Implications of the Biden Administration's Carbon-Neutral Initiative
The Biden Administration resolved this week to pursue complete carbon neutrality across the federal government over the next few decades. The implications for investment opportunities and risks, if the plan is brought to fruition, are numerous. As the article below notes, “the government plans to replace its fleet of 600,000 vehicles with electric models, and will upgrade efficiency at 300,000 federal buildings,” which would require the U.S. government to purchase vast quantities of products and services from the private sector. Companies related to electric vehicles and “green” construction could see a boost, although government contracts may not necessarily benefit all players in a particular industry. Supply chain constraints, which have been particularly acute in recent times, may necessitate relocation and reallocation in long-term manufacturing and distribution strategies. There is also the risk of a future administration overturning or downsizing the carbon-neutral mandate, further complicating analysis of the impact of this announcement on an investment portfolio. Such an analysis would be well served to incorporate a probabilistic assessment of both upside opportunity and downside risk.
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- Anthony Winkels is Managing Partner and Wealth Advisor at Fortis Wealth Management
