The rise of renewables

It has been billed as the ultimate showdown, with the winner deciding the future of energy policy in the world's richest nation - and all at a make-or-break moment in humanity's fight to control global warming.

In the red corner, Donald Trump: climate-change sceptic and champion of a continued drive to increase oil and gas production. In the blue corner, Joe Biden: environmentalist challenger who has vowed to invest trillions of dollars in taking the US carbon neutral by 2050.

Prosperous future?

With mounting scientific evidence that the planet is on the brink of losing the sustainability battle, the stakes could hardly be higher. But while there is little doubt that the renewable energy sector would benefit more from a Biden victory, longer-term forces suggest that the industry may prosper regardless of the outcome on 3 November.

"If Trump wins, he will continue with his incentives for fossil fuels, but renewables will continue to thrive," says Daniel Lacalle, chief economist at Spanish fund manager Tressis Gestión. "The sector is fast-approaching a tipping point in the US."

For green energy advocates, Biden is the clear choice. The former vice-president has made the transition to renewables a centrepiece of his bid to become the next US president. If elected, he has promised the US will have carbon-free power generation by 2035 – and achieve net-zero emissions by 2050.

His vision would see the country's transportation sector fully electrified, the national grid would have utility-scale battery-storage facilities and a network of state-of-the-art vehicle-charging stations would stretch coast to coast. At US$2tn, it is one of the most ambitious infrastructure plans of modern times.

“We can live up to our responsibilities, meet the challenges of a world at risk of climate catastrophe, build more climate-resilient communities, put millions of skilled workers on the job and make life markedly better and safer," Biden said.

Yet he is unlikely to stop any current oil and gas production. When asked on the campaign trail about production of shale gas, he said that there would be no new projects, much to the despair of his corner, which has been trying to rein back ever since.

Hot air

Moreover, Biden's track record on oil and gas is chequered: as vice-president in President Barak Obama's administration, he oversaw one of the most aggressive expansions in oil and gas production in recent US history, with oil output rocketing from 5.2m barrels a day in January 2009 to 8.8m barrels a day by the end of 2016, according to the Energy Information Administration (EIA). Gas production saw similar growth.

Trump, meanwhile, has been unapologetic about his support for fossil fuels. He has slashed budgets for renewable energy, lifted regulations to reduce greenhouse gas emissions and increased areas open to fossil fuel extraction. In June 2017, he even confirmed his decision to pull the US out of the Paris Agreement on climate change.

His support for coal has been relentless. At a 2018 rally in West Virginia, Trump said that his administration was putting coalminers back to work. "The coal industry is back," he declared to the crowd. On the same day, his administration announced new support for coal-fired power stations.

But last year saw the second-fastest closure rate for US coal-fired power stations in history, according to EIA data. In total, more than 50 such stations have shut down in the four years since he took office.

By contrast, renewable energy has made huge progress under Trump, with large-scale solar capacity more than doubling and large-scale wind capacity increasing from 87,488 MW in 2017 to 126,670MW today. Offshore wind projects are on course for about US$78bn in capital spending this decade, compared with US$82bn planned for US offshore oil and gas development, according to energy consultancy Wood Mackenzie.

It’s all about technology

One factor that has turbo-charged this transition is technology. Better and more efficient solar panels and wind turbines have led to a precipitous fall in the cost of producing renewable energy, something that analysts say will continue as technology progresses.

A second factor is increased interest in investing along environmental, social and governance (ESG) lines. Between 2010 and last year, assets under management in ESG-dedicated investment funds more than doubled, according to the United Nations Conference on Trade and Development (UNCTAD).

The renewable energy sector in the US is not without risks though. For one thing, a second Trump term would not provide the boost to the sector that would come from a Biden victory. Wood Mackenzie also says that wind farm developments could suffer if federal and state governments and regulators fail to work together.

But Lacalle believes that such risks will only serve to delay the inevitable. "The energy transition is unstoppable," he says. "Because at the end of the day, it's all about technology."