Billings, Mont. (AFP) – The US oil industry faced a legal hurdle in January when a judge invalidated a $192 million oil and natural gas lease deal in the Gulf of Mexico over future greenhouse emissions from burning fuels. It came at a pivotal time for Chevron, Exxon and other industry players: The Biden administration has scaled back opportunities for new offshore drilling, while raising climate change concerns.
Industry setback It was short-lived, however. President Joe Biden’s Climate Scale Signed Tuesday It bypasses management concerns about emissions and secures new drilling opportunities in the Gulf of Mexico and Alaska. The legislation was drafted to secure support from one of the largest recipients of oil and gas donations, Democratic Senator Joe Manchin, and was shaped in part by industrial lobbyists.
While the Inflation Reduction Act focuses on clean energy incentives that can significantly reduce total US emissionsIt also promotes oil and gas interests by authorizing the leasing of vast tracts of public land off the country’s coast. And it’s locking renewables and fossil fuels together: If the Biden administration wants solar and wind power on public lands, it must introduce new oil and gas leases first.
As a result, US oil and gas production and emissions from burning fuels could continue, according to some industry analysts and climate experts. As domestic demand declines, that means more fossil fuels are exported to growing overseas markets, including from the Gulf where pollution from oil and gas activity affects many poor communities and minorities.
For the industry, the new law indicates that Democrats are willing to work with them and abandon the idea that fossil fuels may soon become obsolete, said Andrew Gillick of Enverus, an energy analysis company whose data is used by industry and government agencies.
“People who think oil and gas will be gone in 10 years probably don’t think about what this means,” Celik said. “Both supply and demand will increase over the next decade.”
The result will be more carbon dioxide — up to 110 million tons (100 million metric tons) per year — of oil and gas produced in the United States by 2030, most of which will come from fuels burned after export, according to some economists and analysts.
An Energy Department analysis obtained by The Associated Press on Thursday said the lease provisions in the law “may lead to some increase.” in carbon pollution, but these other provisions will cut 35 tons of greenhouse gases for every new ton of fossil fuel pollution.
The law restores within 30 days the 2,700-square-mile (6,950-square-kilometer) Gulf leases that were withheld. It ensures companies like Chevron will have the opportunity to expand and bypasses US District Judge Rudolph Contreras’ concerns that the government was “going forward with full steam” without adequately considering an increase in global emissions.
The importance of this measure was underlined by Chevron executives during their recent earnings call, as they expected continued growth in the Gulf and linked this directly to the ability to “lease and acquire additional space.”
The ambitions of the fossil fuel industry are now directly linked to the development of wind and solar power: the bill prohibits the leasing of federal land and water for renewable energy unless the government provides 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 leases during the previous year. Leases are not required to be sold by law, they are only offered for sale.
Critics of the measure say it holds renewables hostage unless the fossil fuel industry gets its way. Some accuse Biden and Democrats of abandoning their pledges to confront the industry.
“It’s another 10 years of mandatory rents,” said Brett Hartle of the Center for Biological Diversity. “We’ll do our best but it’s hard to fight them all.”
Communities near polluting factories 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 Board. She worries that incentives in law for technology that captures carbon from industrial processes could also perpetuate the damage For these poor, mostly minority population.
In St. James Parish in Louisiana, where petrochemical plants dominate the landscape, environmental justice activist Sharon Lavigne said the legislation would allow pollution from fossil fuels to continue to harm her community.
Lavigne, a former high school teacher who founded the Rising St.
The leasing provisions point to the failure of efforts by environmentalists and social justice advocates to enforce a nationwide ban on leasing. The height of the movement came when Biden followed through on his campaign pledges to end new drilling on federal lands with the order of his first week in office. Rental sales suspended.
U.S. District Judge Terry Doughty in Lake Charles, Louisiana, blocked Biden’s nationwide order last year. A federal appeals court on Wednesday overturned Doughty ruled, then on Thursday issued a new injunction saying that rental sales cannot be stopped in the 13 states that opposed Biden’s policy.
Jim Noy, an industry lobbyist who has worked with Senate staff on lease provisions in the climate law, said the influx of potential drilling sites is critical for companies to maintain production in the future because wells can take years to develop and some yield nothing.
“The industry is in constant need — almost like a treadmill — for rental sales,” said Noe, an attorney at Holland & Knight who has represented offshore oil and gas companies. Noi said demand for oil and gas would not decline immediately and that exploration in the Gulf would bring jobs and more energy security.
A United Nations report warned before Biden took office that the United States and other countries need to sharply reduce investments in oil, gas and coal to prevent temperatures from rising by more than 1.5 degrees Celsius (2.7 degrees Fahrenheit) since pre-industrial times.
Analysts say other provisions of the law that focus on renewable energy and carbon dioxide capture from plants will result in net emissions reductions 10 to 50 times greater than emissions increases from burning more oil and gas.
The increase in oil and gas emissions is still significant — as much as 77 million to 110 million tons (70 to 100 million metric tons) of additional carbon dioxide per year by 2030 from new leasing, according to economist Brian Burst of the Research Resources for the Future group.
Other experts had lower expectations: San Francisco-based Climate Research Group Energy Innovation forecast up to 55 million tons (50 million metric tons) of additional carbon dioxide annually from the new hire. Researchers from Princeton and Dartmouth said the impact could be as small or as high as 22 million tons (20 million metric tons) in the United States, plus more overseas.
Any increase depends on continued high global oil and natural gas prices – which in turn depends on a combination of factors including the ongoing war in Ukraine, said Robbie Orvis of Energy Innovation.
“Oil and gas production may increase somewhat, but that pretty much offsets all other parts of the bill,” Orvis said.
However, there is uncertainty about how quickly other parts of the bill can reduce emissions. Wind and solar construction businesses can face supply chain issues that hold back many economic sectors. CCS is still refined and of limited use.
Other provisions may make drilling in public land and water more expensive. There are modest increases in royalties and rents and a new $5-per-acre fee when businesses want certain packages for rent. Other fees require companies to pay for natural gas, or methane, which enters the atmosphere as a potent greenhouse gas.
Higher costs can dampen interest among companies, said Mark Squells, professor of natural resource law at the University of Colorado School of Law.
“Although the industry would get more oil and gas leasing if they wanted to, it’s an interesting question: would they want it?” asked Squilas.
Phyllis reported from St. Louis. Seth Bornstein of Kensington, Maryland contributed.
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