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Biden efforts to curb fossil fuel GHGs checked by courts

23 August 2021 Amena Saiyid

The Biden administration's efforts to reduce GHGs and protect wildlife from fossil fuel operations appear to moving forward despite mixed signals from recent US court rulings over its own actions.

The US District Court for the District of Alaska appeared to reaffirm Biden's climate crisis plan to wean the US of its fossil fuel appetite in a bid to reach a net-zero economy by midcentury with a 18 August ruling.

But, ironically, it did so by thwarting the administration's decision to defend a ConocoPhillips Alaska oil and natural gas project in the National Petroleum Reserve in Alaska that the Trump administration approved to produce up to 160,000 barrels of oil a day, or approximately 586 million barrels of oil and about 3.529 billion mt of CO2 emissions over its 30-year life.

The court ruling came out just before the US Department of Interior (DOI) published a 20 August notice that it would start a new review of the federal coal leasing program that would consider "how best to measure and assess the climate impacts of continued federal coal production, transportation, and combustion" among other considerations, such as fair returns on royalties and energy needs.

The district court's ruling and the DOI review of coal leasing came on the heels of the department's plans to appeal a June ruling from the US District Court for the Western District of Louisiana—which ordered DOI to resume new oil and gas leasing on federally owned lands and waters.

DOI approvals nixed

In the Alaska case, District Judge Sharon Gleason ruled against approvals granted by DOI agencies: The Bureau of Land Management (BLM) approved the Willow project under the National Environmental Policy Act; and the US Fish and Wildlife Service's biological opinion concluded that the drilling would not jeopardize polar bears.

Gleason found that BLM and FWS under the Trump administration failed to rationally quantify the change in GHG emissions abroad resulting from the Alaskan oil as well as to provide the required "maximum protection" from damage caused by installing drilling infrastructure in the region's Teshekpuk Lake Special Area. The judge also found the agencies did not provide specific mitigation measures to reduce impacts on polar bears, among other shortcomings.

The BLM did quantify the total gross GHG emissions that would result from consumption of the Alaska oil, according to Max Sarinsky, senior attorney with the New York University School of Law's Institute for Policy integrity. "But then, BLM ran into trouble when it substantially discounted those emissions upon concluding that most of the oil simply substitutes for other oil that would be produced if the Alaska land were undeveloped, including no change in foreign consumption resulting from the approval," Sarinksy told Net-Zero Business Daily.

On the basis of its environmental assessment, BLM's preferred alternative estimated a "net" change of 35 million mt from its baseline GHG emissions, which the Center for Biological Diversity (CBD) complaint said was less than 14% of the project's total direct and indirect emissions. The CBD and Sarinsky said BLM reached "this implausible conclusion" through a flawed application of a market simulation, which attempts to predict how oil production from a project would substitute for (or displace) production of other energy sources.

Gleason's ruling remanded the decision back to the Interior Department bureaus to address those concerns, which is certain to add months or years to the regulatory process and open new avenues for litigation. To the extent the ruling creates a legal precedent, it raises new potential hurdles for securing approval from the Biden administration, which has made a transition away from fossil fuels a central commitment.

Problems with process, not goals

Lawyers and energy experts familiar with both court rulings do not view them as placing a check on the Biden administration's actions to shift the US to a net-zero economy by 2050.

"I don't think the courts are necessarily sending the administration mixed signals. Numerous courts have held that agencies must properly examine the GHG emissions and climate impacts caused by decisions allowing oil and gas activity," Kristen Monsell, a senior attorney for the CBD, told Net-Zero Business Daily in a 22 August email.

The CBD and Alaska-based Sovereign Iñupiat for a Living Arctic led a coalition of indigenous and environmental groups in challenging the Willow project.

So far, Monsell said, no administration has properly quantified the contribution of GHGs from oil and gas activities. Biden's move to halt federal oil and gas leasing while it assesses GHG contributions from these operations was always planned as a temporary (though open-ended) measure. "That decision from the District of Louisiana has more to do with the process by which the Biden administration implemented the pause on leasing than its underlying merits," Monsell said, adding that the decision in any case is being appealed.

