President-elect Joe Biden has numerous avenues to advance a substantial energy transition plan, even independent of the comprehensive climate initiatives known as the Green New Deal, potentially through upcoming infrastructure or economic stimulus legislation.

Experts, investors, and advisors to the President-elect suggest that opportunities exist to integrate climate-conscious policies into infrastructure and stimulus bills that Congress prioritizes, even if Republicans retain Senate control.

This presents positive prospects for both well-established businesses and emerging companies concentrating on technologies designed to lessen greenhouse gas emissions and address global climate change. These developments could occur despite potential resistance from even centrist Republicans regarding climate-related matters.

“It appears that conservative viewpoints continue to represent the majority of public sentiment within the country,” Senator Mitt Romney stated recently on “Meet the Press.” “I doubt there is widespread support for a Green New Deal, or for eliminating the use of coal, oil, or natural gas. Furthermore, I don’t believe there is significant interest in programs like Medicare for All or tax increases that could hinder economic growth.”

As an illustration, Shell recently announced the closure of a Louisiana facility, resulting in approximately 650 job losses. This closure is largely attributed to reduced oil demand stemming from the COVID-19 pandemic; however, both Shell, headquartered in the Netherlands, and its British counterpart, BP, anticipate that global fossil fuel consumption may have peaked in 2019 and is projected to decline in the long term.

The economic consequences of COVID-19 and a worldwide move away from fossil fuels are also impacting major U.S. oil and gas companies. Chevron and ExxonMobil, two of the industry’s largest players, have experienced declines in their stock prices over the past year as the oil sector responds to substantial decreases in demand and other market challenges.

Concurrently, several of the country’s leading utility companies are actively working to discontinue power generation reliant on fossil fuels.

The shift towards renewable energy is already gaining momentum in the markets, largely without significant governmental intervention, particularly within the United States. Therefore, the central issue is not whether the government should support this transition, but rather how swiftly stimulus funds can be deployed to protect American employment.

“Much of the significant climate-related progress in the immediate future… will not directly involve renewable energy sources,” noted an advisor to the President-elect.

Consequently, key questions arise: What form will economic stimulus take? How will these funds be allocated? And what mechanisms will be used to finance these initiatives?

The President-elect has already outlined the initial priorities for his administration. Addressing the ongoing COVID-19 pandemic, which has tragically resulted in over 238,000 American fatalities, takes precedence, but managing the resulting economic consequences will quickly become a central focus.

Experts and advisors suggest that climate-focused programs will be a significant part of this economic recovery, potentially benefiting both emerging technology firms and established companies within the fossil fuel sector.

Earlier this year, a campaign advisor stated, “When considering how to allocate these funds, it’s crucial to ensure the investments propel us forward rather than simply repeating past mistakes.”

To effectively assess how the substantial funds available will be allocated, it’s useful to consider the objectives in terms of short-, medium-, and long-term horizons.

Initially, the emphasis will be on projects that can be initiated rapidly – often referred to as “shovel-ready” initiatives. These include endeavors such as environmental improvements to existing buildings and infrastructure upgrades, repairs and modernization of water and power networks, increased incentives for electric vehicle production, and potential funding increases for environmental cleanup and restoration efforts.

Estimates suggest this initial spending could reach $750 billion, aiming to create employment opportunities for Americans, particularly in industrial and manufacturing roles, with the potential for sustained positive effects on the national economy. This is especially true if investments are directed towards the government-defined Opportunity Zones established to support economically disadvantaged rural and urban areas.

Integrating Opportunity Zones into these efforts could accelerate fund deployment. Furthermore, prioritizing infrastructure projects that also incorporate technological elements would be advantageous for startups that have successfully navigated the challenges associated with technology-related risks.

A Biden advisor commented, “Careful alignment of incentives with desired outcomes is essential when formulating policy, particularly at the federal level.”

