| Welcome back. AI stocks have been hit by an ugly sell-off, as shareholders take fright at this week’s sweeping electoral gains for the US Democrats. Clean energy investors, in contrast, have taken the result as very good news indeed. Are they right? What the ‘blue wave’ means for climate and clean energy | | | | If Rasmus Errboe was feeling gleeful at the results of this week’s US midterm elections, the Ørsted chief executive did a decent job of restraining himself. “We appreciate that it is a clear outcome,” Errboe said yesterday. Shareholders in Ørsted — the world’s biggest offshore wind developer, which has faced Trump administration attempts to block US projects — have been more full-throated in their response. The company’s share price jumped 6 per cent after the Democratic triumph on Tuesday in a swath of congressional and state-level elections. That was part of a broader bounce in clean energy stocks, reflecting hopes that this election marks a tidal shift in US energy and climate policy. But there are good reasons to keep such excitement under control. While the scale of the Democrats’ victory exceeded most expectations, the party is still short of the “filibuster-proof” majority needed to force laws through Congress unilaterally — let alone the two-thirds majority needed to override the president’s veto powers. Democrats including Chuck Schumer, the party’s Senate leader, have promised an effort to restore or extend Biden-era green tax credits that were cut by last year’s “big beautiful bill” — but it’s hard to imagine Trump signing any such legislation. Perhaps, as economist Paul Krugman suggests, the Democrats will make a point of pushing bills — on areas including clean energy — that will meet broad approval from the public but are certain to be blocked. Krugman argues this will add to the perception of a Republican Party out of touch with the electorate, and prepare the ground for a Democratic general election victory in 2028. Perhaps — but that still leaves two years before a pro-green federal energy agenda can be enacted. At the international level, things will be even more difficult. Trump has legally pulled the US out of the entire UN climate process (not just the Paris Agreement, as in his first term), an exit that will take effect in February 2027. Some legal scholars reckon that re-entering it would require a two-thirds majority vote in the Senate: an argument that Republicans can be expected to make forcefully. It’s far from clear that a future Democratic president would want to spend political capital on that issue, given how quiet the party has been on climate change: a subject that was “strikingly absent” from this campaign, notes David Victor of the Brookings Institution. Some of Tuesday’s highest-profile Democratic winners have been at pains to downplay the topic — including Michigan senator-elect Abdul El-Sayed, who said he was “not going to defend” the Green New Deal policy platform he once championed, and his Texas counterpart James Talarico, who stressed his support for an oil and gas industry whose taxes he said had “funded” the state schools he attended. Where energy was concerned, the salient issue in this election was not climate but “affordability, affordability, affordability”, says Nat Keohane, president of the Center for Climate and Energy Solutions think-tank. But given the economic competitiveness that low-carbon power now enjoys, he argues, this agenda should still feed through into support for the sector. Renewables and batteries have accounted for the vast majority of new power capacity added to the US power system during Trump’s second term, despite the administration’s efforts to tilt the balance in favour of fossil fuels. That government drive has faced a series of legal reverses — notably court actions that have allowed Ørsted to proceed with two offshore wind projects even as the government keeps pursuing attempts to block them. With majorities in both houses, the Democrats will now be able to use leadership of congressional committees to exercise tougher oversight of the administration’s energy and environmental policies. “They are going to need to plant new forests for all of the subpoenas we’ll be printing,” Massachusetts senator Ed Markey vowed this week. There could be big emissions implications, too, from the Democratic pushback against data centre proliferation, in defiance of Trump’s calls for an all-out dash for AI supremacy. Data centre developers are planning to build on-site gas power at a huge scale, while the sector’s growth has been pushing utilities to increase fossil-fired generation. Incoming Texas governor Gina Hinojosa has promised a moratorium on new data centre approvals. Wisconsin governor-elect David Crowley wants to require new data centres to meet all their power demand with renewable generation. Overall, however, the Democrats are still far from having a coherent plan for clean energy and the environment, says Lisa Sachs, director of the Columbia Center on Sustainable Investment. The party’s reticence on climate change contrasts with the concerns of its supporters, 52 per cent of whom called the issue “extremely important” in a Gallup poll last month. For now, Sachs adds, the main impact of this election will be in restraining Trump’s efforts to hold back the shift towards cleaner energy sources. “We can expect less insanity, rather than [expecting] a progressive agenda,” she says. | 
