Joe Biden is the projected winner of the presidential election, while control of the Senate will be won only by a slim margin following runoff elections for Georgia’s two seats in January. What does a divided government mean for the middle market? RSM is looking at the policy implications and key issues for various industries. This is one in our series of industry-focused outlooks for a Biden administration.
According to Joe Biden’s plan:
The energy industry should prepare for a shift as the incoming Biden administration plans to focus on clean energy, more stringent environmental regulations, protection of federal land from drilling and likely less aggressive sanctions on foreign oil. Companies should assess what Biden’s pledge to invest $1.7 trillion over the next 10 years toward the goal of the United States achieving 100% clean energy will mean for them, along with Biden’s plans for aggressive methane pollution limits for energy companies.
What a closely divided Senate means for energy:
Biden’s positions around drilling on federal land and waters and major infrastructure projects will likely be the most pressing matter in the short term for the industry, especially for energy projects and drilling operations that have been contentious over the past decade. Those include the Keystone XL and Dakota Access pipelines, which Biden has signaled he may slow or halt. He also wants to protect the Arctic National Wildlife Refuge from oil and gas permitting, which would be a reversal following Trump, who signed legislation to open ANWR for domestic energy production.
Biden will be able to use executive orders to act quickly on some of these proposed actions, such as rejoining the Paris Agreement and implementing emission limits. Other parts of his platform, such as rolling back certain tax provisions that favor fossil fuels, could face headwinds in case the Senate remains under Republican control or is split 50-50.
What room for growth or evolution exists in the energy industry?
Overall, Biden’s energy policies will bring a significant change from Trump’s focus on domestic energy independence and efforts to expand oil and gas production. At a higher level, Biden also plans to have the United States rejoin the Paris Agreement and has proposed a global world summit that would encourage leaders to respond more aggressively to climate change. Both of those actions would show just how stark the contrast is between his energy priorities and those of Trump, who withdrew the United States from the Paris Agreement in 2017.
A Biden administration will likely accelerate the speed of the energy transition, which will bring huge opportunity for the energy industry. The industry as a whole already invests heavily in renewables and the commitment to net zero, so any government aid will continue to push this investment and related opportunity forward.
Whatever policy shifts may come, companies in the energy industry need to continue investing in advanced technologies, focusing on sustainability, addressing workforce issues and understanding their role in overall energy transition.
Questions that frame the path forward:
- How will the Biden administration change the future landscape of renewable energy?
- How will oil and gas companies need to adapt to an administration heavily focused on clean energy?
- How will the job market and required skill set for the workforce change for the energy industry?
- What other industries will be affected by the intent to move away from fossil fuels?