The White House effect: Biden, Trump, and the outlook for green business

Whoever wins the 2020 election will steer the world’s biggest economy through the start of a critical decade for green business

It is near impossible to express just how monumentally important the 2020 US election could be for the changing climate and the shape of the global economy throughout one of the most consequential decades in human history.

As is blatantly obvious for anyone who hasn’t been living under a rock for the past four years, the two candidates vying for the White House could scarcely offer more starkly different visions for that beautiful, messy, strange, inspiring, and increasingly on fire collection of 50 states that make up America.

While the many demographic, cultural, socio-economic, and political factors sure to be raked over by psephologists both amateur and professional over the coming days can paint a Jackson Pollock vision America, the bigger picture is of a country fiercely divided down very clear lines, and on practically every single issue at stake the election is more akin to a Rothko: two deep blobs of red and blue.

Yet it is green that is arguably the biggest – and most important – colour in this election, and given the US remains the world’s largest economy with unrivalled military, diplomatic, and soft power, it is no exaggeration to say that the outcome of Tuesday’s election matters to every single person on the planet. The climate really is at stake.

That is, at least, the picture Joe Biden’s campaign has sought to paint. There is a widely held belief in the Democrat camp that Hillary Clinton, despite winning the popular vote in 2016, failed to motivate important demographics to turn out in crucial swing states, including – very broadly speaking – youth and minority groups. This time around Biden is working hard to avoid the same mistake, and as such climate change has been pushed front and centre in his campaign as he attempts to capitalise on the strong fervour for action on the issue that has surged over the past four years, particularly among these demographic groups. Even during the final few high stakes days of the campaign, the Biden camp has been releasing ads stressing its commitment to climate action, while Biden has used Twitter to highlight President Trump’s refusal to accept climate change is a threat.

I believe climate change is an existential threat to humanity.Donald Trump doesn’t even think it exists.It’s that simple, folks.

— Joe Biden (@JoeBiden) November 1, 2020

It is a strategy that makes a lot of sense. Concerns over climate change have skyrocketed up the cultural and political agenda in the West, helped in part by the wrecking ball Donald Trump has aimed at environmental regulations, policy, and governance during his first term in office. As a result, for the first time in US history climate change has been a major feature in debates between the two candidates – and in their campaigning. While Biden has promised to listen to scientists, back green jobs, and re-engage with the Paris Agreement, Trump will ensure the US exits the global accord as soon as Wednesday, continues to cast doubt on scientific warnings, and has sought to position himself as the saviour of fossil fuel industries from the threat apparently posed by a Biden White House to the oil, gas, and coal sectors.

The rival messages appear to be cutting through. Climate change, green jobs, and environmental protection look set to be decisive issues for US voters over the next four years and beyond with a recent poll by the Covering Climate Now initiative finding seven in 10 voters supported government action to address such issues.

As such, the eventual outcome will have huge ramifications for green businesses the world over. The race for the Oval Office could be very close, and due to Covid-19 and mail-in ballots, clear results may emerge days if not weeks after polling day. But here, broadly, are the two pathways for the US green economy from January 2021.

A Trump victory

Whoever wins the White House race, the green economy will have benefitted hugely from the air time the climate crisis has for the first time been given at this election, massively helping to raise awareness of not just the problem but also the solutions. 

But there is no avoiding the fact that another four years of Trump in the White House would leave the green economy in a far more difficult position than a under a Biden administration. That isn’t so much because of what Trump will do, but because of what he won’t do. And at a time of escalating climate impacts and an accelerating global market shifts, inaction is an extremely aggressive and dangerous policy position for the US economy.

Trump hasn’t given a lot away about his plans for the economy and the environment, if indeed they exist, but the past four years have given a fairly strong idea of what to expect from a second term. Researchers have tracked more than 160 major rollbacks of environmental regulations over the past three years, including Obama’s landmark Clean Power Plan, car fuel standards, methane emissions rules, and efficiency standards for light bulbs. Trump is therefore almost certain to stoke his bonfire of red tape yet further, having pledged to open up a 19 million acre area of the Arctic for oil drilling for the first time and even hinted at rolling back shower pressure standards, after recently complaining water efficiency rules were harming his hairstyle.

Having overseen the biggest federal corporate tax cuts in US history, Trump’s low tax agenda is also likely to continue. But for green businesses, any conceivable bottom-line benefit that may have delivered is likely more than undercut by Trump’s fondness for industry-damaging trade wars, particularly with China, on which a 30 per cent solar cells import tariff was placed in 2018. Such tensions with China, and indeed with an EU mulling plans for a carbon border tax, are if anything likely to further heighten during a second Trump term. Add to the mix the current administration’s failure to get a handle on the Covid-19 crisis, and green and responsible businesses are unlikely to get the stability and support they crave.