Medium- and long-term objectives will likely necessitate more extensive planning and development, as they may depend on emerging technologies or require navigating the approval processes at state and local levels before federal funding can be secured for construction.

Approximately $60 billion is anticipated to be allocated to these projects, supporting development, workforce training, and reskilling initiatives to prepare the workforce for evolving job market demands.

Prioritizing Incentives over Regulations

A significant potential obstacle for the Biden administration’s climate initiatives lies in the possibility of legal disputes brought before a conservative judiciary that has been increasingly appointed during the Trump administration.

These legal actions may compel the Biden administration to place greater emphasis on the economic advantages of encouraging adoption through appealing incentives, rather than enforcing changes through strict regulations.

“When feasible, allowing market forces to drive outcomes is preferable,” stated an advisor to the President-elect. “A strategy of incentives should generally be favored over a strategy of mandates.”

Recent positive vaccine trial results from Pfizer offer valuable insights, mirroring potential progress within the current administration’s COVID-19 vaccine efforts.

Although Pfizer did not participate directly in the Department of Health and Human Services’ Operation Warp Speed program, the company secured a $2 billion agreement with the government, guaranteeing a market for its vaccine production.

Similar public-private collaborations, as suggested by Connecticut Senator Chris Murphy, could also be utilized in the realm of climate change – particularly in sectors most affected by the shift away from coal.

A portion of this guaranteed funding could be allocated to environmental cleanup efforts for abandoned natural gas wells or coal mining sites – especially in areas like the Dakotas, Montana, West Virginia, and Wyoming, which are likely to experience the most substantial impacts from a move away from fossil fuels. Funding could also support the development of innovative geothermal engineering projects, leveraging the existing expertise of engineering companies and oil businesses.

Furthermore, the potential for a hydrogen-based economy is emerging, which could utilize existing oil and gas infrastructure and skills to facilitate a transition towards a more sustainable energy system (it should be noted that this does not necessarily equate to a completely clean energy future, but rather a comparatively cleaner one).

Several countries, including Japan, are already establishing the foundations for substituting oil with hydrogen fuels, and these types of incentive-driven programs and public-private partnerships could significantly benefit startups across various industries.

Any policy initiatives undertaken by a Biden administration will likely prioritize widespread economic opportunity, and many proposals from the campaign align with this goal. The transition website highlighted a commitment to “establishing quality, unionized, middle-class employment in underserved communities, addressing environmental injustices in areas disproportionately affected by pollution, and supporting innovative solutions from throughout our nation – encompassing rural, urban, and tribal regions.”

Early investment in the electrical grid and utility infrastructure could generate substantial employment opportunities nationwide, while also benefiting technology firms.

Abe Yokell, a co-founder of the energy and climate-focused venture capital firm Congruent Ventures, stated, “Our current electric power infrastructure is outdated, deteriorating, and vulnerable.” He continued, “From an infrastructure perspective, upgrades to transmission and distribution systems are essential, as these areas have experienced insufficient investment in recent years. Such improvements directly support the expansion of renewable energy and the increasing electrification of various sectors.”

Integrating the modernization of electric infrastructure with enhanced broadband capabilities and advanced monitoring technologies for power and water systems would represent a significant benefit for companies like Verizon (TechCrunch’s parent company) and other networking businesses. This also offers utilities a mechanism for adjusting their rates, which is a positive outcome for them.

These infrastructure improvements are also valuable in assisting utilities in finding alternative uses for aging coal facilities, which are both expensive and becoming increasingly obsolete.

Yokell explained, “Continuing to burn coal is no longer economically viable.” He added, “Despite being unprofitable, coal plants are still operating due to liability concerns, and there is a widespread desire to decommission these assets.”

If these facilities can be retired and repurposed as nodes within a distributed energy grid, utilizing energy storage to manage capacity in a similar way to how coal plants once functioned, “it would be a substantial achievement,” according to Yokell. He noted that the primary obstacle to energy storage adoption has shifted from cost to finding suitable locations.

