US midterms: investors hope blue wave reduces climate policy risk
With the Democrats winning a majority in the House and Senate, investors are now considering if growing opposition to Trump might result in a less adversarial ennvironment for climate investors.
Democrats have staged a comeback in the US midterm elections, winning majorities across both the House of representatives and the Senate. A changing of the legislative guard in Washington DC has a range of implications for investors – particularly those keeping an eye on America’s energy and climate policies.
The results point to palpable voter discontent over higher energy prices potentially lower policy uncertainty courtesy a blue wave in the midterms.
Private Markets and Portfolio Construction | 5 November 2026 | Central Court, London
Backlash
Initial responses to the results highlight the role of higher oil prices and falling support for the Trump administration. “US voters blame Trump for high prices. That has cost the Republicans dearly”, says Holger Schmieding, chief economist at Berenberg.
The bank’s house view is that mounting Republican pressure on the Trump administration could yield a deal with Iran and lower oil prices. Berenberg’s forecasts expect Brent crude to fall back down to $75 a barrel by the end of 2027.
Schmieding reckons the result points to a broader backlash. “The vote shows that the political pendulum is swinging against Trump policies. That can impact business decisions in sectors seen as favoured by Trump such as fossil fuels and artificial intelligence”, he adds.
Checks and balances
With democrats now in majority, America’s legislature is more likely to put up checks and balances against executive power – lowering policy volatility.
“I expect the effect of having real checks and balances in the US will lead to rising risk and falling uncertainty”, says Nikesh Patel, an independent trustee.
A divided house reduces the prospect of frequent and fast-paced policy change. Deborah Cunningham, CIO, global liquidity markets at Federated Hermes says markets broadly favour that outcome.
“The blue wave means the federal government is sure to be divided on most issues. That typically creates a blockade against new legislation — an environment which broad financial markets traditionally view favourably as variables decrease”, she notes.
Gerald Alain P Chen-Young, CIO of the US-based National Public Pension Fund Association Benefits (NPPFA) expects a change in the government’s approach to energy and climate policies. A change, he says will be ‘broader, more thoughtful, measured, balanced and pragmatic’.
For investors in American renewable energy projects, a change in approach is welcome news. Share prices for listed clean energy firms with a US presence have rallied as markets opened.
“The election result is a clear positive for renewable developers with US exposure, as it reduces some of the policy uncertainty that has weighed on sentiment in recent years”, says Tancrede Fulop, senior equity analyst at Morningstar.
The Trump administration has targeted win energy projects, seeking to cancel leases and issuing stop work orders for previously approved projects.
‘While it's too early to call this a turning point for US offshore wind, the outcome lowers the risk of further regulatory disruption and provides a more stable backdrop for projects already underway’, Fulop adds.