In issuing 27 January's order to tackle the climate crisis, Biden explicitly linked the need for a pause to a comprehensive assessment of GHG contributions from such activities.

Sarinsky said the Biden administration remains sincere in its quest to curb GHGs from fossil fuels, and that the court ruling in Louisiana reflected that judge's concerns over the process it followed.

In its response to the Louisiana ruling, DOI underscored Monsell's observation about the improper examination of GHG impacts from oil and gas activities, saying it is both "important and necessary" to appeal the court ruling in Louisiana because federal oil and gas leasing programs in the past had failed to account for GHG and other environmental impacts.

Biden pursuing 'balancing act'

However, Monsell said, "if President Biden is serious about addressing the climate crisis, he has to reject any further attempts to move this project forward and prohibit all new oil and gas activity in the Arctic."

The Willow project should never have been approved, and "it can't be defended," she added.

But Atul Arya, IHS Markit senior vice president and chief energy strategist, does not see support for the Willow project as contrary to Biden's climate goals.

Rather, Arya said, the Biden administration is engaging in "a classic balancing act" in making a few short-term compromises to garner the support of moderate Republicans as it pursues an agenda of halving GHG emissions by 2030 and reaching a net-zero economy by 2050.

The Willow project is very important to Alaska's US senators, Lisa Murkowski and Dan Sullivan, because it would generate income and jobs, but Arya noted that these two Republican senators also are key supporters of the $1 trillion bipartisan infrastructure bill that the US Senate passed 10 August.

The DOI in October 2020 approved ConocoPhillips' preferred alternative for the drilling project, which includes about 37 miles of gravel roads, up to five drilling sites, up to 315 miles of pipelines and other infrastructure after months of studies and challenges.

Blow to Alaska's declining oil, gas production

The court's remand of the Interior approval is the latest in a series of blows to Alaska's hopes for turning around a decline in production. It follows Shell's high-profile cancellation of its Arctic Ocean drilling program, BP selling assets to Hilcorp, and weak interest in drilling in the Arctic National Wildlife Refuge seen in a lease auction earlier this year, when virtually no drillers submitted bids on tracts even at fire sale prices.

The Justice Department declined to comment when asked if it would appeal the court ruling on DOI's behalf.

The American Exploration and Production Council (AXPC) said consistency as well as regular and predictable lease offerings and access to drilling on federal lands is extremely important to the oil and gas industry's ability to provide good-paying American jobs, support US energy security, and make further environmental progress.

AXPC CEO Anne Bradbury said the Biden administration has taken numerous steps to halt domestic oil and gas production, including the arbitrary pause on new oil and gas leasing on federal lands and waters.

"Policies that disadvantage domestic producers will cause job losses, empower foreign producers, restrict capital available for developing emissions reductions technologies, and significantly increase energy costs for American families and businesses," Bradbury wrote in a 23 August email.

Both Murkowski and Sullivan, however, condemned the ruling in a joint statement on 19 August as did Alaska Governor Mike Dunleavy.

"This district court order vacating key approvals and permits for Willow is just plain wrong," Murkowski said, while Sullivan insisted that the "decision won't do one thing to help the environment."

On the contrary, Sullivan said, "it further delays one of Alaska's most strategic energy development projects, which will benefit our adversaries that produce oil, like Russia, Venezuela and Iran, whose environmental standards are some of the worst in the world."

Agreeing with Sullivan, Dunleavy said, "make no mistake, today's ruling from a federal judge trying to shelve a major oil project on American soil does one thing: outsources production to dictatorships & terrorist organizations."

--Jim Day, of The Energy Daily, contributed to this article.

Posted 23 August 2021 by Amena Saiyid, Senior Climate & Energy Research Analyst, IHS Markit

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