When Energy Policy is at Odds with Policy Goals

Mark Green
Posted January 28, 2021

We’ve talked about the potential harm to economic recovery and U.S. energy security in the Biden administration’s early, misguided policy actions – killing the Keystone XL pipeline and halting new natural gas and oil leasing on federal lands and waters, the apparent first step toward banning federal development altogether.

Taking a closer look at the flurry of executive orders from the White House, the president’s energy actions also run counter to his own objectives, including these three:

• Advancing “Made in America” concepts
• Conservation and environmental protection
• Improving the U.S. government’s relationships with Native Americans

“Made in America”

The president’s executive order is specific to the federal government’s procurement of “goods, products, materials, and services from sources that will help American businesses compete in strategic industries and help America’s workers thrive.” Yet, it’s clear from the order’s title – “Ensuring the Future Is Made in All of America by All of America’s Workers” – that administration has a broader vision.

Unfortunately, its first day in office, the administration axed 1,000 American union jobs on the Keystone XL pipeline, which would have provided heavy crude oil for technologically advanced U.S. refineries that are configured to process heavy crudes.

More broadly, the administration’s “Made in America” thinking doesn’t appear to include made-in-America natural gas and oil – which accounted for nearly 70% of the energy used by Americans in 2019, according to the U.S. Energy Information Administration. Given that, unilaterally halting new federal natural gas and oil leasing is a mistake. 

The decision looks worse amid projections that natural gas and oil will remain 53% of the global energy mix two decades from now. So says the International Energy Agency (IEA) in its Stated Policies Scenario. Even in IEA’s Sustainable Development Scenario, which projects greater use of other energy sources, natural gas and oil are projected to supply about 46% of the globe’s energy mix.

So, the question is: Why is the United States, the world’s leading producer of natural gas and oil, the world’s leading energy sources, making the unforced error of diminishing its own global energy leadership – and in the process detouring to a policy of import more oil? API President and CEO Mike Sommers, at this week’s U.S. Energy Association State of the Energy Industry Forum:

“The bottom line is that to keep up with population growth and increased energy consumption there simply must be more investments in oil and gas. And now is not the time to give up on American oil and gas. Which is why the president’s announcements the last few days have been disappointing.”

Conservation and Environmental Protection

We’ve already discussed faulty environmental assumptions in the administration’s new federal leasing halt. If indeed this is a first step toward a complete ban on federal natural gas and oil development, API analysis has shown that ending federal development would increase coal use and cause U.S. carbon dioxide emissions to rise by 5.5% in the power sector by 2030. That would reverse progress on power sector CO₂ emissions reductions – down 33% from 2005 to 2019 – and undermine U.S. leadership on emissions reduction since 2000. If the administration’s goal is reducing emissions, why undercut the approach that already has achieved significant results?

On conservation, the administration wants to develop a climate finance plan that, among other things, “conserves our lands, waters, and biodiversity …”

Unfortunately for that goal, the administration’s actions undercut the federal government’s most extensive conservation and preservation program, the Land and Water Conservation Fund (LWCF) – which is mostly funded by revenues generated by offshore oil and natural gas production. The recently passed Great American Outdoors Act guarantees the permanent and full funding of the LWCF at $900 million per year to invest in conservation, parks and recreation opportunities across the country.

Relationships with Native Americans

In the president’s executive order on outreach to Native Americans, all executive departments and agencies are charged with “engaging in regular, meaningful, and robust consultation with Tribal officials in the development of Federal policies that have Tribal implications.”

We wonder if the White House consulted with the only Alaska Native village in Area 1002 of the Arctic National Wildlife Refuge’s coastal plain (ANWR), designated for natural gas and oil development, before the administration imposed a moratorium on that development. Apparently not. Matthew Rexford of Kaktovik Iñupiat Corporation:

“When it comes to ANWR, we’re talking about policies based on environmental singlemindedness. They might sound good sitting in D.C., Seattle or New York, but what we’re dealing with locally and regionally is the federal government preventing Alaska Natives who live inside the Refuge from managing their own lands. Unfortunately, Biden’s promise to grow the economy for all Americans was made without due consideration for residents of the Arctic, and certainly without input from the residents of Kaktovik, Alaska. This is a fundamental human rights issue – we have the right to develop our lands but are being prevented from doing so.”

Voice of the Arctic Iñupiat President Sayers Tuzroyluk: 

“The president’s actions hinder Alaska’s growth and potential, and significantly hamstring the sustainability of our rural Native communities. Since oil was discovered at Prudhoe Bay 50 years ago, the Iñupiat have had to balance our cultural and subsistence needs against the economic realities of modern life. The North Slope of Alaska has a singular economy in oil and gas, and we entertain jobs and opportunities with the industry because nobody else is providing them.”

API has stressed the natural gas and oil industry's willingness to work with the new administration on energy policies that broadly benefit the American people. Abundant, affordable energy benefiting American consumers, increased energy security and, through cleaner natural gas, significant emissions reductions. API supports the direct regulation of methane from new and existing sources and will help develop durable regulation that follows the law. So far, the administration’s response has been disappointing and, as we’ve discussed here, has even been at cross-purposes with its own stated goals. Sommers:

“At API, we are rooting for President Biden to lead America out of crisis. As he works toward that important goal, he faces clear choices. Domestic energy abundance or foreign dependence. American jobs or overseas jobs. Economic revival or decline. Progress or retreat. Thus far, President Biden is on the wrong side of a number of these consequential choices.”