Joe Biden on climate change: What does the new President Elect have in store for tackling the world crisis?
- Author : Novia Financial
- Date : 8 Jan 2021
The month of November started with the world on tenterhooks, watching and waiting for the result of the US election. Unlike most recent elections, this time the system had to face the challenges of processing votes during a worsening Covid-19 pandemic. The larger number of postal votes meant the counting took much longer than normal, and we just had to keep waiting to see whether Joe Biden would put paid to Trump’s hopes for a second term. It was on Saturday 7 November that we finally received the news that Biden was projected to win the key battleground state of Pennsylvania and therefore had successfully captured enough votes to secure the election. Donald Trump continues to contest the result, but consensus among experts remains that his claims are unfounded.
One reason why the world has watched the US election so eagerly is that so much seemed to hang in the balance for the future of the environment. A pro-Green presidency can only be good not just for the United States, but for Europe and the rest of the world. It will also create shifts in the markets. We have already seen interest in “ESG” or “Ethical” investments grow tremendously in the last few years. Sustainable funds in the US have already attracted $30.7bn in net investment flows up to the end of Q3 2020. This is already a record and breaks 2019’s total investment for the year of $21.4bn. A pro-Green US government can only help to increase awareness and improve performance, and this could well lead to more investors turning towards an ESG favoured solution.
Joe Biden is one of the most experienced presidential candidates for many years. He has worked as a Senator since the 1970s and worked successfully as Vice President for Barack Obama for two terms from 2009 to 2017. He has already stated that key items on his agenda for January are Obamacare, Brexit and re-entering the Paris Agreement to fight climate change. The Paris Agreement was set up through the United Nations to deal with this global challenge. Under the agreement each country must plan and regularly report on the contribution that it makes to mitigate global warming. President Elect Joe Biden played a key role under the Obama administration in signing the agreement in 2016. Donald Trump subsequently served notice that the US would leave the agreement when he took office in 2017.
Is the US a green country?
It is important to note that while the US did not have a pro-Green policy under Trump, and did not deem it necessary to tackle climate change, or set targets for the country, there are a vast number of companies, scientists and entrepreneurs in the US that have worked hard over the last four years to embrace this challenge and strive to make sure the US continued to take steps and make advancements in this area. Companies such as Cisco, Tesla and American Water have made much progress in making the US business and environment more sustainable. All the same, there needs to be an organised approach on a national level, with the right support and incentives to help these companies move to a higher level of sustainability.
As you can see from the above image, the US has some ground to make up in utilising renewable energy sources. Due to its temperature and coastal cities it has great potential both for solar and wind power to be fully utilised. It already produces more wind and solar energy than some countries, but much less as a total share of the needs of its population.
So what about under Biden?
President Elect Joe Biden is proposing to make the US carbon free by 2035, with the aim of achieving net zero emissions by 2050. Biden understands that action on climate change has two important benefits: making the US energy efficient and utilising renewable energies on the one hand, and providing new jobs for Americans to help get people back into work on the other. So what are the options?
- Financial investment – Biden plans to invest $2 trillion over the next four years. This money will be spent in making buildings more efficient (both business and residential) and upgrading public transport as well as incentives to switch to the use of electric vehicles.
- Temperature targets – the Paris Agreement agreed a temperature limit of 2 degrees Celsius for participating members. However, many scientists have said that this will not be enough and therefore Biden wants to set a limit of 1.5 degrees.
- Forcing companies to disclose their climate risk – we have seen similar disclosures coming into place in the EU which puts pressure on companies to disclose their climate risks. The G30 calls on governments to set out clear timelines for making the disclosure standards set by the Task Force on Climate Related Financial Disclosures (TCFD) mandatory by 2023.
- Setting a carbon price benchmark – carbon pricing has become a key policy mechanism to mitigate the impacts of greenhouse gases. Carbon pricing is effectively the method of putting a monetary cost to the use of carbon / production of greenhouse gases. It’s a tool now used across the world to help incentivise businesses to lower their carbon footprint.
- Improving the EV tax credit – this could see a change to the EV tax credit with a 600,000-vehicle manufacturer cap and a credit cut from $7,500 to $7,000. Biden has also discussed setting a $250,000 household-income limit for claiming the credit. Lifting the current caps would make the credit available to a much wider audience.
It is a lot of pressure and a lot to achieve for a new president, especially during a global pandemic. Several stakeholders believe that a Biden presidency with a pro-Green policy can make great strides in helping the US maximise its potential.
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