IN FOCUS6-8 min read

The environmental impact of a Biden presidency

As the U.S. election unfolds, much attention has been paid to Joe Biden’s new climate agenda that could result in a step-change in U.S. climate policy and investment, with far-reaching implications across sectors including power, transport, real estate and agriculture.

02/12/2020
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Authors

Catherine Macaulay
Impact Investment Lead

A flurry of climate proposals has been put forward by the House Democrats, the Biden campaign, and the Senate in 2020. These all centre on a combination of ambitious goals, increased regulation and substantial federal investment.

Despite some differences between these proposals, the Democrats have shown a united front on key climate ambitions. All three plans have a 2050 decarbonisation target at their core and envisage significant levels of government spending (between ~1.5 –2.5% of GDP per year) to establish world-leading capabilities in clean industries and technology. All three agendas therefore embrace industrial policy, favouring federal investments over market-based mechanisms.

That said, calls for a carbon price from the financial and private sector continue to grow, as seen in the recent Commodity Futures Trading Commission’s (CFTC) recommendations to instate a nationwide carbon pricing scheme. Biden’s agenda leaves open the possibility of establishing a carbon price towards the end of his first term. It calls for an “enforcement mechanism” to be enacted by 2025 to meet the 2050 decarbonisation target – “based on the principles that polluters must bear the full cost of the carbon pollution they are emitting.”

Key elements of Biden’s updated climate agenda

Biden’s new climate agenda, announced in July as part of his Build Back Better plan, is significantly more ambitious than his original ‘Clean Energy Revolution’ plan. The plan includes an accelerated investment of $2 trillion over four years, vs. his earlier proposal of $1.7 trillion over a decade.

Environmental justice and climate equity have also been highlighted in Biden’s campaign as well as in the proposals put forward by the House and Senate Democrats. The issue has also been a core feature of Biden’s running-mate Kamala Harris’ platform. Just days before she was announced as his vice-presidential pick, Harris introduced a climate equity bill to ensure that any environmental legislation takes careful consideration of its impact on low-income communities.

Biden’s climate agenda

  Priority
Power

Decarbonise the power sector by 2035

Transport

Accelerate the shift toward zero-emission vehicles

Provide high-quality, zero-emissions public transport for every city

Real estate

Make all new buildings net-zero by 2030

Improve energy efficiency: cut emissions in existing building stock by 50% by 2035

Tech

Invest $400 billion over 4 years for green tech (energy storage, carbon capture & storage (CCS), nuclear)

Hydrogen

Ensure green hydrogen is available at the same cost as conventional hydrogen by 2030

Agriculture

Decarbonise the agriculture sector

Source: Schroders.

Conclusion

As Biden has declared victory in the US presidential election, he is likely to re-commit the country to the Paris Agreement and to a net zero emissions reduction target by 2050. This would mean significant investment ($2 trillion) into green industries and technologies, and it would also require tighter regulation of higher-emitting industries, including oil and gas, utilities and autos.

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Authors

Catherine Macaulay
Impact Investment Lead

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