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Biden’s Interior budget request boosts renewables, sidelines oil and gas

02 June 2021 Amena Saiyid

President Joe Biden is seeking significant funding increases for Department of the Interior agencies charged with managing US public lands and waters for fiscal year 2022, which begins 1 October, and is directing funds towards renewable generation, in contrast to prior policies that favored oil and natural gas exploration, permitting, and leasing activities.

In its budget request, the White House requested a nearly 40% increase to $45.8 million for the Bureau of Ocean Energy Management's (BOEM) budget for permitting and siting mostly offshore wind projects to meet a 30 GW-by-2030 goal announced at the end of March. At the same time, the budget seeks a 3% increase to $62.3 million for renewing leases for high priority, existing offshore oil and gas exploration activities.

Overall, the budget proposes $17.6 billion in FY 2022 spending for Interior, an increase of $2.5 billion, or 17%, from the 2021 enacted level.

The White House did not ask for any funding for carrying out new oil and gas exploration, development, and leasing activities on public lands and waters, in line with a 27 January executive order on tackling climate change and reducing the government's carbon footprint. The order directed Interior to pause new leasing activity while instituting a comprehensive review of permitting and leasing practices as well as any royalties and related actions to account for the climate costs of oil and gas resources extracted.

To that end, Interior on 1 June announced it was suspending all activities related to the implementation of the Coastal Plain Oil and Gas Leasing Program in the Arctic National Wildlife Refuge (ANWR), pending completion of a comprehensive analysis under the National Environmental Policy Act.

The White House said Biden's $6-trillion budget request to the US Congress, which controls the federal government's purse strings, illustrates the administration's commitment to boosting power generation from renewable sources, to decarbonizing the economy, and to minimizing global warming impacts caused by burning fossil fuels and releasing GHGs.

The request for Interior is significant because it focuses on public lands and waters that the White House sees as having "excellent" solar and wind energy potential and significant geothermal energy resources.

Biden's 'bold vision'

House of Representatives and Senate appropriators greeted Biden's budget request along partisan lines.

Senator Patrick Leahy, Democrat-Vermont, who heads the Appropriations Committee, called Biden's request "a bold vision for our future," while his Republican counterpart on the committee, Senator Richard Shelby of Alabama, slammed the request as a blueprint for "higher taxes, excessive spending, and disproportionate funding priorities." Shelby added that he is grateful that Congress has the final say on what the federal government receives.

On the House side, Representative Rosa DeLauro, Democrat-Connecticut, who heads the Appropriations Committee, reminded the public that "we cannot prepare for a brighter future without addressing the existential threat of climate change, and this budget makes important investments to create jobs as we meet this challenge."

DeLauro's Republican counterparts remained critical. "Instead of increasing our Defense budget to keep up with the threat from our greatest adversaries like China, Biden's budget prioritizes funding for liberal priorities like climate change—all paid for by raising taxes on hardworking Americans," Republican appropriators tweeted 28 May.

Public lands and waters

BOEM is the Interior agency charged with managing energy and mineral resources in federal US waters, while its sister agency, the Bureau of Land Management (BLM) manages 245 million acres of public lands and 700 million acres of subsurface mineral resources.

The oil and gas industry currently holds leases on an estimated 26.6 million acres of federal lands, of which 13.9 million (or 53%) are unused and non-producing, according to Interior. Of the more than 12 million acres of public waters under lease, it estimates more than 9.3 million (or 77%) are unused and non-producing.

As of 1 April, BOEM was managing 2,341 active oil and gas leases on more than 12.4 million Outer Continental Shelf (OCS) acres. In FY 2020, BOEM's conventional energy activities generated revenues of $97 million in rent, $241 million in bonuses, and $3.4 billion in royalties from production, while offshore production during this period totaled 641.3 million barrels of oil and 881.7 million cubic feet of gas, almost all of which BOEM said was produced in the Gulf of Mexico.

Currently, producing leases on the OCS account for about 15% of all domestic oil production and 2% of domestic gas production.

Oil and gas companies operating on BLM land generated about $4.2 billion in federal royalties and leasing revenue while delivering 288.6 million barrels of oil and 3.4 trillion cubic feet of gas, or 6% and 9% of total US production, respectively.

BLM's Energy and Minerals Management program is seeking $29.1 million in additional funds compared with the prior year appropriation of $90.9 million for its oil and gas program, but not to develop and explore new sites.

