that could end up changing the world – with America realigning its energy policies with those of Europe and China. 

The world’s greatest powers will be implementing their energy strategies in apparent unison if all goes to plan for the Democrat campaign. A real ‘green revolution’ may be on the cusp of reality.

This change in policy direction – if Mr Biden defeats President Trump – will significantly change global flows of capital. The shift will result in even more pain for Big Oil and its growing portfolio of stranded assets – as trillions of dollars flow into alternative-energy projects. 

Sleepy Joe’s energy transformation

A Biden win would give American energy policy a 180-degree makeover, with the ‘clean-energy’ sector benefiting from the largess of the Fed’s money-printing machine. The would-be president said he will set aside $2 trillion to be spent over the next four years to turbocharge climate policy – and drag the economy out of the pandemic-induced doldrums at the same time. For American energy policy, this is truly revolutionary – and the oil industry is unlikely to take the move lying down.

Mr Biden’s plan will significantly escalate the use of clean energy in the transport, electricity and building sectors. It is part of a suite of sweeping proposals designed to create economic opportunities and strengthen infrastructure, while also tackling climate change. The prospective president wants to achieve ‘net-zero’ carbon emissions by 2050.

The European Union’s (EU’s) ‘Green Deal’ plans to transform the bloc from its current status as a high-carbon economy into a leader of a cleaner future. It aims to use some EU’s money earmarked for job creation to encourage a sustainable, green shift – creating work for those suffering from harsh economic reality 
– while simultaneously building the infrastructure of tomorrow.

Earmarking €1.8 trillion, with hopes to raise a further €1.0 trillion from the private sector, the EU plans to develop green-revolution technology such as hydrogen and fuel cells. It wants to encourage sustainable industry while cutting pollution too. It wants to achieve ‘net zero’ by 2050.

The EU was first to declare its green-revolution target, but China had a surprise up its sleeve. In September, Beijing announced an unexpected and dramatic shift in its strategy. President Xi Jinping declared that China would be ‘carbon net-zero’ by 2060, just ten years after the EU’s stated target and Mr Biden’s pledge to American voters.

What do they mean by ‘net zero’?

The main aim of ‘net zero’ is to slash damaging, human-caused emissions to as close to zero as possible. Any remaining polluting gases pumped into the atmosphere will be balanced with an equivalent amount of carbon and other pollutant removals. This could be achieved through forest expansion or by using new carbon-eliminating technology. The – arguably nebulous – concept of ‘net-zero emissions’ is a vague attempt to achieve a form of ‘climate neutrality’.

What is – and what isn’t – ‘climate neutrality’ will be endlessly debated. But clearly, this is yet another trend that Covid-19 appears to have accelerated. Without the pandemic, this enormous pot of money directed at industry to encourage investment in green technology almost certainly would not have existed. 

If a large chunk of the pandemic-related stimulus money creates jobs by building renewable infrastructure projects, dreams of a ‘green revolution’ will start to look more likely. And, if Joe Biden wins the presidential race, America would have caught up with Europe and China – and the businesses that drive the green revolution will be part of one of the most important investment trends around.

Nothing on this website should be construed as personal advice based on your circumstances. No news or research item is a personal recommendation to deal.

More from author

  1. Garry White

    Last Week in the City: Powell fails to reassure

    Date: 5th Mar 2021 12:51pm

    Garry White, Chief Investment Commentator, provides a round-up of the market movement...

  2. Garry White

    Last Week in the City: Airlines call for health passports

    Date: 26th Feb 2021 11:26am

    Garry White, Chief Investment Commentator, provides a round-up of the market movement...

  3. Garry White

    Another cannabis bubble is brewing

    Date: 25th Feb 2021 13:31pm

    Cannabis euphoria has now come to Britain after the first company listed in London th...

Most read articles

  1. You better be ready for  the ‘green revolution’

    Getting to ‘net-zero’ emissions

    Date: 8th Feb 2021 11:18am

    A lively market in carbon offsets is developing, as the need for more renewable power...

  2. You better be ready for  the ‘green revolution’

    The implications of the year of ‘net zero’

    Date: 5th Feb 2021 12:05pm

    Joe Biden’s ‘Build Back Better’ plan means there will be major changes in the investm...

  3. You better be ready for  the ‘green revolution’

    Why 2021 will be such a critical year for the climate

    Date: 28th Jan 2021 17:24pm

    Climate change remained firmly on the agenda in 2020, but this year is shaping up to ...

Investment involves risk. You may get back less than invested.