The US election has still not been decided.
I’m not talking about Donald Trump’s risible legal challenges, which last week descended into pantomime, but whether Biden will control Congress.
We must wait until January to determine this when the two remaining Georgia Senate seats are fought over. Even then Biden’s hold on power would depend on Vice-president Harris’s casting vote as Senate Chair. Environmentalists are despondent, while green stocks are surging with unbridled optimism. Could they both be right?
Trump’s legal challenges are dropping by the wayside, and his legal team seem to be losing their grip on reality. Last week’s press conference was a vital historical event which you must watch (I disagree strongly with CNN’s censorship of this event). Watching Trump’s lawyers Rudy Giuliani and Sidney Powell auditioning for Disney cartoon villains would convince anyone where the truth lies. Highlights included Giuliani acting out a scene from My Cousin Vinny while his hair dye ran, and Sidney Powell asserting that Cuban and Venezuelan communists were switching millions of votes.
Even conservative Fox anchor Tucker Carlson questioned Powell’s allegations, and by Sunday night she was gone.
The fact that the Republican leadership tolerates this nonsense has everything to do with those two senate elections, and their hope victory will prevent Biden from governing.
While the world waits, US environmental policy is hanging in the balance.
On the plus side, the appointment this week of John Kerry as a special envoy on the climate crisis with a seat on the national security council is a serious step-change in tone.
But, Biden’s own ‘Plan for a Clean Energy Revolution’ is a long, long, way from the Green New Deal adored by progressives. It commits to making the US carbon neutral by 2050 (not 2030) and to spending $1.7 trillion (not $7 trillion). This plan is not ideal and the suspiciously round job numbers certainly do not bear scrutiny (250,000 jobs magically created by plugging oil wells and ‘reclaiming’ mines – really?). Nonetheless it has two significant initiatives – a government sponsored retrofit of buildings nationwide, and a major push on electric vehicles (installing some 500,000 EV charging stations for ‘made in America’ electric cars).
But this deal will get nowhere in the Senate. Even if Biden wins both those Senate seats, legislation would still have to get past Democrat Joe Manchin of West Virginia (the US’s main mining state). Washington consultant Gloria Dittus observed “a legislative green new deal has been derailed.” Environmentalists are despondent.
Stock markets beg to disagree – “green is the new black” as Reuters quipped. The iShares Global Clean Energy ETF has surged from $8 to $22, while data from Morningstar shows 1.9 billion euros went into European renewable energy funds in Q3 (more than ten times the amount last year). The RENIXX Renewable Energy Index has more than doubled in 2020, while oil shares have collapsed. At one point NextEra Energy (the American renewable energy company) even briefly overtook the market capitalisations of Exxon and Chevron. European green stocks have soared. Vestas Wind Systems has risen over 150%, and EDP Renovaveis more than 80% (and is now worth some 15 billion euros).
These hopes for a clean energy boom are founded on President Biden’s ability to use his regulatory powers. “Large portions of the domestic economy operate according to regulatory requirements that are written by the executive branch as opposed to the legislative branch” observed John Morton, a partner at the climate change consultancy Pollination. This will be especially important in three areas – wind energy, solar energy and electric vehicles.
A Biden administration could quickly end the extraordinary delays to the proposed 800MW Vineyard Offshore Wind Project in Massachusetts run by Avangrid Renewables and Copenhagen Infrastructure Partners. This in turn could end a logjam for other east coast projects and provide a clear change of direction. As Tom Kiernan of the American Wind Energy Association says: “setting a standard….is really important for giving people a north star.”
Likewise, the new government could end the Trump tariffs on solar modules and inverters from China (which have doubled prices). And the Solar Energy Industries Association has hopes that the phasedown of the solar investment tax credit will be delayed and a replacement found for “the single most effective current policy available to encourage clean energy deployment.”
In electric vehicles we might also legitimately hope for a u-turn on the Trump decision to strip California of its right to set tougher auto standards (which led California along with twenty two other states to sue the federal government). As California Governor Gavin Newsom says “you can’t get serious about climate change unless you get serious about vehicle emissions.”
Nor must we forget, US presidential patronage is on a scale that seems unthinkable to Europeans used to politically-neutral civil servants, though this will not extend to top posts requiring Senate confirmation. Laura Maunus of ‘Sunrise’ the “green movement of young people” (excluding older people makes me uncomfortable, but not them) asserted they would hold Joe Biden’s feet to the fire on appointments. The very next day, the Biden transition team appointed Cedric Richmond who has allegedly received more financial support from the oil and gas industry than almost any other congressman.
Likewise, hopes of Washington Governor Inslee for the EPA seem a pipe dream the Senate won’t accept. Nor Debra Haaland (D-NM) as Secretary for Energy, despite more than 130 Native American leaders asserting “Native Americans are guardians of the land…in major environmental decisions.”
By contrast, the biggest executive power President Biden will exercise will be re-joining the Paris accord. This is something he absolutely can do, because President Obama determined that this international agreement was an “accord” not a “treaty” (which would have required congressional authority). US leadership on climate issues will be re-asserted.
But leadership in which direction? The Paris accord is hopelessly compromised by the scope it gives the world’s polluter-in-chief, China, to carry on. China makes green-sounding comments and then does exactly the opposite. A Guardian-commissioned ranking of national green recovery plans puts China last of the major economies (renewables are just 0.3% of its stimulus package). Meanwhile China’s ‘Belt and Road initiative” is sponsoring dirty power projects globally across 70 different countries.
To be fair to Joe Biden, he says China should do more. But will he really pressurize them successfully?
Most worrying here are the various allegations linking the Biden family with Chinese interests. How truthful are they? The Biden family business partner Tony Bobulinski has made highly detailed allegations about meetings he had with Joe Biden, along with his son Hunter Biden and brother Jim Biden. These show ties to CEFC China Energy (which generated 60% of its revenue from oil and gas by the way) and purportedly offered Hunter $10 million a year for introductions. Documents released last week by a Senate committee showed two $3m wire transfers from Shanghai Based State Energy (a CEFC affiliate at the time) to Rob Walker (no relation) who along with Jim Biden, Hunter Biden and Bobulinski were partners in an entity called Oneida Holdings.
These allegations need to be investigated, but as the Wall Street Journal commented Joe Biden “hasn’t denied that the meetings took place, and the Bobulinski documents make clear Mr. Biden hasn’t been honest about his knowledge of his son’s business affairs.”
So much for a ‘new era.’ What hope for the green agenda in this age of truth decay?
Christopher Walker is a writer on business and politics. He sat for several years on the asset allocation committee of a major asset manager.