The Biden administration announced a climate target to cut U.S. greenhouse gas emissions by 61%-66% by the year 2035, below 2005 levels. The goal of the new ambitious emission reduction targets is to keep the U.S. on a straight path to achieving net-zero greenhouse gas emissions by 2050 as per the Paris Agreement. 

Private market firms, asset managers, and impact investors may need to adapt their investment strategies according to new regulatory scrutiny on climate-related risks to capitalize on the anticipated surge in demand for sustainable investments as the transition to a net-zero economy grows. 

Let’s discuss the new GHG emission reduction goal of the U.S. in detail. 

About the new climate goal of the U.S.

The new climate target to cut emissions is intended to serve as the foundation for the United States' Nationally Determined Contribution (NDC) under the Paris Agreement. The NDCs are national climate action plans given by each country under the agreement, which must be updated every five years with increasingly ambitious targets. The current NDC of the U.S. was established by the Biden administration in 2021 and calls for a 50% - 52% reduction in emissions by 2030. The current targets to achieve 50% emissions reduction by 2030 are looking realistic. However, the new 2035 NDC targets of 61%- 66% depending on the new Trump administration and other favourable factors. 

Key aspects of the new climate goal of the U.S.

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  The new emissions reduction strategy is based on leveraging landmark investments from the Bipartisan Infrastructure Law and Inflation Reduction Act to support a transition to a clean energy economy while also creating jobs. 

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  The climate target aims to achieve net zero emissions by no later than 2050. This long-term goal is consistent with global efforts to limit temperature increases to well below 2°C, preferably aiming for 1.5°C, as defined in the Paris Agreement.

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  The overall NDC for 2035 outlines plans across critical sectors, including renewable energy, battery storage, transportation, and energy efficiency, by cutting emissions by 2 billion metric tons.

• The strategy for emission reduction highlights the necessity of collaboration at all levels of government—federal, state, municipal, and tribal—as well as participation in private sector projects. 

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