United States

2020 Election preview: Energy


With the election approaching, RSM is looking at the economic stakes and the key issues for various industries and sectors. This is one in our series of election previews.

The top policy issue for energy

The top issues are clean energy and environmental regulation. Most of President Donald Trump’s actions during his time in office have centered on his goal of domestic energy independence, including rolling back regulations and working to expand oil and gas production. Former Vice President Joe Biden’s platform, on the other hand, prioritizes clean energy, pollution limits and a more aggressive stance on permitting, especially on federal land.

If Trump wins

In line with Trump’s last four years in office, a second term for him would likely mean a continued focus on energy independence and less restrictive environmental regulations for the industry, specifically utilities. The Affordable Clean Energy rule, which Trump’s Environmental Protection Agency put into place in 2019 and which allows states to develop their own plans for limiting regulation, would continue to govern emission standards. Trump withdrew the United States from the Paris Agreement in June 2017, a decision that would likely hold if he serves a second term. 

If Biden Wins

A Biden win would place a greater focus on clean energy, more stringent environmental regulations, protection of federal land from drilling and likely less aggressive sanctions on foreign oil. Biden has pledged to invest $1.7 trillion dollars over the next 10 years toward the goal of the United States achieving 100% clean energy. This mega-investment and Biden’s plans for aggressive methane pollution limits for oil and gas companies are just a couple of highlights from his proposed plan for “clean energy revolution and environmental justice.” Biden has also committed to having the United States rejoin the Paris Agreement; moreover, he has proposed a global world summit that would encourage leaders to respond more aggressively to climate change.

Other energy issues include:

One key issue differentiating the candidates is their stance on the use of federal land and waters for drilling activity. Trump favors opening federal lands for drilling, as evidenced by the reversal of President Barack Obama’s moratorium on new leases for oil and gas development on federal lands. Trump has also signed legislation to open the Arctic National Wildlife Refuge to domestic energy production. Biden, conversely, has pledged to stop issuing drilling permits for federal lands and waters and would aim to protect the Arctic National Wildlife Refuge from oil and gas permitting.

The candidates have also displayed differing approaches to infrastructure projects such as the Keystone XL and Dakota Access pipelines, two major endeavors that would support the industry’s supply chain. Trump approved permits for both pipelines while Biden has signaled that he may slow or halt them.

Another divisive issue is sanctions and international energy policy. In 2018, the Trump administration withdrew the United States from the nuclear deal with Iran (a deal that lifted sanctions on Iran in exchange for agreement to limit nuclear activity) and later imposed sanctions on Iran and Venezuela oil exports. Although Biden has not specified his plan on the nuclear deal or sanctions, based on the Democratic Party precedent and Biden’s less aggressive stance on relations with Iran, the nuclear deal would likely be back on the table if he wins.

The Trump administration’s effect on the industry has been:

Domestic oil production has accelerated since Trump took office, increasing from around 9 million barrels per day to about 12 million barrels per day this past summer, according to S&P Global. In 2019, the United States became a net total energy exporter for the first time since 1952. This surge in production is due in part to increased permitting, imposing sanctions on overseas oil, approval of pipelines and less regulatory red tape. The increase, however, cannot all be credited to Trump: The crude oil export ban (lifted under the Obama administration) kick-started the rise in production, and other market forces not influenced by policy also had a hand in the production boom.

By the numbers:

  • $1.7 trillion: The investment Biden wants to make toward the goal of the United States achieving a 100% clean energy economy and net zero emissions no later than 2050, funded in part by rolling back Trump’s corporate tax incentives.
  • $12 billion: The amount of public revenue produced by federal oil and gas production in 2019, according to Reuters. What this number might look like in coming years will be tied to decisions about permits for drilling on federal land.

In preparation for the outcome, companies in the energy industry should consider:

A Biden win would mean that oil and gas companies across the energy value chain will need to shift their focus and rethink their strategy in order to survive long term. If Trump is elected to a second term, we do not expect any major, immediate changes in the energy policy landscape. Whatever the result of the election, though, it is crucial for companies to focus on emission goals and sustainability. That’s especially true as more investors and consumers prioritize environmental, social and governance values, as we explain in our latest industry outlook.

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