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The incoming Biden administration is under intense pressure to end permitting for oil and gas development on public lands from environmentalists who see this as a step toward reducing carbon emissions.
As a candidate, President-elect Joe Biden made such a pledge and a large coalition is now insisting his administration bar drilling across Utah and other Western states.
Not only would such a move provoke lawsuits, but a development ban would come at a massive social and economic cost, including a $15 billion hit to Utah’s economy over 20 years, according to new state-funded research from the University of Wyoming, the flagship school for the West’s most energy-dependent state.
“Many states with federal lands have highly productive oil and gas assets that await development,” said the study’s author, energy economics professor Tim Considine. “These policies [proposed by Biden] lock access to these assets and forgo income that could be earned from their development.”
This week, a consortium of 538 environmental and social justice groups sent the Biden transition team a letter imploring the incoming administration to make good on the president-elect’s campaign pledge. The plea came in the form of a proposed executive order that bans leasing and permitting for new development on federal lands and waters.
“For our health and prosperity, President-elect Biden needs to make transitioning from fossil fuels a No. 1 priority,” said Jeremy Nichols, the climate and energy program director for WildEarth Guardians. “That starts by taking bold action to get our federal government out of the business of selling coal, oil, and gas, and instead put public lands and waters to work for the climate.”
Under the proposed order, new development would be put on hold while the Interior Department reviews the climate impacts from oil and gas activities. Development could restart only if the review shows fossil fuel development is consistent with reducing greenhouse gas emissions by 50% by 2030 to near zero by 2040 and if climate change can be kept below 1.5 degrees Celsius.
But Considine argued that neither a leasing moratorium nor a drilling ban would deliver much in the way of climate benefits since neither would necessarily drive down demand for fossil energy.
“There are many cost-effective technologies and strategies to reduce greenhouse gas emissions,” Considine said. “Restricting development of oil and gas on federal lands is not one of them.”
Utah and seven other states, including Alaska, account for nearly all onshore oil and gas production from federal lands. Shutting these lands off to future development would reduce the nation’s GDP by $670 billion and eliminate 351,000 jobs a year by 2036 through 2040, according to the Considine report.
The study, which has yet to be peer-reviewed for publication, was commissioned by the Wyoming Energy Authority and released Tuesday by Wyoming Gov. Mark Gordon.
“We are hopeful that the president-elect will embrace the diverse energy portfolio and recognize the importance of the oil and gas industry to our economy and to our nation,” Gordon, a Republican, said in a call with reporters. “However, it is also important to know what it could mean for the people of Wyoming were this new administration to act differently.”
Ranking fourth in natural gas and fifth in oil production on public lands, Utah would shed $1.1 billion in annual economic activity by 2024 if both leasing and drilling were banned, according to this report.
Such moves would reduce opportunities for good-paying jobs in rural places, according to Gordon Larsen, Utah Gov. Gary Herbert’s adviser on federal affairs who will play a similar role in the incoming Cox administration.
“The oil and gas economy in the West is fragile right now, so a ban on energy leasing or development on federal lands would dry up investment and devastate many of our rural economies,” Larsen said. “And it’s not necessary. Our energy producers and refiners have invested millions in producing much cleaner fuels, and at this point 75 to 80% of all fuel purchased in Utah is the cleaner Tier 3 fuel. Gov.-elect Cox is eager to have that conversation with the Biden administration and help them make common-sense energy policy.”
Between 2021 and 2024 in Utah, according to the Considine report, bans on leasing and drilling would eliminate on average 3,232 jobs a year, $541 million in oil and natural gas investments, $319 million in production value, and $664 million in wages.
“Attempts to reduce production in the United States will only support our adversaries and those in the Middle East and Russia who benefit from our own destabilization,” said Rikki Hrenko-Browning, president of Utah Petroleum Association. She noted the United States has led the world in emission reductions since 2005, even as oil and gas production has increased.
“Moving production out of the U.S. to jurisdictions with less stringent standards would result in a net negative to our environment and global stature as a climate change leader,” she said.
But critics of the report point to Considine’s well-established industry connections.
“This study was written with the rosiest of rose-colored glasses, without acknowledging the existential crisis facing the oil and gas industry,” said Jesse Prentice-Dunn, policy director for the Center for Western Priorities.
He argued Considine’s conclusion rely on outdated assumptions on gas prices and oil demand and fail to acknowledge the economic impact of climate-altering emissions.
“A lack of public lands to drill on is not the problem [for the oil and gas industry],” Prentice-Dunn said. “The industry already holds leases to more than 12 million acres of public lands that they are not using. The problem is oil companies have built crushing debt for years and low oil prices are now driving drillers towards bankruptcy.”