Home NewsCommodities News U.S. Senate bill could be death blow for Biden anti-drilling pledge By Reuters

U.S. Senate bill could be death blow for Biden anti-drilling pledge By Reuters

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U.S. Senate bill could be death blow for Biden anti-drilling pledge By Reuters


© Reuters. FILE PHOTO: A person holds a sign in Encinitas, California, U.S., October 5, 2021.REUTERS/Mike Black/File Photo


by Nicola Groom

(Reuters) – U.S. President Joe Biden vowed during his 2020 campaign to end federal oil and gas drilling, a major step in his strategy to tackle climate change.

A $430 billion spending bill agreed by Democrats in the U.S. Senate this week could stifle that promise. If passed, it would effectively guarantee continued drilling rights auctions on federal lands and waters for at least a decade.

Still, with Congress set to begin its summer recess next weekend, Senate Majority Leader Chuck Schumer faces a tough road to fast-track the bill, which would be a victory for Biden and his fellow Democrats, hoping Retains control of Congress during this period. midterm elections in November.

The legislation also contains nearly $370 billion in energy security and climate change efforts, including expanding and expanding incentives for electric vehicles, solar and wind power. After more than a year of difficult negotiations, Schumer and Democratic Senator Joe Manchin reached an agreement.

Manchin, who represents the coal-producing state of West Virginia and seeks to protect fossil fuel interests, ensured the bill includes protections for oil and gas.

For example, it makes the licensing of solar and wind installations on federal lands subject to the Interior Department making at least 2 million acres available to drillers in the preceding year, a requirement that will last for ten years.

In federal waters, offshore wind leases would be contingent on the agency providing drillers with at least 60 million acres of outer continental shelf in the previous year, according to the text of the bill.

The deal will also reinstate the results of a November 2021 Gulf lease sale that was struck off by a federal judge over its environmental impact and ordered offshore auctions on the Gulf and Alaska coasts that were canceled earlier this year.

Green groups, while broadly supporting the bill’s billion-dollar incentives for clean energy, have criticized its protections for federal oil and gas leases.

“That’s where the bill is so hard to swallow,” Eric Schlenk-Goodrich, executive director of the Western Environmental Law Center, said in an interview.

“On the one hand, you’re largely pushing us forward in climate action. On the other hand, you’re taking it away.”

The White House did not respond to a request for comment. Biden this week called the spending deal a compromise that would not deliver on his full agenda but would ease inflationary pressures.

An oil and gas group suing the government over the lease suspension called the clause “a pleasant surprise”.

“As this administration only wants to advance wind and solar, this bill will force them not to ignore oil,” Western Energy Alliance president Kathryn Sigama said in an email.

While the act protects the federal drilling program, it also includes reforms that would make development more expensive. It raised the royalty rate for onshore drilling from 12.5% ​​to 16.66%, and raised minimum bids, rents and bond requirements to protect taxpayers from paying to clean up wells if the company goes bankrupt.

It also eliminates non-competitive leases, which allow speculators to snap up parcels that do not sell at auction at very low cost, and levy a fee on emissions of the greenhouse gas methane.

One analyst said the emissions reductions the bill would bring could far exceed the climate impact of any new federal oil and gas leases.

“The $30 billion-plus in additional incentives and investments in clean energy could have a much bigger impact on emissions than those leases,” Rhodium Group partner John Larsen said on a conference call with reporters on Thursday.

Backers of the bill say it could cut U.S. carbon emissions by 40 percent by 2030.

President Joe Biden promised to end new federal leases during his presidential campaign, and his Interior Department tried to suspend new auctions shortly after he took office. Months later, a federal judge ruled they must reopen the auction.

Meanwhile, the administration is under mounting pressure to address high energy prices due to the economic rebound from the pandemic and Russia’s invasion of Ukraine, leading the White House to ask the oil industry to ramp up production.

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