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February 21, 2022

US oil and gas permits suspended amidst climate cost dispute

The news comes as the Biden administration continues its pursuit of curbing emissions by 50% of 2005 levels by 2030.

By Scarlett Evans

The US Interior Department is putting a hold on new federal oil and gas leases and permits after a judge ruled against the Biden administration’s estimated social costs of fossil fuel-based projects and the emissions they produce.  

The metric – known as the “social cost of carbon” – is used to compare the economic impacts for every oil or gas project against its potential economic benefits. Under President Obama’s term, the estimate was at $51 for every tonne of CO2 fossil fuels produced, while President Trump significantly reduced the figure to $7 per tonne. Now, President Biden is raising the number once more to the $51 mark. 

The decision has, however, been met with opposition from leading energy-producing states such as Louisiana and Wyoming, and on 11 February a Louisiana judge ruled that the calculations “artificially increase” the economic costs of drilling projects.  

Now, the federal government is pausing all new drilling projects as it assesses the complaints, with a legal filing from Saturday saying: “Work surrounding public-facing rules, grants, leases, permits, and other projects has been delayed or stopped altogether so that agencies can assess whether and how they can proceed.” 

“The Interior Department continues to move forward with reforms to address the significant shortcomings in the nation’s onshore and offshore oil and gas programs,” the agency added. “Specifically, the Department is committed to ensuring its programs account for climate impacts, provide a fair return to taxpayers, discourage speculation, hold operators responsible for remediation, and more fully include communities, tribal, state, and local governments in decision-making.” 

The news also came in the same week that the Federal Energy Regulatory Commission voted to overhaul the certification process for new gas pipelines in favour of increased scrutiny of projects’ impact on the environment, community, and economic landscape.  

Biden has set the nation a target of curbing emissions by 50% of 2005 levels by the end of this decade; however, the environmental agenda has been met with pushback from states that continue to hold fossil fuels at the heart of their economic growth, and tension between environmentalists and energy-producing states continues to simmer.  

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