NEWS OF THE DAY:
Why the Biden administration just sold offshore oil leases, despite campaign pledge
Ben Adler, Yahoo! News, November 18, 2021
Environmentalists are fuming after the Department of the Interior auctioned leases to drill for oil in an 80-million-acre section of the Gulf of Mexico on Wednesday morning. The Bureau of Ocean Energy Management sold 308 tracts covering 1.7 million acres to fossil fuel giants such as Chevron and ExxonMobil.
“This morning was met with extreme disappointment, depleted hope, and shattered trust,” said Hallie Templeton, legal director for Friends of the Earth, in a statement. “The Biden administration has opted to move forward with relinquishing all remaining parcels of the Gulf of Mexico to oil and gas interests. The decision is based on unlawful analysis that ignores climate change and the serious environmental injustice posed to the Gulf’s frontline communities. We are left aghast that the administration has ignored its clear authority to defer the sale and our final hope lies with the federal court to remedy these violations.”
While President Biden has made action to reduce greenhouse gas emissions a centerpiece of his legislative and regulatory agenda and recently proclaimed at the U.N. Climate Change Conference in Glasgow that the United States is a global leader on combating climate change, environmental activists argue that the administration could have refused to move forward with the auction.
The White House contends that it had no choice, due to a court order issued in June. During the 2020 campaign, President Biden pledged to end fossil fuel leasing offshore and on federal lands. This was a major concession to climate activists, who argue that the government shouldn’t let public lands and waters be used to make climate change worse and to risk the other environmental impacts of oil and gas exploration.
At first, Biden did attempt to stop future fossil fuel leasing. In his first week in office, Biden signed an executive order issuing a “temporary pause” on oil and gas lease auctions on federal land and water.
Louisiana and 12 other states took the administration to court, arguing that already-planned lease sales must continue. A Trump-appointed federal district court judge in Louisiana agreed, and he ordered the administration to complete the sale.
We believe the decision is wrong, and the Justice Department is appealing it,” said Jen Psaki, Biden’s press secretary, when asked about the sale in a press conference on Monday. “So it’s in the courts; it’s in a legal process. We’re required to comply with the injunction. It’s a legal case and legal process, but it’s important for advocates and other people out there who are following this to understand that it’s not aligned with our view, the president’s policies, or the executive order that he signed.”
But some environmental law experts think the administration had more options. On Aug. 31, Earthjustice filed a federal lawsuit in the D.C. Circuit Court, on behalf of Friends of the Earth, the Sierra Club and the Center for Biological Diversity, that would, if successful, force the administration to reverse course before the sales from the auction are formally completed.
“There are three things [the administration] could have done that they have just chosen not to do, that could get them out of” holding the auction, Drew Caputo, a vice president of litigation at Earthjustice, told Yahoo News.
“The first stems from the fact that the court ruling is wrong,” Caputo said. “The court ruling says that if you write a five-year leasing plan and it has a lease sale in it, you have to go forward with the lease sale. … That’s wrong legally because there are plenty of cases out there that recognize that the government has the ability to adapt and has the discretion to delay or cancel lease sales.
“Administrations of both parties have regularly not gone forward with lease sales contained in five-year leasing plans — including most recently the Trump administration, which last year, in 2020, delayed an oil and gas lease sale in the Gulf of Mexico for economic reasons,” Caputo noted.
He argues the Department of Justice could have filed an immediate appeal and sought a stay from the appeals court of the district court order. “They didn’t even try to do that,” Caputo said. “They sat around for two months after the judge ruled, and then they filed an appeal. But they never sought to accelerate or expedite that appeal and instead went all-in on the lease sale.”
The National Environmental Policy Act (NEPA) “requires that they do a full enviro analysis of the consequences of the sale, and among the consequences of the sale they have to consider is the consequences for climate change,” he said. “Their environmental analysis says that it would be worse for climate change to cancel the sale than to proceed with it.”
This conclusion — that producing up to 1 billion barrels of oil would be better for climate change than not doing so — assumes that the oil not produced domestically will all be imported from even dirtier sources. “It ignores basic economic laws of supply and demand, which is that when you decrease the supply of something, something happens to price that could affect demand,” said Caputo. “But, most importantly, two federal courts since last year have considered that exact same climate analysis in connection with two other oil and gas decisions, and rejected it as absurd, under NEPA.”
Lastly, the Outer Continental Shelf Lands Act (OCSLA) gives the president the ability to withdraw offshore areas from oil and gas leasing. In December 2016, then-President Barack Obama used that authority to withdraw most of the Arctic Ocean from oil and gas exploration and development.
“The Biden administration could have used the same withdrawal authority under OCSLA to withdraw some or all of the waters,” Caputo said. “They didn’t do that either.”
