SIM Report: US to resume oil drilling auctions in spite of White House’s climate agenda

SIM Report: North America, Issue 14

On 31 August, the US Department of the Interior announced that millions of hectares of land will be opened for oil and gas exploration after a federal judge in Louisiana ruled that the US government is required by law to offer the land to the energy industry. According to a sale document, available blocks in a 36-hectare area in the Gulf of Mexico could hold up to 1.1 billion barrels of crude oil and 4.4 trillion cubic feet of natural gas. The announcement, which has been heavily criticised by environmental groups and seen activists launch legal action against the decision, comes in sharp contrast to President Joe Biden’s stated climate ambitions. Moreover, the case provides a useful indication of the contradictions between the Biden administration’s climate pledges and its actions in government.

Throughout his successful presidential campaign, Biden pledged ambitious action to tackle carbon emissions and rising global temperatures, a major shift away from the Trump administration’s climate change scepticism. Among Biden’s campaign commitments were a ban on new oil and gas drilling on federal lands, a USD2 trillion clean energy and infrastructure plan, and for the US to become carbon neutral by 2050. On taking office in January 2021, Biden signed a flurry of executive orders in line with his pledges. Among the steps taken were re-joining the Paris Agreement, halting oil and gas drilling in Alaska’s Arctic National Wildlife Refuge, and cancelling the Keystone XL pipeline project. The government has also announced plans to replace the government’s fleet of cars and trucks with domestically-assembled electric vehicles, while Biden and major US automakers have signed a commitment aimed at making half of all new vehicles sold electric by 2030. Internationally, Biden’s administration has elevated the foreign policy relevance of its climate agenda, convening a major climate summit in April and appointing ex-Secretary of State John Kerry as special presidential envoy for climate.

Biden’s administration, however, has also faced criticism from climate activists and some members of his own party for other climate policy decisions. Since taking office, Biden’s government has issued more than 2,100 permits to drill for oil and gas on public and tribal lands, the fastest rate since the George W Bush administration. Moreover, the government has supported expansion of the Enbridge Line 3 oil pipeline in Minnesota and a proposed ConocoPhillips oil-drilling project in Alaska, and has refused calls to close the Dakota Access Pipeline. Furthermore, in August, the White House called on OPEC, a group of major oil producing countries, to increase oil output in order to counter rising fuel prices and prevent stalling the global economy’s recovery from the COVID-19 pandemic.

Contradictory climate ambitions and policies are likely to remain a theme of Biden’s presidency, particularly in the run-up to the November 2022 mid-term elections. While tackling climate change is a high priority for the administration, Biden’s government will seek to balance its climate agenda with short-term economic imperatives as well as political considerations, particularly in swing districts and states. Companies operating in the US, particularly those in high-polluting sectors, are advised to monitor climate policies updates and assess how their interests will likely be impacted by energy policies and electoral dynamics.

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