The oil and gas management program budget includes an extra $8.6 million to plug orphan wells, which it said in "some instances could be causing groundwater contamination or leaking methane, an extremely potent greenhouse gas—as well as reclaim the sites." This request also includes an additional $18 million for Alaskan legacy wells that includes remediating the Tulageak legacy well site in the National Petroleum Reserve-Alaska.

Eric Brakey, a senior spokesman for the conservative-leaning, Texas-based Young Americans for Liberty, criticized the Biden administration for suspending oil drilling activity at ANWR. "President Biden is wrong to shut down oil drilling in Alaska. Washington, DC is a city 4,000 miles away and should not have more power to decide energy policy in Alaska than the people who actually live there," wrote Brakey in a 2 June statement.

"Sadly, this does not apply to just one state, as the Biden administration seeks to defund all new petroleum exploration on federal lands, making America more dependent on foreign countries like Saudi Arabia," he added.

A coalition of local indigenous and conservation groups, including the Alaska Wilderness League and Sovereign Inupiat for a Living Arctic, disagreed, thanking Biden and Secretary for the Interior Deb Haaland in a statement for suspending ANWR oil and gas activities.

"These lands are sacred to the Gwich'in and Iñupiat peoples and nursery to the Porcupine caribou, polar bears, and millions of migratory birds," the coaliton wrote. "More work remains, however, and we look forward to working with the administration on stronger action to correct this unlawful leasing program and preserve one of our nation's most majestic public lands."

Building back better

Biden's budget request fulfills his campaign promise to "build back better" with funding geared toward shifting energy production and related jobs to the clean energy sector.

Under BOEM's $249 million request, for instance, the Biden administration has included $86.8 million, a 12.5% increase over FY 2021 levels, to finance lengthy multi-agency environmental analyses for offshore wind projects and chase the 30 GW goal.

To meet that goal, though, BOEM estimates "it will need to complete reviews of at least 16 construction and operating plans by 2025 to support 19 GW of clean energy."

As of 1 June, BOEM's own data show the agency is reviewing 13 construction and operating plans for the 17 commercial leases it has issued for mostly offshore wind sites.

Moreover, BOEM officials have indicated publicly the agency will hold a lease sale off the Atlantic Coast in the New York Bight area by the end of 2021 or early in 2022 and another for the Pacific Coast off California in 2022. It also is looking at additional lease areas in the waters of the Carolinas, the Gulf of Maine, Hawaii, and Oregon.

Fast-tracking approvals

To complete approval of 16 plans by 2025, BOEM would have to use the fast-track approach it used to expedite approval of the Vineyard Wind construction and operation plan, "which could prove difficult as the project has to gain acceptance from around a dozen federal and state agencies, stakeholders as well as fishing industry groups, as well as local communities," Abhishek Singh, IHS Markit senior research analyst, said in a 1 June email.

"And it's a big issue to have them all completed by that deadline," Singh added.

BOEM's budget request to boost renewables is similar to requests at other Interior agencies. They all reflect Biden's priorities to tackle climate change across the government and to secure a supply chain of critical minerals needed for boosting renewable generation.

BLM has asked for $55.6 million to study, permit, and approve rights-of-way work associated with siting new onshore wind, solar, and geothermal projects as well as transmission lines to back Biden's renewable energy goals.

At the Bureau of Indian Affairs, the agency's minerals and mining program would receive $67 million that includes $40 million specifically to boost renewable energy siting, development, and installation on tribal lands. Complementing this funding is another $10 million request to provide training in clean energy jobs.

Securing minerals supply

To secure a supply chain for critical minerals needed to build batteries and other vital components of solar panels and wind turbines, Biden's request includes funds for various Interior agencies.

Biden is seeking $15 million for BOEM to continue assessing which of the currently identified 35 critical minerals may be located on the OCS. BOEM is developing the National Offshore Critical Mineral Inventory to house information about potential critical mineral resources and environmental conditions in shallow and deepwater environments.

For the US Geological Survey (USGS), which provides the latest scientific research about natural hazards, natural resources, and effects of climate and land-use change, the administration seeks a $1.6 billion budget, essentially a $327 million boost over fiscal year 2021 funding. In particular, the request includes nearly $87 million for the USGS Mineral Resources Program to support supply chain research related to the critical minerals needed for green technologies as well as research on and assessment of mine waste in support of reclamation and potential mineral recovery.

"By determining whether reclamation sites have valuable mineral waste resources that can be extracted and reclaimed, USGS can help identify a potentially valuable domestic source of critical materials and help create good-paying jobs," it said.

Posted 02 June 2021 by Amena Saiyid, Senior Climate & Energy Research Analyst, IHS Markit

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