Supply

President Joe Biden has been busy in his first days in office, signing executive orders that set the stage for the environmental and social priorities for the next four years. Among these are several climate-related actions that will have downstream ramifications for companies pursuing renewable energy and carbon neutrality commitments. Here are the top four actions our team of experts is tracking – and their potential impacts on U.S. companies.

1. The Biden administration is serious about tackling the climate crisis at home and abroad

President Biden fulfilled one of his most significant campaign promises on day one by recommitting the United States to the Paris climate agreement – a commitment that will be in force as of February 19, 2021. While mostly a symbolic gesture, the move signals to the rest of the world that the U.S. is reasserting itself as a climate leader. This may spur global competition in emissions reductions and encourage other countries to accelerate their own commitments. (Click here for an in-depth look at this topic).

Beyond reentering Paris, the administration has issued a formal proclamation that climate action is more necessary and urgent than ever, putting the climate crisis at the center of national security decisions, increasing resilience to climate change, and aligning economic practices with a low GHG emissions pathway.

By committing to developing a net zero transition plan, the U.S. comes in line with the direction that many of the largest corporations, federal agencies, and states within the country are already headed. As an example, in 2020, 90% of S&P 500 companies published corporate sustainability reports – an all-time high that signals a shift in the way the private sector and the investor community view the value of sustainability and climate action.

Takeaway for companies:

If legislative activity already underway in the EU for “green recovery” is an indicator of how federal orders will impact corporate sustainability initiatives, the impact on organizations may be significant. It – combined with investor mobilization on climate risk – is almost certain to accelerate existing voluntary momentum. Companies can take proactive steps now to align with national and international positions by developing their own climate action plans.

2. The Administration aims to protect public health and the environment

The federal government will advance its responsibilities to ensure both climate action and environmental justice. Included in this commitment are explicit steps to ensure clean air and water by holding polluters accountable – particularly those that are today predominantly impacting lower-income communities and communities of color. Biden has pledged that communities disproportionately affected by climate change will receive additional federal support for clean air and water infrastructure.

Takeaway for companies:

There is a growing mandate for companies to consider the implications of their actions on underrepresented minorities and the dismantling of oppressive systems, and this will be true of energy and sustainability actions as well. Organizations should anticipate the intersection of social and climate justice to impact their decision-making, with potential brand implications for inaction. Learn more about our predictions on this topic in our trends blog.

3. The Administration is grappling with its position on oil & gas

The moratorium on new oil and gas projects on public lands, and the cancellation of the controversial Keystone XL pipeline, point to Biden’s prioritization of U.S. clean energy development, while simultaneously developing transition plans for American fossil fuel jobs displaced by the transition. The administration promises to meet the climate crisis with action and shifting development toward renewable energy sources is one of the key levers to meet this aspiration. However, Biden also supports the use of hydraulic fracturing (fracking) as a bridge in the transition to a clean energy economy.

Takeaway for companies:

While the short-term impacts of these decisions will not dramatically affect crude prices today, they will contribute to the overall acceleration of renewable energy and cleantech adoption and a continuation in the decline of market share of oil and coal. The recent extreme weather in the U.S. and its impact on the centralized energy grid has put the complexity of this transition squarely in the spotlight. Companies can align directionally – and develop greater reliability for themselves – by adopting their own clean energy transition plans, pursuing renewable electricity and resilient, electrified solutions like microgrids over continued investment in fossil generation and fuels.

4. The federal fleet will be electrified

Biden’s plan to transition government fleets, including those of the postal service, to all-electric and American-made vehicles will speed up the electric mobility transition and potentially create new jobs in the American automotive industry. (American manufacturer General Motors has already announced the company will produce 100% emissions-free vehicles by 2035; the company has simultaneously called on the Administration to advance a national zero emission vehicle initiative). The injection of government buying power will boost the electric vehicle (EV) market overall, incentivizing manufacturers to shift focus in their new lines on electrified models. This will also increase demand for American-made EVs and could speed adoption among consumers.

Takeaway for companies:

The transition towards fully electrified vehicles and the accompanying infrastructure is already underway, and this commitment by the administration amplifies the speed at which it may take place. Forthcoming legislation could have downstream impacts on corporate fleets, and many U.S. states have already put goals in place to eliminate combustion vehicles in the next 10 to 40 years. As more light- and heavy-duty EVs are developed, range and battery life continue to grow, and charging infrastructure begins to scale, there will be natural incentives for organizations to adopt EVs widely. Many organizations are already pursuing their options as a means to reduce Scope 1 emissions.

Download our Special Market Update to read more.

Biden has placed climate action and justice at the heart of his term; likely, the actions in the first month are the tip of the proverbial iceberg to emerge from the next four years. The bottom line for U.S. companies and companies with U.S. operations is to be prepared and alert.

Now’s a great time to engage Schneider Electric’s Energy & Sustainability Services team. Our experts can help you forecast and manage energy risk, develop and implement long-term strategies, and explore your clean sourcing and technology options. Contact us today.