It’s an eternal dispute - the need to meet consumer energy needs through oil and gas production versus the battle of climate change activists and green policy. When President Biden came into office in January his stance on green policy was in stark contrast with his predecessor Donald Trump. Biden promises a Green New Deal under which he will pave the way for the banning of oil and gas drilling on public lands, protect a third of America’s land and ocean, introduce a government electric vehicle (EV) fleet, and move away from traditional fuel towards EV for the mail and military.
Biden immediately re-joined the Paris Agreement in an effort to show the country and the world that he meant business, thereby leaving America’s oil and gas industry in a state of uncertainty about the future of the country’s black gold.
Earlier this year, Biden imposed a temporary ban on new oil and gas leases on public lands and offshore waters, while the Interior Department carried out a “comprehensive review” of the leasing program. The idea was to reconsider the industry’s impact on the environment and global warming.
This lease ban was overturned by a federal judge in June after 13 states filed a legal challenge in Louisiana to end it. This means many jobs remain safe and production levels can resume, but at what cost to the environment?
Related: The Next Major Wildcard For Oil There’s no getting away from it, America runs on oil. Fuelling the nation, forming a major part of its export economy, and providing thousands of jobs across the country, the ongoing need for the oil industry in the U.S. is evident.
And despite the show from Biden to make America green, he continues to invest in the country’s oil industry, knowing that it is still needed to maintain stability until an alternative is viable.
To this end, early in 2021 he approved the new Willow project by ConocoPhillips’ in the National Petroleum Reserve-Alaska (NPR-A), as well as arguing against the shutting down of the Dakota Access pipeline that carries around half-million bpd of oil between South Dakota and Illinois.
In addition, Big Oil holds all the cards thanks to the ongoing lucrative business of fuelling the world. Oil supermajors such as Royal Dutch Shell have long been donating to political lobby groups, including the American Petroleum Institute, to stall and weaken legislation threatening big oil’s position of power in America. ExxonMobil, Chevron, and BP, all make similar contributions to ensure their place in the U.S.
However, with plans to achieve net-zero carbon emissions by 2050, while oil is very much set to stay in the U.S. over the next decade, many companies are looking to modernize, increase their renewable energy portfolios, and cut carbon in line with international expectations. This comes following months of pressure from the government and the International Energy Agency (IEA).
“The signs are unmistakable, the science is undeniable, and the cost of inaction keeps mounting,” Biden stated on Earth Day. “The countries that take decisive actions now will be the ones that reap the clean-energy benefits of the boom that’s coming.”
Related: Oil Prices Crash After OPEC+ Reaches Deal To Ease Cuts
Little is happening to slow production, as companies fight to produce as much as possible before demand wanes later this decade, however companies are looking to improve environmental policies through new technologies such as carbon capture and storage and wastewater recycling for use in other industries.
The IEA strongly supports the introduction of CCS programs, believing they add “significant strategic value” in the transition to net-zero. Samantha McCulloch, head of CCUS technology at the IEA, stated “CCUS is a really important part of this portfolio of technologies that we consider.”
So, while the fight against climate change continues and pressure is being put on governments to introduce a green policy that would significantly hinder oil and gas production, the more likely expectation is for oil and gas to stay in place while global demand remains high, changing practices to meet international expectations and new carbon emissions norms.
By Felicity Bradstock for Oilprice.com
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To put it bluntly, renewables on their own aren’t capable of satisfying global energy demand because of their intermittent nature. That is why global energy transition won’t succeed without major contributions from both natural gas and nuclear energy. Furthermore, the global economy will come to an immediate standstill without oil.
Neither courtrooms nor boardrooms or the IEA’s la-la-land net-zero emissions roadmap could force the global oil industry to change its direction as long as there is global demand for oil.
In May 2021, the US Supreme Court ruled 7–1 in (BP PLC v. Mayor and City Council of Baltimore) that federal appellate courts have the jurisdiction to examine all of the arguments made by litigants on whether such lawsuits belong in federal or state courts. The plaintiff cities and states usually prefer state courts as the venues, as they are seen as more likely to rule against the defendant fossil-fuel producers, in substantial part because the Supreme Court ruled in 2011, in an 8–0 decision that “it is primarily the office of Congress, not the federal courts, to prescribe national policy in areas of special federal interest such as energy security.
In a nutshell, the litigation game against the producers of fossil fuels is based upon a premise that is false: that it is fossil-fuel producers who should be held responsible for the effects of increasing atmospheric concentrations of greenhouse gases (GHG).
Oil and gas will continue to be the core business of the global oil industry well into the future. US oil giant ExxonMobil CEO Darren Woods and Occidental Petroleum CEO Vicky Hollub succinctly and eloquently made their position very clear on zero emissions at the CERAWeek conference in March this year when both said that “reducing carbon emissions from fossil fuels and not the actual use of fossil fuels, offers the best way to combat climate change”.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London
As much as I'd like to continue burning, I'm just not seeing technology anytime soon that can deliver adequate emissions reduction.
I guess we can continue to burn with the thought that they're working on it.