US President Joe Biden, sworn into office on January 20, 2021, prioritized climate and clean energy issues during the election season. Now, just a few months in office, President Biden and his administration have started delivering on some of the promises made on the campaign trail. Their actions on climate change, clean energy and greenhouse gas (GHG) reduction will clearly have lasting implications for O&G companies—and the larger energy transition.
Accenture has analyzed the likely impact of the new administration’s positions and policies on the energy industry—looking specifically at what the proposed policy changes will mean to the energy market as a whole and to the competitiveness and operating models of O&G players. While the consequences of some policy elements will be minimal, others will require companies to take bold and fast action.
Those that correctly target their response to the new agenda will be the likely leaders in the energy transition—for the next four years and beyond.
Brace for impact
During this presidential campaign, President Biden proposed an infrastructure and clean energy investment program that has two primary goals:
Driving a sustainable economic recovery through equitable job creation.
Achieving a 100 percent clean energy economy with net-zero emissions by 2050.
We anticipate the Biden administration will take that campaign blueprint and produce a bold plan that will consist of both executive and legislative actions, which we have decomposed into 16 key elements as seen below.
Components of the Biden action plan likely to impact oil and gas companies
Impact on markets
The administration's comprehensive plan will have a direct bearing on O&G markets. The magnitude of the impact of the plan's elements will vary, as will the time that peak impact is expected to occur. For O&G companies, understanding the likelihood and timing of each is critical for an effective response.
Impact on competitiveness
The new administration’s policies will usher in a renewed focus on decarbonization across industry sectors—including energy. To remain competitive in the lower-carbon world, O&G companies will have little choice but to accelerate their efforts to reduce the carbon intensity of their operations and simultaneously scale low-carbon energy services and products. Policies in hydrocarbon production, consumer- and retail-related, clean energy, and other policies not directly targeted at the O&G industry or clean energy are driving the need for change across the value chain.
Impact on oil and gas operations
The operational implications of the Biden administration’s energy and foreign policies will resonate across the energy industry. There are three actions that all O&G companies should consider, regardless of their role in the hydrocarbon value chain:
To offset the pending rise in operating costs and tariffs, all players should look for opportunities to come together to reduce expenses.
Success in O&G will be measured by value created—not by the volumes of oil and gas produced.
Boost digital investments
To offset some of the industry costs associated with the policies, companies should accelerate their investments in digital technologies and AI.
Beyond these no-regret actions, we believe companies in the various value chain segments should carry out specific activities to address the respective challenges and opportunities that the new US policies present. The implications of new policies will differ for each type of player. So should these players’ responses. Their strategies, as well as their near-term and medium-term actions, will determine not only how well they navigate the changes that will materialize over the next four years and beyond, but also their role in the accelerated energy transition.
Meet the moment
The Biden presidency has made energy policy and emissions reductions top priorities. Several early executive actions—chief among them the revocation of the Keystone XL pipeline permit and limitations on new leasing and drilling—have already been issued. More ambitious policy changes will require legislative action.
Some of the pending policy changes will disrupt traditional players’ business and operating models. But others will provide funding and incentives to companies looking to reimagine their roles in the new energy system.
Winners in the energy future will not simply bide their time for the next four years. They will address the financial, operational and environmental challenges that have been simmering for years. They will effectively brace for the impact of the Biden administration’s policy changes. And they will boldly seize the opportunities these new policies hold.