Revitalizing existing hydroelectric facilities with newer, more efficient technologies presents another avenue for progress through readily available projects, and is an area where startups could potentially benefit from increased investment. This also provides a means of creating jobs in rural areas.

The potential benefits of infrastructure spending extend to both urban and rural communities, but the positive economic effects do not stop there.

Rural areas stand to gain from business opportunities in “climate-conscious agriculture, resilience initiatives, and conservation efforts, including 250,000 jobs related to plugging abandoned oil and gas wells and reclaiming abandoned coal, hardrock, and uranium mines,” as highlighted by the Biden transition team. Additionally, workers in the oil industry have a significant opportunity to transition into the expanding geothermal energy sector, which is driven by technological advancements.

Farm subsidies, which have increased significantly under the Trump administration, could continue, but with a greater emphasis on climate considerations. Rather than simply distributing funds to farmers – a projected $46 billion in 2020 under the Trump administration – payments could be linked to “carbon farming” practices. Appealing to the agricultural vote with the promise of financial incentives for carbon sequestration could potentially revive discussions around carbon pricing (a concept that has faced challenges in government). Beyond carbon sequestration, rapid advancements in synthetic biology for biomaterials, coatings, and even food production could leverage the existing biofuel fermenters and feedstocks in the Midwest to foster a new biomanufacturing industry.

Moreover, the expansion of rail lines spurred by the shale gas and oil boom creates opportunities to develop additional manufacturing capabilities that can be transported throughout the United States.

Financial investments intended to strengthen rural economies can be similarly effective within America’s major metropolitan areas. Initiatives designed to stimulate the automotive sector, whether through incentives for electric vehicles or federal requirements for fleet modernization, would significantly benefit both vehicle manufacturers and the companies that provide them with parts.

Collaborative efforts between public and private entities focused on urban infrastructure improvements could initially benefit from funding allocated to planning and overseeing these upgrades. This approach could encourage the adoption of innovative technologies from emerging companies nationwide, while simultaneously generating employment opportunities for a substantial workforce during the implementation phase.

A significant opportunity for urban economic growth and the advancement of climate goals lies in the often-overlooked areas of weatherproofing, installing energy-efficient appliances, and renovating existing buildings.

Lauren Zullo, Director of Environmental Impact at Jonathan Rose Companies, a real estate management firm, stated, “Municipal governments throughout the nation are keenly interested in the development of a green economy and the transition to a low-carbon economy. Cities are actively seeking partnerships with the private real estate industry, recognizing the essential role buildings will play in this economic shift. Furthermore, any investment in upgrading local buildings directly stimulates the local economy.”

Directing financial resources toward green building renovations and the implementation of localized renewable energy sources will provide a considerable boost to local economies, with a particularly positive impact on communities most vulnerable to the effects of climate change.

Zullo noted, “We observed… considerable investment channeled in this manner through the Recovery Act,” referencing the American Recovery and Reinvestment Act of 2009, the economic stimulus package enacted during President Obama’s first term. “A significant portion of [these] funds were dedicated to weatherization programs for low-income households and affordable housing. [These] funds have enabled us to decrease energy usage by 30% to 50%… and the resulting reductions in utility expenses have been profoundly beneficial for those communities.”

Zullo further elaborated on the importance of these programs: “Individuals and families with limited incomes are disproportionately affected by the cost of utilities and energy. Prioritizing energy-saving measures within these communities is genuinely meaningful… not only in terms of reducing carbon emissions, but also in improving the well-being and prospects of these communities.”

Financing the Initiative

Even for this relatively scaled-down legislative proposal to gain approval in Congress, a Biden administration will need to address the critical questions of funding sources and how the stimulus funds would be allocated.

Political analyst Matthew Yglesias suggested via Twitter that the nation possesses the financial capacity to implement a substantial economic boost. His proposal would allow Republicans to maintain existing tax reductions while simultaneously enabling continued government spending on stimulus programs.