Yet despite Trump’s disdain for renewable energy and penchant for pumping billions of dollars into declining fossil fuel industries in the wake of the pandemic, his efforts have failed to halt the clean energy transition. US wind power, which Trump has tried to link to everything from bird deaths to cancer, has grown from around 80GW of capacity in 2016 to over 100GW last year, and solar capacity is also still growing fast, as are electric vehicle numbers. Meanwhile, more coal capacity has retired under Trump than Obama, numerous fracking operations have filed for bankruptcy, and like many oil companies ExxonMobil has just announced thousands of job cuts.

For Rachel Kyte, Dean of the Fletcher School at Tufts University in the US and former CEO of NGO Sustainable Energy for All (SEforALL), a second Trump term would likely result in big missed opportunities for the US to catch the crest of the global green economic wave. For example, Trump is unlikely to put in place the policies required to accelerate the development of the nascent US offshore wind industry, nor would would he prioritise energy efficiency and renewables in the economic stimulus package that must surely follow the pandemic. But Kyte remains bullish that market forces and state-level action will continue to broadly accelerate the clean tech transition regardless, potentially posing a major political challenge for second term Trump White House.

“I think we’re at tipping points now in terms of where capital is going, and we’re at tipping points in terms of where young people want to work, so the front-end of the energy transition is just going to go faster,” Kyte said during an event last week hosted by the Energy and Climate Intelligence Unit (ECIU) think tank. “And so the question then for the Trump administration is do you try and hold back the tide, or do you find things within [the clean energy transition] that should be important to a fiscally responsible conservative government?”

This broadly upbeat assessment is widely shared by green business leaders and investors, who do not want to see a Trump victory but reject the idea it would inevitably prove to be disastrous for the US and global green economy.

However, it is somewhat harder to maintain such optimism when considering the impact of a Trump victory on climate diplomacy. The US is due to exit the Paris Agreement the very day after the election this week, which would significantly reduce the country’s influence in next year’s crucial COP26 climate change conference in Glasgow. It could also drive a wedge in its ‘special relationship’ with the UK, which as host of the summit is under significant pressure to deliver strong global climate commitments and could well form closer diplomatic ties with the EU and China as a result.

The big fear is that a Trump victory and validation for his form of overt climate scepticism and ‘America First’ nationalism would send shockwaves through multilateral institutions such as the UNFCCC climate secretariat and embolden those fellow travellers who echo Trump’s opposition to the Paris Agreement. A worst case scenario could see Brazil, Russia, Turkey, and others seize on a Trump victory to step up their own opposition to the accord and the global climate action it aims to catalyse.

But here too observers insist a Trump victory can be managed. Peter Betts, associate fellow for the energy, environment, and resources programme at Chatham House, remains confident no other countries would follow the US out of the Paris Agreement, and that even under an extended Trump administration the green agenda will progress “come what may”. “The real economy shifts are absolutely huge,” he argued during the ECIU event. “It’s not just renewable energy being cheaper than fossil fuels in most parts of the world, electric vehicles are going to be cheaper even on a full life cost basis than internal combustion engines in the next few years . This change is irreversible. It’s inevitable.”

Again, there is a broad consensus that the transition to a net zero economy is now inevitable – a consensus that has strengthened in the last month with the moves by China, Japan, South Korea, and the EU to beef up their net zero plans. But the concern remains that a Trump administration would slow the transformation of the global economy, resulting in key deadlines being missed. Green businesses would remain bullish in the face of any further setbacks, but there is no doubt a Trump victory would put a big dent in the chances of the 2C temperature goal being met. That is why so many business leaders will be privately hoping Trump doesn’t just lose this week, but loses by such a wide margin that he has no possible legal recourse to try and cling to power and finally forces the Republican Party to reflect on his ecocidal and authoritarian tendencies. 

A Biden presidency

Joe Biden has called climate change the “number one issue facing humanity”, and his policy positions on climate and clean energy – as well as being far clearer than Trump’s – would, on paper at least, easily make him the greenest President in US history.

He has promised the US would re-join the Paris Agreement – which requires just a month’s notice to do so – target net zero greenhouse gas emissions by 2050, and build a net zero carbon electricity system within 15 years. All three he has promised to demand from Congress within his first year in office, backed by the establishment of “an enforcement mechanism that includes milestone targets” no later than 2025 towards the net zero goal. These pledges alone are far beyond anything previous serious contenders for the White House have offered.

In addition, Biden’s $2tr green investment plan promises to help create millions of jobs in clean energy and electric vehicles, tighten fuel economy standards for cars, build 1.5 million sustainable homes, provide green upgrades for another four million existing homes, help rollout zero emissions public transport across the country, invest in new railroads, support “climate-smart agriculture”, and create employment opportunities from “plugging abandoned oil and natural gas wells”. On top of federal investment, he is hoping to leverage more than $5tr in private and state investment towards climate and environmental justice efforts over the next 10 years.

“Every dollar spent toward rebuilding our roads, bridges, buildings, the electric grid, and our water infrastructure will be used to prevent, reduce, and withstand a changing climate,” Biden’s policy platform states.

