Over the last few weeks, president-elect Joe Biden has been making announcements on his key economic team. Let’s run down the list:
Special Envoy for Climate: John Kerry
US Treasury: Janet Yellen
US Treasury deputy: Wally Adeyemo
CEA chair: Cecilia Rouse
CEA council: Jared Bernstein
CEA council: Heather Boushey
NEC: Brian Deese
OMB: Neera Tanden
Why does Kerry head this list? Unless you haven’t be paying attention or haven’t read our research on Biden over the last 12 months, Kerry represents the direction of energy and environmental policy for the new administration. We believe the full team represents a clear path towards carbon pricing in the United States.
Kerry has worked on climate issues for a long time. As secretary of state, he played a key role in negotiating the Paris agreement, which was adopted by nearly 200 nations in 2015 and was aimed at addressing the negative impacts of climate change. He was a co-chair of the Biden-Sanders unity task force focused on producing policy recommendations on climate.
Yellen was Federal Reserve chair under Obama and would’ve stayed on with Trump under normal decorum. During a Bloomberg New Economy Forum, she said, “We need public policy oriented toward making a big difference on climate change.”
Adeyemo was Obama’s deputy national security advisor and deputy director of the National Economic Council and served as the president’s senior international economic advisor. He was responsible for coordinating the policymaking process on international finance, trade and investment, energy, and environmental issues.
Rouse, a labor economist and head of Princeton University’s School of Public and International Affairs, served on the CEA from 2009 to 2011, and served on the NEC from 1998 to 1999 in the Clinton administration. Fully supportive of Biden enviro policies or wouldn’t have been picked to lead.
Boushey is president and co-founder of the Washington Center for Equitable Growth, a think tank focused on inequality. Fully supportive of Biden enviro policies or wouldn’t have been picked.
Bernstein was an adviser to then-Vice President Biden during the Obama administration before becoming a fellow at the Center on Budget and Policy Priorities, a left-leaning think tank. He was the architect of the Obama “shovel ready” stimulus plan. (Personal note: I’ve met and debated with Jared over the years on CNBC. I respect him, but don’t agree with him.)
Deese worked on the auto bailout and environmental issues in the Obama White House, where he held the title of deputy director of both the NEC and the OMB. He was the global head of sustainable investing for BlackRock.
Tanden is president and CEO of Center for American Progress, and served in President Bill Clinton’s administration. She was a key player in Hillary Clinton’s 2008 campaign, and worked in the Obama administration, helping craft the Affordable Care Act. She supported Obama’s Clean Power Plan.
If personnel is policy, then we should expect and plan for big change. The biggest shift will be a carbon tax and creating carbon markets in the US. To do this, you need gravitas on your team. And Yellen and Kerry will be taking point on selling this to Congress and the American voter. Who better than Yellen to sell a carbon tax and attempt to convince skeptics this will be a job/labor friendly move? Rouse, Boushey and Bernstein will all produce research on the labor aspect. Most economists will support a tax on carbon as a way to increase its price relative other energy sources.
With a split Congress, this will be almost impossible especially with West Virginia Sen. Joe Manchin part of the mix. Yet, we have all learned how powerful the executive office can be and we should expect immediate action on this via executive orders. Rejoining Paris Climate Agreement, cessation of new E&P leases on federal lands, undoing methane gas reforms are just some of the actions we will see in the first 100 days. We can also expect action via additional Biden cabinet members at DOE, EPA and FERC initiating policy to achieve carbon neutrality and go electric. Expect DOD to play a key role as well.
The success of Italy’s Enel and the US NextEra (See charts) should make investors think strongly about a changed world on carbon, renewable energy and the rise of ESG investing. Biden’s team will drive additional interest and investing. Whether you believe in climate change or not, believe in the policy change that is coming.