Clean energy-sector related exchange traded funds were left out of the broad market rally Wednesday as the presidential election results remained too close to call and Republicans appearing to fight off Democratic opponents in the Senate.
The iShares Global Clean Energy ETF (ICLN) fell 1.3% Wednesday.
Renewable or clean energy stocks have rallied ahead of the elections in anticipation of increased spending to combat climate change should the Democratic party gain the upper hand in the election. However, the likelihood of a so-called Blue Wave, where Democrats control both the White House and Congress, has diminished, along with bets on green energy stocks due to the unclear results.
While the outcome of the presidential race is still unclear, a Biden victory could likely come with a Republican-controlled Senate, which would hinder efforts to address climate change, promote clean energy and roll back fossil-fuel subsidies.
“Perhaps the biggest conclusion to be drawn at this stage is that there is only a small likelihood that existing oil & gas tax incentives will be removed in the U.S. — even if Biden emerges as the winner,” Artem Abramov, Head of Shale Research at Rystad Energy, said in a note, according to Bloomberg.
“There was some anticipation of a Democratic sweep and the possibility of major climate reform,” Raymond James Analyst Pavel Molchanov told Bloomberg, adding that even if Democratic nominee Biden wins, without a Democratic Senate “he’ll have to rely on executive action, tinkering around the edges, rather than anything game-changing or transformative.”
Biden previously pledged to spend $2 trillion to combat climate change by shifting America’s energy policy away from the oil industry towards renewable energy. He also outlined plans to curb carbon emissions from the power grid by 2035, along with spending to increase the green energy infrastructure.
For more information on the renewables space, visit our renewable energy category.