Through Bloomberg / Bloomberg Getty Images
Days after President Joe Biden told world leaders that his administration is committed to slowing down climate change “by action, not by word,” his Department of the Interior oversaw one of the largest oil and gas leases in American history.
Eighty million acres in the Gulf of Mexico, an area twice the size of Florida, were put up for auction on Wednesday. The energy companies, led by Exxon Mobil Corp., only made bids for a total of 1.7 million acres, and it is unclear how much of that will be developed later.
Environmentalists rejected the lease auction. “This is an administration that is campaigning to combat climate change,” said Drew Caputo, an Earthjustice lawyer who sued to stop the trade. “Therefore, this lease is disappointing, as it is the most significant measure the administration has taken in the development of oil and gas and it is going in the wrong direction.”
The Biden administration argues that it did not have many options. Shortly after taking office, Biden announced that he would suspend new oil and gas leases on federal land and waters until their impact on the worsening climate crisis is assessed. About a quarter of U.S. greenhouse gas emissions come from the extraction of fossil fuels from public lands.
More than a dozen Republican-led states were sued to challenge the break, saying it would cause undue harm to the energy industry and state economies that depend on fossil fuel production.
Earlier this summer, a Louisiana federal judge sided with these states and issued a nationwide preliminary injunction. Biden’s administration has appealed the decision, but agreed to resume rental sales in the meantime. More leases are planned for Wyoming, Colorado, Montana and other western states early next year.
“They can be despised if they don’t comply with a court order, so I think they’re looking at litigation risk and making a verdict,” said Hilary Tompkins, an environmental lawyer at Hogan Lovells. a State Department attorney during the Obama administration.
Environmental organizations argue that Biden could have done more to stop the sale if it plans to seriously move the U.S. economy away from fossil fuels.
The Department of Justice could have applied for an urgent injunction to suspend the lease while the administration’s oil and gas lease break is being complained about. It could also have argued that the environmental risks associated with the lease were in conflict with national environmental law.
According to Tompkins, both involve legal and political risk.
“The law is pretty clear,” said Erik Milito, president of the National Ocean Industries Association, a trade group for offshore energy companies. “The law says the home office must have and maintain a leasing program, so it’s hard for the home office to just cancel leases without a reasonable basis.”
In addition, he said, intervention to stop renting would have a devastating effect on the country’s oil and gas industry.
An analysis commissioned by the Conservation Economics Institute in August, commissioned by the Natural Resources Defense Council and other conservation-based nonprofits, concluded that the suspension of oil and gas leasing in the country would have “significant” economic effects in the short term.
Oil and gas companies entered into leases during the term of former President Donald Trump. More than half of the land leased by energy companies is currently not producing, according to the analysis, “indicating a decline in economic demand for federal leases.”
The current lease is different, Milito said.
“The level of production is almost at the highest level we have ever seen in the Gulf of Mexico, and we see the Gulf as one of the most attractive basins for oil and gas prospects in the world,” he said.
Energy prices will rise sharply as world economies recover from the COVID-19 pandemic. Republican lawmakers and fossil fuel companies have quickly pointed the finger at the Biden administration’s climate policy as a reason, arguing that leases like the Gulf could lower prices.
In reality, oil prices are global and are often determined by how much crude oil OPEC sells on the market. Oil production on leases auctioned on Wednesday will take years, and challenges from environmental groups are expected.
“It simply doesn’t make sense to put the profits of oil companies ahead of the future of the inhabited planet,” said Christy Goldfuss, director of energy and environmental policy at the Liberal Incubator Center for American Progress. “The Biden administration must take control of the federal leasing program with its existing powers to deliver on its promises to current and future communities across America. We cannot afford this dangerous, harmful, and inconsistent approach to managing American public lands and oceans.”