President Joe Biden rejoined the Paris Agreement on his first day in office, reversing one aspect of his predecessor’s “America First” foreign policy.
Biden effectively signaled to the world that fighting climate change will be a top priority of his administration, alongside combatting the coronavirus, speeding up the national vaccine rollout, and sustaining the country’s economic recovery.
In withdrawing from the agreement in 2017, President Trump famously said, “I was elected to represent the citizens of Pittsburgh, not Paris,” from the White House rose garden. Trump stated that the agreement’s “harsh economic restrictions” stemming from carbon reduction requirements would hurt Americans in places such as Youngstown, Ohio, and Detroit, in addition to Pittsburgh. “I cannot in good conscience support a deal that punishes the United States, which is what it does,” Trump added.
The Obama administration viewed the Paris Climate Agreement, which was signed by close to 200 countries, as one of its signature achievements. It encouraged countries, including the U.S., to gradually phase out fossil fuels and pursue clean energy. As a part of the deal, Obama committed to reducing U.S. greenhouse gas emissions by 26% to 28% by 2025.
‘The hug a tree to hug Biden strategy’
Biden’s $2 trillion climate plan calls for the U.S. to pursue an “irreversible path” to net-zero emissions by 2050. His renewed focus on fighting climate change with the help of foreign countries could lead to a boom in green energy investments in the U.S.
“While [rejoining the Paris climate agreement] does not have any immediate market impact, it does underscore the importance of sustainable investment in the coming years,” wrote Paul Donovan, chief economist at UBS global wealth management, in a note to investors on Thursday.
While Biden’s commitment to fighting climate change will likely spur further investments in the renewable energy sector, new global investment in the U.S. has already begun to take shape.
Greencoat Capital, a UK renewable investment giant, announced plans to expand in the U.S. and acquire a wind farm in Texas on Tuesday. This is the first U.S. investment by Greencoat Capital which has over $8 billion of assets under management. The company’s 24% stake acquisition in four onshore wind farms in Texas is only the beginning. Greencoat is planning on making further investments in U.S. wind and solar projects.
Donovan expects that world leaders seeking to curry favor with the U.S. will highlight their sustainability policies going forward. “The hug a tree to hug Biden strategy is already being pursued by the world’s leaders who see a clear trade-off. Sustainability policy equals photo opportunity with the U.S. president,” he wrote. “It is notable that U.K. prime minister Johnson last night was again emphasizing carbon reduction as common ground with the new U.S. administration.”
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