Under President Donald Trump, the United States became a net exporter of oil, with production at times topping 13 million barrels a day. As President-elect Joe Biden said during a debate last month, however, one of the goals of his administration will be to “transition away from the oil industry” and increase focus on renewable clean energy sources.
It’s a political change of direction that creates major business issues for automotive and energy industry leaders—and it isn’t the only one. As the new administration assumes leadership (and assuming that any recounts and lawsuits will fail), a host of policy reversals are on the table. Among them are stricter auto emissions standards, a ban on fracking on federal land, rejoining the Paris climate agreement, and financial incentives for renewable energy innovations. It may not matter entirely either if Republicans hold the Senate, as experts anticipate many of these rollbacks are still possible through executive order.
To be sure, even a little clarity about which direction the White House will be headed can help, particularly in capital-intensive industries like automotive and energy. “When there is the potential for inconsistent policy at the top, it is very difficult to know what big, long-range decisions to make,” says Brad Marion, global sector leader for Korn Ferry’s Automotive practice. But experts say a host of industries will be facing some challenges. Here’s an overview:
Given the still-raging pandemic, healthcare is obviously an industry of intense focus. It’s also the industry with perhaps the most partisan debate, as many Republicans want to unwind the Affordable Care Act that President-elect Biden played a major role in passing. Expanded insurance coverage and lower costs for prescription drugs are among the potential battles expected to be waged almost immediately. Greg Button, Korn Ferry’s president of global healthcare services, says hospital leaders and physicians are concerned about the new administration’s Medicare and Medicaid funding proposal, as it “may not be sustainable given the aging US population.” Healthcare leaders also have questions about whether value-based care programs will continue and the potential impact of moving toward a one-payer system. “These are all major concerns for healthcare leaders,” he says.
Big tech was a target of criticism before the election, and it could be an even bigger one now that it’s over. Experts say, for instance, that antitrust issues are likely to be a focus of attention in the Biden-led administration. Under the new administration, tech leaders expect heightened scrutiny on their market power as well as the spread of misinformation on their platforms, says Esther Colwill, Korn Ferry’s president of global technology industries. “Tech companies have become politicized, and the challenge for tech leaders is to cut through the hyperbole in a non-political way,” she says. More regulations and greater government oversight isn’t necessarily bad or unwanted, provided the White House and Congress can agree on the direction of regulation. “The right regulation is more important than just regulation,” says Colwill.
The biggest fear among agriculture leaders is that the industry will be used as a chess piece in negotiations over climate-change initiatives, trade deals, and even federal aid payments. President-elect Biden has staked out a pro-family-farmer, pro-small-business position while at the same time running on a platform that could impose stricter regulations on how the industry operates, for instance. Sean McBurney, a Korn Ferry senior client partner and sector leader of the firm’s North America Agriculture practice, says how industry leaders view the new administration depends on where they sit on the agriculture value chain. More predictability and stability in trade deals and commodity prices could help larger conglomerates, for example, while higher taxes and tighter regulations could hurt farmers. “It’s going to be a difficult balance between the pros and cons,” McBurney says.
Without a doubt, renewable energy is a high priority for the Biden administration. Few expect that the president-elect will get it, but his campaign proposed a $2 trillion spending plan to cut carbon emissions. Industry leaders should expect the new administration to hit the gas, so to speak, on research and development around energy storage, which became an issue last summer when a heat wave forced California’s utilities to impose some major blackouts. More storage would have meant more power. “Storage is the Holy Grail for the industry, and there will be more funding and focus around it for sure,” says Richard Preng, a Korn Ferry senior client partner and global sector leader of the firm’s Energy practice.
Other energy sectors probably can’t expect quite this much attention. Preng says new coal plants and nuclear reactors are out of the question, for instance. Of oil and gas companies, he says, “they are going to shrink because no one wants to be seen as a net gas emitter.” New policy directives will change not only energy companies’ business models but also their workforces. Traditional oil and gas will need more talent in highly skilled areas like artificial intelligence and data than in drilling, for instance. As a result, Preng says, more could be done on the part of companies and the new administration to reskill and provide learning and development opportunities for the energy worker of the future.
The new administration’s energy-policy changes will also factor heavily into the reshaping of the auto industry. The twin goals of reducing carbon emissions and increasing the use of renewable energy is a continuation of measures already enacted en masse by the auto industry and should be viewed as a net positive by its leaders, says Marion. “Biden’s priorities are much clearer, which should help auto leaders with capital investment,” he says. He cites infrastructure improvements such as pledging to develop 500,000 new charging stations as a boon for electric-vehicle production, for instance. However, with concerns around the power of big tech and other priorities taking precedence, Marion says autonomous vehicle development will likely take a backseat during Biden’s first few years in office.