Climate bill’s unlikely beneficiary: US oil and gas industry
BILLINGS, Mont. — The U.S. oil industry hit a legal roadblock in January when a judge struck down a $192 million oil and natural gas lease sale in the Gulf of Mexico over future global warming emissions from burning the fuels. It came at a pivotal time for Chevron, Exxon and other industry players: the Biden administration had curtailed opportunities for new offshore drilling, while raising climate change concerns.
The industry’s setback was short-lived, however. The climate measure President Joe Biden signed Tuesday bypasses the administration’s concerns about emissions and guarantees new drilling opportunities in the Gulf of Mexico and Alaska. The legislation was crafted to secure backing from a top recipient of oil and gas donations, Democratic Sen. Joe Manchin, and was shaped in part by industry lobbyists.
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While the Inflation Reduction Act concentrates on clean energy incentives that could drastically reduce overall U.S. emissions, it also buoys oil and gas interests by mandating leasing of vast areas of public lands and off the nation’s coasts. And it locks renewables and fossil fuels together: If the Biden administration wants solar and wind on public lands, it must offer new oil and gas leases first.
As a result, U.S. oil and gas production and emissions from burning fuels could keep growing, according to some industry analysts and climate experts. With domestic demand sliding, that means more fossil fuels exported to growing foreign markets, including from the Gulf where pollution from oil and gas activity plagues many poor and minority communities.
To the industry, the new law signals Democrats are willing to work with them and to abandon the notion fossil fuels could soon be rendered obsolete, said Andrew Gillick with Enverus, an energy analytics company whose data is used by industry and government agencies.
“The folks that think oil and gas will be gone in 10 years may not be thinking through what this means,” Gillick said. “Both supply and demand will increase over the next decade.”
The result would be more planet-warming carbon dioxide — up to 110 million tons (100 million metric tons) annually — from U.S.-produced oil and gas by 2030, with most coming from fuel burned after export, according to some economists and analysts. Others predict smaller increases.
The law reinstates within 30 days the 2,700-square miles (6,950-square kilometers) of Gulf leases that had been withheld. It ensures companies like Chevron will have the chance to expand and overrides the concerns of U.S. District Judge Rudolph Contreras that the government was “barreling full-steam ahead” without adequately considering global emission increases.
The measure’s importance was underscored by Chevron executives during a recent earnings call, where they predicted continued growth in the Gulf and tied that directly to being able “to lease and acquire additional acreage.”
The fossil fuel industry’s ambitions are now directly linked to wind and solar development: The bill prohibits leasing of federal lands and waters for renewable energy unless the government has offered at least 2 million acres (810,000 hectares) of public land and 60 million acres (24 million hectares) in federal waters for oil and gas leasing during the prior year. The law does not require leases to be sold, only offered for sale.
The measure’s critics say that’s holding renewables hostage unless the fossil fuel industry gets its way. Some accuse Biden and Democrats of abandoning pledges to confront the industry.
“It’s 10 more years of mandatory leases,” said Brett Hartl with the Center for Biological Diversity. “We will do our damnedest but it’s hard to fight them all.”
Communities near polluting industrial plants will continue to suffer if the oil and gas industry remains vibrant, said Beverly Wright, executive director of the Deep South Center for Environmental Justice and a member of the White House Environmental Justice Advisory Council. She worries that incentives in the law for technology that captures carbon from industrial processes could also perpetuate harm to these poor, mostly minority residents.