Critics rightly point out that Biden’s plan still doesn’t go far enough towards tackling the climate crisis and delivering the level of green investment required to build a net zero emission economy, yet it would still undoubtedly be a huge boon for the green economy, and a setback for fossil fuels. Having promised not to accept any campaign contributions from oil, gas, and coal companies, Biden says he wants to cut federal subsidies for fossil fuels and “transition away from oil” in order to reach net zero by 2050.

However, it is here that the clarity that defines Biden’s climate plan becomes a little murkier. He has repeatedly insisted he does not want to ban fracking – except on federal land on which very little drilling takes place anyway – and that he favours developing carbon capture and storage (CCS) technology in order to keep fracking going long into the future. It is an approach that would represent a major win for the CCS industry, but it has also fuelled concern over the strength of his commitment to ambitious climate action. “We’re not getting rid of fossil fuels,” Biden has said. “We’re getting rid of the subsidies for fossil fuels, but we’re not getting rid of fossil fuels for a long time.”

Betts believes Biden is serious about ambitious climate action, but has to tread a tricky line. “It’s a priority and the whole coalition he’s built depends on it,” he said. “But even if he wins the Senate, some of the states he is going to need to win to get over the line are likely to be places like West Virginia and Montana which have strong fossil fuel industries. He’ll need to build constructive coalitions to build transitions and other opportunities for these places.”

To date Biden has walked the tightrope pretty effectively. Leading Democrat advocates for bolder climate action such as Alexandria Ocasio-Cortez have vocally backed Biden’s strategy, arguing it is much better to lobby for more ambitious decarbonisation policies once your colleague is in the White House than spark a factional row during the campaign.

On the international stage, meanwhile, having a US leader committed to climate action would make a monumental difference to climate diplomacy worldwide. Biden has promised to “fully integrate climate change into our foreign policy and national security strategies, as well as our approach to trade”, and re-joining the Paris Agreement and delivering a 2050 net zero plan before COP26 next year, the momentum in support of bolder global climate ambition – following closely on from similar pledges from the EU, China, Japan and South Korea – would sent a clear signal to markets and governments.

In his first 100 days of office, Biden has also promised to convene a summit of the world’s major emitters to try and persuade them to strengthen their climate pledges. And while fiercely critical of China’s human rights record which is likely to worsen relations between the countries, a Biden White House is widely thought to view the EU as a natural ally on a number of issues – both he and Brussels leaders are currently considering carbon border adjustment policies, for example. There are fears that in cosying up to the EU the White House could marginalise the UK, while perhaps greatly reducing the chances of a green business-damaging no-deal Brexit, due in part to Biden’s concerns such an outcome could imperil the Good Friday peace agreement in Northern Ireland. But the diplomatic alarm bells should really be ringing within those governments that remain obstructive towards climate progress. A Biden victory, coupled with China’s new net zero goal, could leave them looking very isolated.

However, a great deal of what Biden could achieve depends on the make-up of Congress. The House of Representatives is almost certain to remain Democrat controlled after this week’s elections, and the Senate is also very much up for grabs, which could smooth the path for Biden to enact his climate vision. Should Republicans maintain their stranglehold, however, Biden’s climate ambitions would be severely hindered. But Conservative MP Tom Tugendhat, chair of Parliament’s the Foreign Affairs Select Committee, said during the ECIU event he thought ‘split-ticket’ voting was unlikely on Tuesday. “I suspect whoever wins the Presidency will win the Senate,” he said. “If Biden wins that will give the Democrats a majority in the Senate, and I can’t see any particular reason for doubting Biden’s seriousness or his ability to deliver [on his climate policies].”

Crucially, too, should the Democrats take the Senate, it could usher in a new cohort of climate-savvy senators chosen by an electorate increasingly keen on climate action. One of those could be Mark Kelly, a former US astronaut who has a strong chance of taking the late Republican John McCain’s former seat in Arizona, and who is a strong advocate of climate action. “These are important races and could give us a set of senators that bring real experience to the table on climate if the Democrats were to win,” Kyte argued last week.  

A fork in the road

After the tumult of 2020, next year could usher in the greenest presidency in history overseen by a man who has put climate change, green jobs, and science front and centre of his campaign. It would result in all three of the world’s biggest economies – the US, China, and the EU – all having targets and investment plans in place to fully decarbonise within three or four decades. It would unleash multi-trillion dollar green infrastructure investment programmes that would have a ripple effect all around the world. And it would herald a demographic shift in America that may finally demonstrate to Republicans that their disavowal of basic climate science could lock them out of power for a generation.

Or, on the other hand, the vagaries of the US electoral college and some of the most amoral campaigning tactics ever witnessed could ensure that for the next four years the most powerful office in the world is once again occupied with a man with interest in confronting the biggest threat to global stability and prosperity this century. It could result in the implosion of the consensus that gave the world the Paris Agreement and lead to the erection of numerous fresh barriers in the path of green businesses and clean energy developers. Worst of all it could serve to turbocharge a new era of nationalism, precisely at a time when climate impacts and the transition away from fossil fuels ratchet up geopolitical tensions.

With hours to go until the polls open, the stakes could not be higher.

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