‘Nuclear revival’ priced into a potential Harris administration

Hello from New York. First today, I would like to start with breaking news. Vanguard on Thursday published its voting report for the 2024 proxy season. And the $9.3tn asset manager said it supported not one of the 400 environmental or social shareholder proposals it considered this year.

Many asset managers have supported fewer environmental and social resolutions past couple of years. Vanguard last year voted in favour of 2 per cent of such proposals. But its total rejection of these proposals so far this year caught some in the industry by surprise.

For today, I delve into the Kamala Harris campaign’s positions on climate and what they mean for cleantech companies. Harris has not said much about her climate policies yet, but investors are looking for clues about which sectors might do better than others. — Patrick Temple-West

clean tech

Renewable sector expects Harris to boost nuclear, despite reticence on climate and energy

Kamala Harris’s young campaign has been noticeably quiet on key policy issues such as climate change. But analysts say cleantech stocks — especially nuclear — could thrive in a Harris presidency.

Washington insiders have said the campaign’s reticence is by design. There is a rule in politics that “when you are explaining you are losing”. Any policy announcement inevitably requires explanation and will be immediately attacked. So why bother? Especially if Harris continues to gain ground on Donald Trump in battleground states largely on vibes alone.

Many environmentalists, too, have been reluctant to talk about Harris on the record. While some have broadly pushed her to hold the line on climate change policy, quietly, they told me they have refrained from needling the Harris campaign — for now at least. They know Trump, as the alternative to Harris, would be devastating. So they say it makes sense to stay hold fire, build relationships with the Harris campaign and play the long game.

Without specific policy from Harris, analysts have turned to the Democratic party platform for clues. The party platform highlights Democratic support for green steel and cement, as well as expanding solar and wind energy deployment. The platform also endorses nuclear power as long as it “eliminates waste associated with conventional nuclear technology”.

Harris, who cast the tie-breaking Senate vote to pass the 2022 Inflation Reduction Act, is widely expected to advance this key piece of President Joe Biden’s climate policy.

“We anticipate Harris will embrace the Biden strategy of linking climate policy with industrial policy” and US job security, John Miller, a political analyst at TD Cowen, said in a recent report. Miller added that Harris will “seek to deliver a more forceful defence of IRA tax credits” as well as federal spending from the 2021 Bipartisan Infrastructure Law. This law created a $6bn nuclear credit programme “to prevent premature retirement of existing zero carbon nuclear plants”.

Satyam Khanna, a former Biden administration EPA official, told me the IRA was designed to show Republicans and Democrats the power of federal government investment in the future.

“The next administration must prioritise ensuring these investments are reaching all parts of the country,” he said. “That means working alongside market participants, non-profits, and states and cities to build the institutional infrastructure essential to getting green projects done.”

But it is important to remember that even if Harris wins, she will have plenty of opposition to her climate agenda. The Senate is almost certain to flip to Republican control. And that means any IRA “Part Two” is likely to fail.

Further, Washington agencies such as the Environmental Protection Agency have been significantly muzzled by the Supreme Court. In 2022, the court curbed the EPA’s authority to limit greenhouse gas emissions from power plants. And this year, it overturned a legal doctrine that for 40 years had given them significant latitude to agencies such as the EPA. This ruling is likely to push regulators to censor themselves and refrain from pushing tough climate regulations.

The Supreme Court has “significantly” muzzled agencies, and “this is going to make things a lot more difficult” for a potential Harris administration, Aniket Shah, a managing director at Jefferies, told me. As a result, “Congress is going to matter a heck of a lot more”.

And that means Harris will need to find climate policies that have bipartisan support — like nuclear power — he said.

“The [nuclear] stocks and commodities are all pricing in a nuclear revival,” Shah said.

Ultimately a Harris victory would be a win for cleantech companies. But how much additional support the sector can achieve from the government will be determined by the fate of Congress.

Smart read

I recommend David Pilling’s dispatch from Benin about how simple T-shirts could transform its economy.