Biden and oil: What does responsibility mean in a new energy era?

The Gulf of Mexico is known for its rough waters. Now its choppy, emerald-green expanse is creating political turbulence too, as the Biden administration clears the way for controversial oil and gas activity in places from the Gulf to Alaska.

Recent steps on oil drilling highlight a difficult question: What defines responsible policy at a time of transition – when Americans want to shift toward clean energy but still rely heavily on fossil fuels?

President Joe Biden and his team are moving more aggressively than any past administration toward renewable energy – with his Interior Department, for example, proposing the first-ever Gulf of Mexico lease for offshore wind power. Yet his administration is also approving oil auctions in the Gulf set for next week and for September, and it’s facing a decision on whether to approve major oil-export terminals offshore from Houston that critics describe as “carbon bombs.”

This comes as a U.N.-convened panel of climate scientists has just warned that “there is a rapidly closing window of opportunity to secure a liveable and sustainable future for all.”

Some energy experts say selective fossil fuel developments still make sense – in part for national security reasons – despite the goal of a carbon-free economy. Yet, in an era of what promises to be a managed decline for fossil fuels, big profits are far from assured for the industry. And the Biden administration’s new oil and gas activity sends a somewhat ambivalent message. 

“It’s a signal to the world that, ‘listen, we’ll keep drilling if we have to for our national security interests,’” says Jesse Keenan, a professor at Tulane University researching climate change adaptation. “But on the other hand … as the world weans itself off oil and gas sources, those things become less valuable.”

Where to strike a balance

Biden administration officials describe their straddling of the line between fossil fuel and renewable infrastructure development as a managed approach to the energy transition.

In announcing the proposed offshore wind auction in the Gulf last month, Interior Secretary Deb Haaland insisted that the energy transition was “happening right here and now,” including recent offshore wind auction sales off California’s Pacific coast and near New York. In the Gulf, the proposed sale includes Louisiana and Texas sites that will power more than 1.3 million homes, the department estimates.

Such investments not only reduce emissions of heat-trapping gases in the atmosphere, but they also reduce U.S. dependence on imported or domestic oil.

Yet backers of fossil fuels say development of oil and gas resources has also aided the cause of American energy independence – and helped the world be less reliant on Russia and the Middle East for energy. The United States is now the leading exporter of liquefied natural gas (LNG). Amid the Ukraine war, some of those exports are helping Europe end its reliance on gas from Russia. 

Late last year, the Federal Energy Regulatory Commission – currently half Biden appointees – gave unanimous final approval of the first large-scale LNG project in more than two years, an export terminal in Lake Charles, Louisiana. 

At least 19 additional LNG facilities are either proposed or underway in the U.S.

Controversy in the Gulf

Supporters of these efforts say natural gas is the cleanest of fossil fuels, and that, as oil drilling goes, production in the Gulf is also comparatively clean.

New deepwater technologies “place this region among the lowest carbon intensity oil-producing regions in the world,” says Justin Williams, a spokesperson for the offshore energy group National Ocean Industries Association. He says the homegrown supply “secures our energy with highly regulated and lower emissions production sources.”

But where he calls the Gulf “a national strategic asset” for energy, others say that fossil fuel production in the Gulf region endangers other vital industries as well, from fishing to tourism and more. 

“This whole thing has the same feel of continuing to treat the Gulf Coast as a sacrifice zone for the oil and gas industry,” says Kristen Schlemmer, a lawyer at the Bayou City Waterkeeper, which works with Houstonians impacted by pollution or flooding.

Natural gas may be clean-burning compared to coal or oil, but large quantities of methane – a particularly potent greenhouse gas – are released in its extraction, environmentalists say. And lots of energy gets used to cool the gas into a liquefied state for LNG exports.  

Moreover, oil and gas developments expose ecosystems and communities to potential accidents and pollution. Often it’s African American and low-income communities that live in the closest proximity to the threats posed by refineries and export terminals.

Investing in fossil fuels is not an energy transition, Ms. Schlemmer says. Rather, “that’s walking us back for several more decades.”

Far from building major oil and gas infrastructure, the need in the U.S. and worldwide is to rapidly build renewable energy facilities, judging by the new report from the U.N.’s Intergovernmental Panel on Climate Change. 

By some estimates, modest new investments in fossil fuels will still be needed even on a path toward net-zero carbon emissions by 2050. But the U.S. faces the prospect of oil rigs becoming “stranded assets” over time.

“The dominant factor in new investments is the perception of shortened life cycles for hydrocarbon projects going forward,” as Gautam Jain and Luisa Palacios put it in a new analysis published by the Center on Global Energy Policy at Columbia University in New York. 

President Joe Biden’s policies appear partly to be based on navigating this uncertain transition in energy supply and demand. But partly the president is also playing a hand he’s been dealt by politics, Congress, the courts, and prior administrations. 

His landmark Inflation Reduction Act last August won a massive $369 billion for investment in climate change mitigation and adaptation over the next decade. However, passing the bill required a bargain with U.S. Sen. Joe Manchin, a Democrat from the coal state of West Virginia who chairs the Senate’s influential Energy and Natural Resources Committee, requiring the opening of offshore oil lease auctions in the Gulf and Alaska. 

Both lease auction announcements have since drawn lawsuits from environmental groups, who argue the process is failing to account for the threat of oil spills and future greenhouse gas emissions. The Biden administration, continuing its balancing act, cited climate change in recently hiking the royalty rates for the Alaska auction, dousing oil company interest and stirring Senator Manchin’s ire. 

Game of chicken?

Then there’s the economic question: How many of those new leases does the industry really want? 

Already, the Biden administration has approved many new drilling permits, angering environmentalists but following the implicit lead of prior administrations that leased specific plots to energy firms.

In the recent high-profile case of the Willow project in Alaska, the administration is allowing ConocoPhillips to build three well pads instead of a proposed five (a decision that faces its own lawsuit from environmentalists). 

But in offering new leases for projects that could ultimately get permits for development years down the road, the Biden administration is playing a game of chicken, according to Dr. Keenan at Tulane. That’s because the renewable energy sector is booming, he explains. 

“The energy transformation in America – and globally – is moving so fast … it essentially undermines the value of those long-term [oil] investments,” Dr. Keenan says. If oil executives were to partially decline the administration’s lease auction offer, “it would be an acknowledgment of the limitations of their own business model.” 

While some of its moves make climate advocates balk, the Biden administration has mostly pursued a bold environmental agenda – as signaled in recent days by declaring new national monuments that will protect lands in Texas and Nevada from development, and placing more Alaskan land and water off limits for drilling.

The Interior Department described the recent Willow decision for oil development as striking “a balance” – a metaphor that might be applied to other Biden steps allowing some fossil fuel development.

But from Ms. Schlemmer’s vantage point in Houston, as companies ready for next week’s oil lease auction, the balance doesn’t feel as well struck as federal officials might claim.

For her and other Gulf communities, she says, “it’s just really disheartening to see.”