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Nick Cunningham

Nick Cunningham

Nick Cunningham is an independent journalist, covering oil and gas, energy and environmental policy, and international politics. He is based in Portland, Oregon. 

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Environmental Groups Target Fossil Fuel Production On Federal Lands

Environmental groups have decided to widen their attack on fossil fuels, calling on the President to end the development of coal, oil, and natural gas from public lands.

After campaigning against the Keystone XL pipeline, which has successfully delayed the infamous project for years and may yet ultimately kill it off, environmental groups are shifting their sights to a broader “supply-side” strategy. They are now demanding the President end the leasing program of fossil fuels on public lands.

In a September 15 letter to the President, a very long list of environmental organizations, including the Sierra Club, 350.org, Greenpeace, and others, stated clearly that “the longstanding U.S. policy of leasing federal public lands and oceans to corporations for coal, oil and gas extraction must end.” The letter argues that the combustion of fossil fuels derived from federal lands resulted in one quarter of total U.S. energy-related greenhouse gas emissions over the past decade. With climate change only getting worse, the costs of developing those resources are high, making the President’s only responsible option to leave “those remaining fossil fuels...safely in the ground.” Related: The Shale Delusion: Why The Party’s Over For U.S. Tight Oil

The strategy can also be exhibited by a more confrontational approach on the behalf of environmental groups towards the President, which they have been reluctant to do throughout most of his Presidency. The Obama administration is implementing historic limits on greenhouse gas emissions from power plants, and previously secured monumental gains in efficiency of the nation’s auto fleet through regulatory pressure. While those moves are acknowledged, Obama’s “all-of-the-above” approach to energy has come increasingly under fire by his supporters, who say he is not doing enough to respond to climate change.

“Whether it’s with Keystone XL, or an expansion of drilling in the Arctic, or leasing on public lands, we need to see some examples of the fact that the president understands that energy supply and demand are linked, and we have to start to develop a supply side strategy to address climate change,” Michael Brune, executive director of the Sierra Club, told the Washington Post. Related: EU’s Energy Market In For Some Drastic Changes

The supply-side strategy is laid out in the letter sent by the environmental groups to the President, in which they also target several other hotly contested areas, calling for the end of fossil fuel development. These include: the Powder River Basin (mostly coal, but also oil and gas), the entire Gulf of Mexico offshore industry, the Atlantic Ocean, fracking in California, oil sands in Colorado, and fracking in national forests.

“Under existing federal laws…you have clear authority to stop new leases. With the stroke of a pen, you could take the bold action needed to stop new federal leasing of fossil fuels.”

Obama will probably not respond to most of these demands, if any. With a year and a half left, he will probably shrug off calls for a deeper response on the supply-side, and trumpet his demand-side achievements (EPA power plant limits, for example) as evidence of a strong environmental legacy. Related: Panasonic Now Gunning For Tesla’s Energy Storage Crown?

But some of what the environmental groups call for could be taken up by a future administration.

Such a scenario illustrates the “carbon bubble” dilemma very clearly. If the world is indeed going to get a handle on global greenhouse gas emissions, that will require some pretty intense shifts in the global energy system. In short, addressing climate change will necessarily result in stripping major oil, gas, and coal companies of their most prized assets. If that is to happen, the share prices and the valuations of some of the largest companies are wildly off base. The financial markets may be expecting hundreds of billions of dollars in revenues that may not materialize.

However, the markets are also not really pricing in this risk. With little action from the federal government in sight, investors are ignoring this possibility. Also with major shifts in stock prices so dependent on short-term news, major climate policies reside safely in the future for now. Until then, it seems, the fossil fuel industry will keep on moving – business as usual.

By Nick Cunningham of Oilprice.com

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