As per this recent Bloomberg article: “Senate Democrats are urging the White House to declare a “climate emergency” while dismissing any optimism that a climate change package could be moved swiftly through Congress in September. “The potential to enact the legislation is dead,” Senator Jeff Merkley, an Oregon Democrat, told reporters on Capitol Hill Monday evening. “This then frees up the president to use the full powers of the executive branch. And those full powers certainly include a climate emergency.”
The article continues by stating that ” Such a move could give President Joe Biden broad executive authority to redirect funds for clean energy projects or restrict offshore oil drilling. The president could even use the power to curtail the movement of fossil fuels on pipelines, trains and ships.”
This will have some major implications for the energy spectrum across the board. Given that energy prices are already very high, these measures would just make the problem worse. If this happens though, which I hope it doesn’t for the sake of energy security in the US, it could see a lot of capital move towards the nuclear power and solar/wind industries. Focusing on nuclear power in particular, it's important to note that this administration is pro-nuclear power and that the sector has bipartisan support in the US. Any measure that will open the floodgates for more investment in green energy simply has to include nuclear power as a substantial part of that, there is simply no other way around it and recent policy decisions in the US, Japan and Europe have shown this as well.
On the other side of the proverbial coin, halting new investments in fossil fuel projects and trying to put a stranglehold on this critical part of the energy spectrum will only push prices up. With demand nowhere near topping out, attempting to demolish the supply side with measures like the one described above will have big adverse effects and make the energy crisis we find ourselves in even worse. Whether or not the US actually goes through with this remains to be seen, as nothing is ever set in stone when it comes to making policy, but my view is that it will push up prices across the energy space for the reasons mentioned above.
With that in mind, I believe that when monetary policy changes and a renewed risk-on environment is established, we will see some big moves up for energy and see that part of the market continue to outperform as it has done at the start of this year. My personal focus is on oil and uranium as asset classes in this energy bull market.
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