Asked about these arguments, the Department of the Interior sent a statement, attributed to spokesperson Melissa Schwartz, that began: “The Department is complying with the U.S. District Court’s decision regarding Sale 257 while the government appeals the decision. At the same time, Interior is conducting a more comprehensive analysis of greenhouse gas impacts from potential oil and gas lease sales than ever before.” Schwartz went on to detail how the Interior Department is doing that, but didn’t respond directly to the arguments Earthjustice has put forth.
That response isn’t going to satisfy critics who say they suspect the administration is reluctant to fight hard against oil drilling at a time when it’s feeling political pressure over the recent rise in gasoline prices and a need to appease centrist Democrats in Congress who hail from fossil fuel-producing states.
“They’re, I think, thinking, ‘Well, we need to give a little’ on fossil fuel development,” said Caputo.
The problem, Caputo argued, is that climate change will keep getting worse if the United States keeps extracting fossil fuels in a vain attempt to keep prices from ever rising.
“It’s not like climate change is gonna sit around and wait for the politics to get better,” he said.
U.S. Asks Big Oil Consuming Nations To Release Reserves
Irina Slav, OilPrice.Com, November 18, 2021
China is not the only big oil consumer the United States has asked to release oil from its reserves in a bid to rein in prices, Reuters has reported, citing unnamed sources.
Earlier this week, the South China Morning Post reported that President Joe Biden had asked China’s Xi Jinping to release oil from storage in a bid to put a lid on oil prices that have pushed U.S. retail fuel prices to levels that are worrying Washington.
According to the Reuters sources, Japan, South Korea, and India were also among the countries Washington approached with the suggestion to release oil from their reserves.
“We’re talking about the symbolism of the largest consumers of the world sending a message to OPEC that ‘you’ve got to change your behavior,'” one of the Reuters sources said.
The option of releasing crude from the state reserve has also been discussed in the U.S. itself, but some commentators with knowledge of how the energy industry works have expressed skepticism it would have the desired effect. One of the reasons given for this skepticism is that the president can only order the release of a limited amount of crude oil from the strategic petroleum reserve of the United States, and this amount will only have a temporary effect on prices.
“It seems the energy market is convinced that even if the U.S. resorts to tapping the Strategic Petroleum Reserve, the benefits would be minimal … to the U.S. consumer,” Oanda analyst Edward Moya said in a recent note, as quoted by Reuters.
As for whether a concerted reserve-draw effort would have the effect of making OPEC start producing more, this, too, is questionable. OPEC and its OPEC+ partners have made it clear they would remain cautious about adding too much oil to global markets, and the one-off release of a few million barrels by each of the countries contacted by the Biden administration would hardly worry them.
LNG Tanker Rates Surge to Record as Asia Buys More US Gas
Ann Koh,, Bloomberg, November 18, 2019
Spot freight rates for liquefied natural gas tankers in the Asia-Pacific have surged to record highs as a steady flow of U.S. cargoes to the region boosts demand for ships.
The cost of chartering a vessel to carry a shipment of the super-chilled fuel from Australia to Japan spiked to $316,750 per day on Tuesday, five times higher than two months ago, according to data from Spark Commodities. That beats the previous high in January during a cold snap in Northeast Asia.
The jump comes in the run-up to the peak winter consumption season and is spurring concern among Asian buyers that colder-than-normal temperatures could be exacerbated by the shortage of ships, pushing costs of the electricity feedstock even higher. Asian benchmark LNG prices are currently about $39 per million British thermal units. That’s down from a peak above $56 in early October, but above the high last winter.
“There has recently been more demand in Asia for U.S. LNG, but that also means more demand for ships to bring LNG to the Pacific,” said Joseph Sigelman, chief executive officer of AG&P Group. “The situation for ships will remain tight through the rest of winter.”
Inpex Corp., Kyushu Electric Power Co. and PTT International Trading signed a memorandum last month to collaborate on LNG trading and hiring gas tankers to optimize their operations amid the dearth of ships.
Asian buyers will be hoping there are no unplanned LNG supply outages in the U.S. over winter as that would force them to seek cargoes from Australia, Southeast Asia or Qatar, putting even more pressure on the tanker market.
They’re also seeking to avoid a repeat of last winter’s congestion in the Panama Canal, and are deploying vessels to travel around the Cape of Good Hope from the U.S. to Asia, stretching shipping capacity even further, traders said. A round-trip voyage could tie up tankers for two to three months.
EPA sets timeline to weigh next steps related to Pebble Mine
Associated Press, November 18, 2021
The U.S. Environmental Protection Agency announced Wednesday it is extending through May a timeline to decide how or whether to proceed with proposed restrictions on mining in Alaska’s Bristol Bay region, which is known for its salmon runs.
Acting Regional Administrator Michelle L. Pirzadeh, in a written notice, said an extension through May would allow time “to consider available information in order to determine appropriate next steps, which may include revising” restrictions that were proposed but never finalized under the Obama administration.
The EPA, as part of a 2017 settlement with the developer of the proposed Pebble Mine, agreed to initiate a process to suggest withdrawing the proposed restrictions. The developer, the Pebble Limited Partnership, cast the proposed restrictions as an attempt to preemptively veto the copper and gold mine and said it wanted the project vetted through the permitting process.
