The start of the Biden administration, along with a Democrat majority in the Senate and House, marks a significant shift in the approach to addressing climate change at the national level. Climate policy and regulation will no longer be limited to state-level action and legacy federal programs. While expansive, economy-wide legislation may remain elusive, sector-specific actions are imminent. Aggressive economy-wide emission reduction goals suggest that no economic sector is immune.
Every company with greenhouse gas emission footprints along their value chains should take steps now to prepare for the coming business risks and opportunities. These steps include:
- Assessing direct, downstream, and supply chain emissions
- Understanding likely climate policy scenarios that may develop in the coming years
- Evaluating how different policy scenarios would impact specific industries, businesses, and investments relevant to the company’s operations
- Forming corporate and regulatory strategies that are resilient to climate policy risks and take advantage of opportunities in the changing landscape
In this Insights piece, we address the second step: understanding possible climate policy scenarios. While acknowledging that state-level and regional policies are important, this paper focuses on the national level—the major climate policy options that may be pursued by the Biden administration and Congress. We review the sectors that may be targeted for emissions reductions, identify the various policy tools and how they may be used, and discuss potential policy outcomes.