Skip to content
Search

Potential Winners and Losers from Biden's Climate Plan

Katie Elizabeth Deal, Investment Analyst

Regulations would affect the energy sector and automotive industry.

Presumptive Democratic presidential nominee Joe Biden has an ambitious climate agenda, headlined by pledges to eliminate carbon dioxide emissions from the U.S. electric power industry by 2035 and position the country to achieve carbon neutrality by 2050.

With USD 2 trillion in federal investment, Biden aims to achieve three goals: create jobs, modernize critical infrastructure, and support the growth of green technologies—with an eye toward putting the U.S. on the cutting edge of the energy transition.

Given the difficulty of passing sweeping legislation even with a congressional majority, Biden’s ideals-driven platform likely would get streamlined into an easy-to-pass bill. But we should expect the two themes anchoring Biden’s climate proposals to serve as the foundation for his presidential agenda: tighter regulation of the fossil fuels industry and stronger incentives to catalyze domestic development of fuel-efficient and green technologies.

Opening Quote With USD 2 trillion in federal investment, Biden aims to achieve three goals: create jobs, modernize critical infrastructure, and support the growth of green technologies... Closing Quote

Regulation vs. Legislation: Focus on the Path of Least Resistance

If elected, Biden would have two priorities in the first several months of his term: mitigating the coronavirus pandemic’s near-term effects and then helping the economy recover. Biden has framed his environmental and climate policies as components of larger economic proposals, suggesting that federal investment in green infrastructure could be a fundamental feature in a recovery act. However, that inclusion depends both on the administration’s priorities, which could shift between now and January 2021, and Biden’s ability to get legislation through the Senate.

Because several components of Biden’s platform would require Congress to pass and implement tax and spending provisions, the number of Democrats in the Senate would determine the extent to which his administration could accomplish its policy agenda. If the Democrats achieve a Senate majority, Biden could use the budget reconciliation process to pass clean energy and green infrastructure spending initiatives. Without that majority, the administration would need to moderate its legislative proposals.

Regulation would be Biden’s path of least resistance in promoting environmental protections, presenting an opportunity to reestablish and strengthen the Obama administration’s stance toward fossil fuels.

Winners and Losers From the Energy Transition

Although the details of Biden’s regulatory proposals are still developing, we would expect his administration to increase federal scrutiny of U.S. oil and gas operators. Biden has promised to crack down on greenhouse gas emissions, including methane leaked into the atmosphere by oil and gas operations. We would also expect agencies to tighten their regulatory requirements for issuing permits, leading to higher compliance costs for oil and gas wells, pipelines, and other fossil fuel infrastructure.

Biden does not support a national ban on hydraulic fracturing; however, his campaign has voiced support for a moratorium on new oil and gas lease sales on federal lands, halting the issuance of new drilling permits in these areas, and adjusting the royalty structure for wells.

Biden has also proposed leveraging federal tax credits and streamlining regulations to incentivize the manufacture and adoption of renewable energy—including massive federal investment in grid modernization. These and other policies could enhance secular tailwinds for electric utilities.

Opening Quote Biden views the electric vehicle industry as critical to achieving both carbon neutrality and an American manufacturing renaissance. Closing Quote

Automotive Industry: Electric Vehicles Favored

Biden views the electric vehicle industry as critical to achieving both carbon neutrality and an American manufacturing renaissance. In addition to tax incentives that would spur domestic manufacturing and consumer adoption of electric vehicles, Biden pledged federal dollars to build 500,000 charging stations, tighter fuel economy standards for passenger vehicles, and a full upgrade of the federal automotive fleet.

Although a Biden administration may have to adjust its campaign platform to reflect shifting legislative priorities and bureaucratic challenges, we would expect the presumptive Democratic nominee to use the tools at his disposal to further his party’s climate and green infrastructure agenda.


Important Information

This material is being furnished for general informational and/or marketing purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice, nor is it intended to serve as the primary basis for an investment decision. Prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Past performance is not a reliable indicator of future performance. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.

The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.

Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources’ accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of the date written and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.

The material is not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the material and in certain countries the material is provided upon specific request. It is not intended for distribution to retail investors in any jurisdiction.

EEA ex-UK—Unless indicated otherwise this material is issued and approved by T. Rowe Price (Luxembourg) Management S.à r.l. 35 Boulevard du Prince Henri L-1724 Luxembourg which is authorised and regulated by the Luxembourg Commission de Surveillance du Secteur Financier. For Professional Clients only.

Switzerland—Issued in Switzerland by T. Rowe Price (Switzerland) GmbH, Talstrasse 65, 6th Floor, 8001 Zurich, Switzerland. For Qualified Investors only.

UK—This material is issued and approved by T. Rowe Price International Ltd, 60 Queen Victoria Street, London, EC4N 4TZ which is authorised and regulated by the UK Financial Conduct Authority. For Professional Clients only.

© 2020 T. Rowe Price. All rights reserved. T. ROWE PRICE, INVEST WITH CONFIDENCE, and the bighorn sheep design are, collectively and/or apart, trademarks or registered trademarks of T. Rowe Price Group, Inc.

202008-1303824

Download

Audience for the document: Share Class: Language of the document:
Download Cancel

Download

Share Class: Language of the document:
Download Cancel
Sign in to manage subscriptions for products, insights and email updates.
Once registered, you'll be able to start subscribing.

By clicking the Continue button, I acknowledge that I have read and accepted the Privacy Notice

Continue Back

Change Details

If you need to change your email address please contact us.
Subscriptions
OK
You are ready to start subscribing.
Get started by going to our products or insights section to follow what you're interested in.

Products Insights

GIPS® Information

T. Rowe Price ("TRP") claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. T. Rowe Price has been independently verified for the twenty four-year period ended June 30, 2020, by KPMG LLP. The verification report is available upon request. A firm that claims compliance with the GIPS standards must establish policies and procedures for complying with all the applicable requirements of the GIPS standards. Verification provides assurance on whether the firm’s policies and procedures related to composite and pooled fund maintenance, as well as the calculation, presentation, and distribution of performance, have been designed in compliance with the GIPS standards and have been implemented on a firm-wide basis. Verification does not provide assurance on the accuracy of any specific performance report.

TRP is a U.S. investment management firm with various investment advisers registered with the U.S. Securities and Exchange Commission, the U.K. Financial Conduct Authority, and other regulatory bodies in various countries and holds itself out as such to potential clients for GIPS purposes. TRP further defines itself under GIPS as a discretionary investment manager providing services primarily to institutional clients with regard to various mandates, which include U.S, international, and global strategies but excluding the services of the Private Asset Management group.

A complete list and description of all of the Firm's composites and/or a presentation that adheres to the GIPS® standards are available upon request. Additional information regarding the firm's policies and procedures for calculating and reporting performance results is available upon request

Other Literature

You have successfully subscribed.

Notify me by email when
regular data and commentary is available
exceptional commentary is available
new articles become available

Thank you for your continued interest