Yglesias explained, “With very low interest rates, the country can pursue a strategy of spending on beneficial initiatives and offsetting those costs through tax cuts.”

https://twitter.com/mattyglesias/status/1326214856949837824?s=20

To manage the distribution of these funds, Congress could create an organization modeled after the Reconstruction Finance Corporation (RFC). This entity was originally established during the administration of Herbert Hoover at the beginning of the Great Depression and was later expanded under Franklin Delano Roosevelt to provide financial assistance to struggling banks, farms, and businesses.

The overall effectiveness of the RFC remains a subject of debate; however, alongside federal deposit insurance and the Commodity Credit Corporation (which continues to operate today), it played a role in the nation’s recovery from the Great Depression and its preparation for wartime manufacturing in the 1940s.

The long-term viability of the CCC could serve as a blueprint for any new government-established infrastructure credit corporation.

Certain investors are in favor of this concept. One infrastructure investor stated, “The focus should be on directing funds to state, municipal, or private entities capable of providing significantly subsidized loans for modern infrastructure projects financed through municipal bonds or toll revenue.” They further added, “This would provide a credit guarantee for infrastructure investment and could include a technology component.”

Multiple investors proposed that funds generated from loans issued through an infrastructure bank could be used to encourage the return of manufacturing to the country, with the resulting tax income from these businesses potentially offsetting some of the loan expenses. Distributing these loans through community-based financial institutions could also yield additional economic advantages.

Mark Paris, a managing partner at Urban.us, a venture capital firm specializing in urban infrastructure, noted, “An existing framework for delivering these funds is already in place – the municipal bond market.”

The infrastructure answer

The Biden administration has numerous avenues available to counteract the previous administration’s climate change policies, but many of these potential federal adjustments may encounter legal obstacles.

David Roberts of Vox provides a thorough overview of the immediate steps President Biden could take to advance the decarbonization of the U.S. economy. These actions encompass reinstating the more than 125 climate and environmental regulations that were either overturned or diminished during the Trump presidency; collaborating with the Environmental Protection Agency to formulate a revised and more comprehensive Clean Power Plan, building upon the original Obama-era version; promoting the Department of Transportation’s creation of updated fuel efficiency benchmarks; and endorsing California’s ambitious vehicle emission standards.

Furthermore, Biden could incentivize financial markets to integrate climate-related risks more effectively into their investment assessment models. This would likely stimulate investment in environmentally responsible businesses and discourage funding for fossil fuels, as Roberts points out.

Several of the largest financial institutions in the United States are already implementing such practices, while companies in the oil and gas sector are confronting the necessity of shifting towards renewable or zero-emission fuels. This transition is occurring as their stock values decline and demand decreases due to the COVID-19 pandemic.

As suggested by Mother Jones last year, a Biden administration could designate climate change as a national security emergency, mirroring the Trump administration’s declaration regarding immigration. Such a declaration would grant Biden substantial authority to reshape the economy and directly influence industrial strategies.

Formally recognizing a national climate emergency would equip Biden with the necessary powers to implement many of the infrastructure projects central to the President-elect’s energy plan, though it wouldn’t automatically guarantee public support for these measures.

Prior to taking this course of action, Biden might first attempt to pursue all available legislative options. Given a divided Congress, this would likely involve concentrating on infrastructure development, job creation, and industry incentives.

“The effects of climate change are indiscriminate. This is because it is not a political issue, but a matter of science. Our response should reflect this reality – it should be based on scientific evidence and a collaborative effort from all of us,” Biden stated in a speech delivered in September.

“These are tangible, practical policies that will generate employment opportunities, lessen the impact of climate change, and guide our country toward achieving net-zero emissions by 2050, at the latest,” he continued. “We can invest in strengthening and improving our infrastructure while simultaneously addressing the fundamental causes of climate change.”