The company subsequently filed a permit application with the U.S. Army Corps of Engineers.
In 2019, during the Trump administration, the EPA withdrew the proposed restrictions, removing what it called an “outdated, preemptive proposed veto of the Pebble Mine.”
That action was challenged in court, and the EPA earlier this year asked a judge to vacate the withdrawal decision and send the matter back to the agency for further consideration. The request was granted.
The EPA said the ruling reinstated restrictions proposed in 2014 and triggered regulatory deadlines to either withdraw the proposed restrictions or prepare a so-called recommended determination that would seek to prohibit or restrict activities in an area. The EPA said it can extend the deadline through a notice in the Federal Register and has chosen to do so. The new deadline is May 31.
The corps last year rejected a key permit for the project following an environmental review from the corps months earlier that the Pebble partnership had viewed as a favorable to the project. The Pebble partnership is appealing the rejection.
The Pebble partnership on Wednesday cited the corps’ environmental review and said the EPA “did not have this significant volume of detailed technical information” when it took action previously. The company also said the nation will need minerals the Pebble project could provide.
Nelli Williams, Alaska director of Trout Unlimited, said the timeline laid out Wednesday shows a “strong commitment” by the EPA “to follow through and finish the work started in 2014” to provide protections for the Bristol Bay region.
From the Washington Examiner, Daily on Energy:
FIRST IN DAILY ON ENERGY — CLEARPATH ANNOUNCES 2022 ENDORSEMENTS: ClearPath Action Fund is planning to run ad campaigns supporting 13 Republicans in the 2022 election cycle.
Most notably, the advocacy arm of the conservative clean energy group is pledging $500,000 to help re-elect Sen. Lisa Murkowski, the former Energy Committee chairman who faces a contested fight to hold her seat in Alaska. This week, ClearPath Action Fund launched a $250,000 ad campaign in Alaska supporting Murkowski, recognizing her for being the “driving force” behind a massive bipartisan clean energy bill passed at the end of last Congress.
ClearPath Action Fund has earmarked $2 million to spend on its full roster of candidates, whose names are being reported here for the first time.
Along with Murkowski, they are: Sens. Mike Crapo of Idaho, Tim Scott of South Carolina, John Hoeven of North Dakota, and John Kennedy of Louisiana, and Reps. Dan Crenshaw of Texas; John Curtis of Utah; Cathy McMorris Rodgers, Dan Newhouse,and Jaime Herrera Beutler of Washington; David Schweikert of Arizona; Fred Upton of Michigan; and David Valadao of California
Feds: Carbon tax could cut energy emissions 19%
Kristi E. Swartz, CLIMATEWIRE, November 18, 2021
A carbon tax could cut U.S. energy sector emissions by as much as 19 percent in 2050 compared to 2020 levels, according to an analysis yesterday from the U.S. Energy Information Administration.
The agency’s analysis showed that a fee as high as $35 a metric ton would have a “significant” impact on the nation’s reduction of carbon emissions. A carbon tax is a fee on the sale of fossil fuels.
EIA’s analysis includes emissions from the electricity, transportation and industrial sectors.
“The U.S. electric power sector is most responsive to the carbon fees in our projections,” said acting EIA Administrator Steve Nalley.
This is because a fee would lead to coal losing market share to less carbon-intensive options such as natural gas and renewables, Nalley said. Also, EIA’s analysis shows that the fees could make emission-free nuclear reactors less likely to retire and could accelerate the pace in which renewable energy is added to the power grid.
To be clear, electric companies nationwide have been shifting away from fossil fuels as market conditions have pushed coal out of favor and natural gas and renewables have become more economic. Political, business and social pressures have led to the transformation of the energy sector as well.
Sen. Sheldon Whitehouse (D-R.I.) and Senate Finance Chair Ron Wyden (D-Ore.) have been pushing for some form of a carbon price, likely starting around $15 per ton. Both told reporters this week that the issue is still alive despite pushback from Senate Energy and Natural Resources Chair Joe Manchin (D-W.Va.) as well as political resistance from the House (E&E Daily, Nov. 17).In the past, carbon fees have found difficulty gaining traction in Congress.
EIA studied three levels of carbon fees per metric ton of CO2: $15, $25 and $35. The analysis is based on the fees starting in 2023 and increasing 5 percent a year through 2050. That would result in an initial $35 fee per metric ton increasing to roughly $132 a metric ton in 2050.
Power sector emissions would fall the most during the first five to 10 years of the tax, EIA said. After that, they would continue to decrease but at a slower rate, the agency said.
As much as 280 gigawatts of additional renewable energy could start producing electricity by 2050, according to EIA’s projections. That is compared to the agency’s baseline forecast.
“In all the cases we considered, carbon fees would have a significant initial impact on CO2 emissions, though we do not see significant additional reductions after the first decade,” Nalley said.