The World Renewable Energy index has outperformed the MSCI global equity benchmark by more than 100% so far this year. Should he win the election this week, Joe Biden has signalled that he would rejoin the Paris climate change agreement and has earmarked $2 trillion towards spending on climate-related projects. These factors help explain why there has been a strong correlation between Biden’s polling and the relative performance of global renewable energy stocks. But the correlation between these two series only firmed up in in October – there was little relationship between the two earlier this year. Incoming legislation in other parts of the world, specifically in Europe where a Green New Deal is in the legislative pipeline, help to explain the rise in renewable energy share prices in 2020. A Joe Biden victory would provide another boost to renewable firms, especially those in the US, while a Donald Trump victory would most likely see profit-taking from those who have made money by investing in renewable energy stocks this year. Fathom recently held an event along with Refinitiv, in which the issue of global warming, its economic impact and the related policy response were discussed within the context of the US election. To access a recording of the event please follow the link. For more information about climate economics and how Fathom’s research into this area could help your organisation please contact lg@fathom-consulting.com.
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