We've been here before and it wasn't even that long ago. Another long night that started with assured (though not boastful) predictions for a victory of the status quo ended up in a dawn marked by a stunning upset that leaves the intelligentsia with their heads in their hands.
It's fair to say that – much like on the morning of 24 June, after the UK voted to leave the EU – investors weren't exactly pricing in a Donald Trump victory at the US presidential elections. The market reaction has been somewhat predictable, with stock markets declining (before bouncing back after the initial shock) and the Mexican peso, seen as a bellwether for the protectionist policies around the corner, taking a beating.
For readers of this publication, though, the real question is: what does a Trump presidency mean for infrastructure investment? The short answer is: we don't know for sure, but we have a few indications of what's in store.
The first comes from the President-elect himself, who directly referenced infrastructure in his victory speech. “We are going to fix our inner cities and rebuild our highways, bridges, tunnels, airports, schools, hospitals. We're going to rebuild our infrastructure, which will become, by the way, second to none. And we will put millions of our people to work as we rebuild it.”
Trump never really offered an infrastructure plan while he was on the campaign trail, but he did offer some 'guidelines'. For example, when his Democratic opponent, Hillary Clinton, unveiled her $275 billion infrastructure plan, he said he would invest double that amount; he also said he would use tax credits to attract private capital and take advantage of low interest rates to set up a bank/fund to help plug America's $3.6 trillion infrastructure deficit. And at one campaign rally on 7 November, Trump suggested cancelling US payments to the UN and rerouting them to infrastructure.
So a Trump presidency will almost certainly bring infrastructure investment, some of it surely to be executed and paid for by the private sector. The elephant in the room is, of course, whether Trump's infrastructure plan will include investment in clean energy infrastructure.
On the campaign trail, Trump referred to climate change as a hoax perpetrated by the Chinese; indicated that he would be willing to undo all of President Obama's emissions-related regulations; called the Environmental Protection Agency “a disgrace” that he would consider getting rid of; and said he would pull the US out of the COP21 climate change agreement.
He did not, as far as we can tell, threaten to repeal the five-year extensions of the wind and solar tax credits passed by Congress last year, with comfortable bipartisan support, that are expected to add about 40GW of solar and wind power. But here's the kicker: with Republicans now in control of both chambers of Congress and the presidency, Trump has a broad mandate to pretty much do what he likes.
The only silver lining is that renewables have come a long way. In fact, Bloomberg columnist Chris Bryant argues that they are, on the basis of cost alone, an unstoppable force – with or without Obama's Clean Power Plan, COP21 or, even, renewable tax credits. His conclusion: Trump can hamper efforts to stop climate change, “but he can't change energy economics”. What he can do, however, is introduce a lot of uncertainty for investors.
We often talk about disruption in the context of infrastructure investment, a lot of it brought on by new technologies. But the number one disruptor of 2016? Tesla could unveil a flying car tomorrow and the answer would still be easy: it's called the will of the people.
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