President Joe Biden is running for re-election, and his potential second term could have significant impacts on various sectors, including energy. Understanding the implications of Biden 2.0 for energy stocks is crucial for investors, given the administration’s strong focus on climate change, renewable energy, and regulatory changes.
Biden’s energy policies stand in stark contrast to the Trump administration’s focus on deregulation and fossil fuel subsidies. Trump’s tenure saw a rollback of environmental regulations and increased drilling activity, while Biden’s agenda pushes for decarbonization and clean energy incentives.
What are Biden’s key energy policies?
Biden’s key policies and initiatives include rejoining the Paris Climate Agreement, setting a net-zero emissions goal by 2050, and boosting investments in electric vehicles, renewable energy, and energy efficiency through the bipartisan Infrastructure Act and the Inflation Reduction Act.
During Biden’s first term, clean energy stocks have generally outperformed traditional energy stocks. Companies in renewable energy, electric vehicles, and energy efficiency have made big gains, while fossil fuel producers have faced challenges from tighter regulations and the shift to clean energy.
Biden, if elected to a second term, is expected to continue to focus on clean energy and climate change. However, the extent of potential changes will depend on the balance of power in Congress. A divided Congress could lead to more moderate policies and a slower pace of change, while a Democratic majority could enable bolder initiatives.
Clean energy stocks are likely to remain attractive investments, with continued growth in sectors such as solar, wind and electric vehicles. However, the performance of traditional energy stocks will depend on factors such as global demand and supply dynamics and the pace of the energy transition.
What stocks to consider if Biden wins?
But which stocks will the Biden campaign focus on? First, the Biden administration is expected to continue supporting clean energy incentives that could benefit companies like First Solar (NYSE:NASDAQ:), NextEra Energy (NYSE:NYSE:), and Sunrun (NYSE:NASDAQ:).
Market analysts expect a second Biden term could support the momentum in renewable energy stocks. Investments in solar, wind and battery storage are expected to rise. Conversely, traditional energy stocks could continue to face headwinds due to increased regulatory scrutiny and a potential decline in demand for fossil fuels.
Conversely, a Trump victory could lead to increased investment in the oil and gas sector, benefiting producers such as Exxon Mobil (NYSE: NYSE:), Cheniere Energy (NYSE: NYSE:), and ConocoPhillips (NYSE: NYSE:).
Meanwhile, Trump’s second term, which would come after a four-year gap, could bring new tariffs on imports, which could hit discretionary spending but benefit domestic manufacturers like Ford Motor (NYSE: NYSE:) and General Motors (NYSE: NYSE:). Nocor (NYSE: NYSE:), and Steel Dynamics (NYSE:NASDAQ:).
If Biden wins, investors could consider increasing their exposure to renewable energy stocks, focusing on companies with strong growth prospects in solar, wind, and energy storage.
Electricity and hydrogen production could also see gains under Biden’s support, benefiting stocks like Eaton (NYSE: NYSE:), Quanta Services (NYSE: NYSE:), and Air Products & Chemicals (NYSE: NYSE:).
However, conversely, companies in the energy-efficient and recycling industries may continue to make big strides thanks to ongoing incentives regardless of the outcome of the presidential election.
Some stocks that fall into this category include: Johnson Controls (NYSE: NYSE:), Trane Technologies (NYSE: NYSE:), Waste Management (NYSE: NYSE:), and Republic Services (NYSE: NYSE:).
In short, the outcome of the 2024 US presidential election will have significant implications for the energy sector. A second Biden presidency is expected to continue to focus on clean energy and climate change mitigation, which could benefit companies in sectors such as solar, wind, and electric vehicles.
However, the performance of traditional energy stocks will depend on a variety of factors, including global demand, supply dynamics, and the pace of the energy transition. Investors should carefully consider their exposure to the energy sector and monitor policy developments.
