July 30, 2021 [OilPrice] – It’s an eternal dispute – the need to meet consumer energy needs through oil and gas production versus the battle of climate change activists and green policy.
When President Biden came into office in January his stance on green policy was in stark contrast with his predecessor Donald Trump. Biden promises a Green New Deal under which he will pave the way for the banning of oil and gas drilling on public lands, protect a third of America’s land and ocean, introduce a government electric vehicle (EV) fleet, and move away from traditional fuel towards EV for the mail and military.
Biden immediately re-joined the Paris Agreement in an effort to show the country and the world that he meant business, thereby leaving America’s oil and gas industry in a state of uncertainty about the future of the country’s black gold.
Earlier this year, Biden imposed a temporary ban on new oil and gas leases on public lands and offshore waters, while the Interior Department carried out a “comprehensive review” of the leasing program. The idea was to reconsider the industry’s impact on the environment and global warming.
This lease ban was overturned by a federal judge in June after 13 states filed a legal challenge in Louisiana to end it. This means many jobs remain safe and production levels can resume, but at what cost to the environment?
There’s no getting away from it, America runs on oil. Fuelling the nation, forming a major part of its export economy, and providing thousands of jobs across the country, the ongoing need for the oil industry in the U.S. is evident.
And despite the show from Biden to make America green, he continues to invest in the country’s oil industry, knowing that it is still needed to maintain stability until an alternative is viable.
To this end, early in 2021 he approved the new Willow project by ConocoPhillips’ in the National Petroleum Reserve-Alaska (NPR-A), as well as arguing against the shutting down of the Dakota Access pipeline that carries around half-million bpd of oil between South Dakota and Illinois.
In addition, Big Oil holds all the cards thanks to the ongoing lucrative business of fuelling the world. Oil supermajors such as Royal Dutch Shell have long been donating to political lobby groups, including the American Petroleum Institute, to stall and weaken legislation threatening big oil’s position of power in America. ExxonMobil, Chevron, and BP, all make similar contributions to ensure their place in the U.S.
However, with plans to achieve net-zero carbon emissions by 2050, while oil is very much set to stay in the U.S. over the next decade, many companies are looking to modernize, increase their renewable energy portfolios, and cut carbon in line with international expectations. This comes following months of pressure from the government and the International Energy Agency (IEA).
“The signs are unmistakable, the science is undeniable, and the cost of inaction keeps mounting,” Biden stated on Earth Day. “The countries that take decisive actions now will be the ones that reap the clean-energy benefits of the boom that’s coming.”
Little is happening to slow production, as companies fight to produce as much as possible before demand wanes later this decade, however companies are looking to improve environmental policies through new technologies such as carbon capture and storage and wastewater recycling for use in other industries.
The IEA strongly supports the introduction of CCS programs, believing they add “significant strategic value” in the transition to net-zero. Samantha McCulloch, head of CCUS technology at the IEA, stated “CCUS is a really important part of this portfolio of technologies that we consider.”
So, while the fight against climate change continues and pressure is being put on governments to introduce a green policy that would significantly hinder oil and gas production, the more likely expectation is for oil and gas to stay in place while global demand remains high, changing practices to meet international expectations and new carbon emissions norms.
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