Will the US lead on climate change?

If President Trump’s lack of policy still led to green growth, imagine what president-elect Biden’s $2trn green stimulus plan can do, if fully enacted.

Well, that took a while. After four nail-biting days that kept the world on tenterhooks, Democrat Joseph R Biden Jr emerged as president-elect of the United States.

At the time of writing, President Donald Trump has yet to concede defeat. However, much like we did in 2016 – when we wrote our post-election debrief based on the then president-elect’s projected victory – we are tuning out the culture wars to focus on what the new US president has in store for the asset class.

Specifically, we want to tackle the Biden administration’s stance on climate change, considering it’s pretty much diametrically opposed to the outgoing administration’s. There is also a wider Biden infrastructure plan, which we’ll address soon.

But first, a trip down memory lane. Trump’s views on climate change were fluid, from branding it an “expensive hoax” to acknowledging it as “very important”. His signature climate policy – withdrawing the US from the 2015 Paris Agreement – speaks for itself, though.

Still, as Joe Keefe, president of Impax Asset Management, noted, “the clean energy sector has managed to thrive despite four years of indifference at best and opposition at worse, from the Trump administration. Technology cost reductions, supportive state-level policy and strong demand from corporate consumers responding to customer pressure have all helped renewables grow significantly with extremely limited federal support”.

Which is another way of saying that society at large disagreed with the president, and carried on decarbonising the economy. That’s encouraging, but no substitute for an actual climate change mitigation policy.

Take president-elect Biden’s plan for a $2 trillion green stimulus over the next four years, to help the US economy bounce back from covid. An analysis by Vivid Economics, published in The Guardian, shows green spending would increase 14-fold if Biden’s plans were implemented in full. To get a sense of how net positive that would be for the environment, the US would overtake the EU as the biggest low-carbon spender. In comparison, the current US stimulus plan is net negative for the environment.

Of course, the chances of Biden being able to fully implement his green stimulus are a bit like this election’s red mirage: come January and a Republican Senate, they might fade fast. As Keefe pointed out: “If the Republican Senate leadership reverts to its strategy during the Obama years – of an outright refusal to work across the aisle on any legislative proposals – then an overwhelming majority of this agenda is likely to be compromised.”

In which case, a cynic might ask what’s the point of a $2 trillion green stimulus plan – or an executive order to re-join the Paris Agreement – in the face of the cold, harsh truth? To which an optimist might reply that if four years of “indifference” and “opposition” still managed to produce green growth, four compromised years of climate-positive policies should be able to generate a whole lot more of it.

With the Federal Reserve listing climate change as a risk for the first time in its biannual financial stability report – calling for increased disclosure and warning of significant impacts on asset values – the more important question is: what are the cynics and the obstructionists actually holding out for?


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