Biden wastes no time in unraveling Trump's pro-oil agenda

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Just like that, we have a new president. And by just like that I mean after months of vitriol and anxious sweating and binge eating everything-flavored pretzel crisps.

On Wednesday we heard from Amanda Gorman, Lady Gaga, and Joe Biden, ordered here by importance. Just kidding. Biden, was, of course, the man to watch, swearing into office and then wasting no time to unleash a wave of executive actions.

Many of them took aim at pro-oil policies put in place by the Trump administration. Let's start there.

Biden wastes no time in unraveling Trump's oil legacy

It's been a bad few weeks for Trump's energy agenda. The Arctic Refuge drew few takers when leases went up for sale. A court struck down his administration's attempt to relax emissions rules for power plants.

And then there was Wednesday. Shortly after his inauguration, Biden issued a burst of energy-related orders.

What they do: Biden rejoined the Paris Agreement, which, of course, dominated headlines. But an executive order had much farther-reaching implications for the energy industry.

• The order includes a moratorium on the Arctic National Wildlife Refuge's oil leasing program and revokes a key permit for the embattled Keystone XL pipeline.
• It also directs agencies to review Trump regulations that are at odds with addressing climate change and propose new ones. Experts point out two major policies that are subject to change.

Also on Wednesday: The Interior Department placed a temporary ban on oil and gas leasing on federal lands.

• Is it a big deal? Yes and no. Federal lands and waters make up about a quarter of US oil output, according to Reuters, but companies stockpiled permits before Biden took office, in anticipation of this exact situation.
• So, the order is largely symbolic - signaling "a more restrictive policy backdrop," per Morgan Stanley, in a note this morning - and unlikely to restrict oil output for the time being.

The industry responds: The American Petroleum Institute, the most powerful oil lobby, was not thrilled with some of Biden's moves.

• "Restricting development on federal lands and waters is nothing more than an 'import more oil' policy," API CEO Mike Sommers said in a statement.

Still, major banks are betting that oil and gas stocks will soar this year ...

It might sound a bit counterintuitive, given the rise of clean energy and a new administration that prioritizes climate action, but major banks are betting big on fossil-fuel stocks nonetheless.

I talked to the head of oil and gas research at Bank of America, Doug Leggate, who's covered the industry for about 25 years. He summed up his energy investment thesis like this:

• While the 2020 oil downturn was historic for many reasons - the US crude benchmark, for example, has never gone negative before - the market forces were similar to those in the late 90s when oil crashed. He spells that out here.
• After that downturn, the market recovered, big time. And the value of oil and gas companies shot up.
• That's where we're at now, he says - at the cusp of a "significant" market recovery, meaning now is the time to buy into the market.

What to buy: "We've got buy-ratings on pretty much all the oil names," Leggate told me.

• See the 15 energy stocks Bank of America says to buy here.
• Beyond the uptick in oil prices, Leggate pointed to two things that make oil and gas companies investible now: They're less focused on growth and they've upped their disclosures.
• That gives analysts like Leggate a better idea of how much money they make at a given price of oil.

A note on ESG: While investors have been ditching fossil fuel stocks over climate-change concerns, Leggate says the ESG conversation will shift once oil prices bounce back and returns start notching up.

• "It's very convenient to dress up the ESG metrics as a reason for avoidance of the energy sector when the energy sector is the worst-performing sector in the market," he said. (Energy was, by far, the worst-performing sector of the S&P last year.)
• "That's going to be a much more difficult discussion when energy is outperforming, which we think resets the balance of the ESG debate, much as it did in 2000."

… while others see opportunity in the 'green-energy majors.'

In a recent report, Goldman Sachs showcased eight European clean-energy giants including Enel and Iberdrola that it said are set to soar, BI's Theo Golden reports.

• "We would expect these companies to outperform the rest of the sector, their share of the total sector's capitalization is likely to continue rising," the report said.

Behind the growth: For one, the bank expects more than $12 trillion in investment stemming from the European Green Deal by 2050, Golden writes.

• Even more money will be needed to reach the goals of the Paris Agreement.

The bottom line: "In short, this means unprecedented growth creating higher capital expenditure and translating to higher profits," per Golden's story.

Bill Gates and Elon Musk promised big spending on climate tech this week

Not gonna lie, I wish I had the personal funds to casually tweet - in 11 words - about donating $100 million dollars.

Tesla chief Elon Musk did that last night, saying that he's putting $100 million towards a prize for the "best" carbon-capture technology.

• Scientists say carbon-capture tech - essentially, devices that trap greenhouse gases, either from point sources or directly out of the air - will be key to reaching net-zero emissions.

In context: Musk asked his followers earlier this month for advice about where to put his money, BI's Tyler Sonnemaker reported.

• $100 million is a lot of money, but not compared to the cost of some carbon-capture technology.
• For example, commercial-scale plants that suck CO2 out of ambient air, known as direct-air capture, could cost as much as $500 million.
• Early last year, Microsoft said it would launch a $1 billion fund "to accelerate the development of carbon reduction and removal technologies."

Where the $ might go: Musk said he'd offer up more details next week. In the meantime, check out our list of climate-tech startups to watch, and four that are working specifically on carbon capture.

Meanwhile: Breakthrough Energy Ventures, a prominent climate-tech venture fund led by Bill Gates, aka another wealthy individual, said this week it closed a second $1 billion fund.

• The firm said it expects to fund 40 to 50 startups and start making investments as soon as, well, now.
• We took a look at what kinds of tech might be on the table.
• Oh, and if you want to get a sense of the kinds of energy startups Bill Gates is already backing, check out our list here.

I'm going to leave it there. Thanks for reading, and have a great weekend.

- Benji

Ps. It's been exactly one minute since I've shared a photo of my puppy - who, by the way, is now an elephantine 40 pounds, the top end of what I was looking for when I adopted - so, here you go.