The 2020 election offers voters a choice between President Donald Trump, who has largely campaigned on his economic record, and former Vice President Joe Biden, who has criticized Trump’s response to the coronavirus pandemic. Although environmental policy is not making the headlines as frequently as the pandemic or the recession, the two major candidates have proposed greatly divergent plans on climate change, natural resources, and energy. What ramifications could the election results have for climate-focused impact investors?
A Second Term for Trump: Looking beyond the Paris Withdrawal
As Trump is the incumbent, his campaign materials for the 2020 election emphasize what he has already accomplished in office and suggest that reelecting him would allow him to continue advancing his priorities. With regard to the energy sector, these priorities include expanding oil and gas production, increasing natural gas exports, relaxing emissions regulations, and withdrawing from the Paris Agreement. The Trump campaign highlights job creation and lower energy prices for consumers, rather than environmental outcomes, as the results of the current administration’s energy policies. However, the President also touts the Affordable Clean Energy rule, which aims to reduce greenhouse gas emissions, among other goals, and expresses support for the Environmental Protection Agency’s environmental cleanup work.
Some have argued that Trump’s policies have “stunted growth” in the renewable energy sector and that reelecting him would irreparably harm the climate. If these perspectives are correct and Trump is reelected, impact investors could see fewer renewable energy projects seeking investment in the years to come and steep challenges for climate change mitigation initiatives. Shareholder advocates might also have a difficult time convincing companies of the importance of environmental policies if corporations believe that regulators have backed off due to the administration’s stance.
At the same time, some conservatives have suggested that Trump’s support for technological innovation benefits clean energy, and that withdrawing from the Paris Agreement is a symbolic act with few real-world implications. Thus Trump’s reelection might boost investment in green technology, either because his policies promote innovation as some claim or because a backlash to his symbolic rejection of environmental goals prompts local governments and private companies to double down on implementing renewable energy.
A Biden Presidency: Climate Leadership or Unrealized Ambitions?
He has proposed a variety of environmental policies, from providing zero-emissions public transportation and promoting clean energy technology to supporting sustainable agriculture, upgrading energy efficiency in buildings, and ridding the energy sector of carbon pollution by 2035. Biden’s plan for climate change is to achieve net zero greenhouse gas emissions by 2050, offer incentives for adopting renewable energy, crack down on companies that pollute the environment, and participate in the Paris Agreement.
Depending on whether he is elected and how events play out, impact investors might see a proliferation of new sustainable energy initiatives, particularly projects directed at reaching Biden’s ambitious carbon pollution milestones. In fact, it has already been suggested that Biden’s poll numbers are buoying clean energy stocks.
However, some have questioned whether Biden can actually accomplish his energy objectives, given that his plans appear to depend on future technological advancements that might not materialize. It could be a challenge for impact investors to identify technologies that can deliver on their promises, although the race to create these technologies would also likely lead to many opportunities for investors. Others have criticized Biden’s plan on the grounds that it does not sufficiently encourage decentralized climate action. According to this view, a Biden presidency could mean that investors would not face as wide a range of potential investments as they would under a decentralized approach.