Opening public lands and waters to fossil fuel extraction could have major climate consequences

The study – published today in Climatic Change – found that a ban on new and renewed leases for fossil fuel production on U.S. public lands and waters could reduce global CO₂ emissions by 280 million tons annually by 2030. That is equivalent to about 5% of U.S. emissions, a reduction that would represent substantial progress toward U.S. and global climate goals.

These findings highlight flaws in federal environmental reviews that often simply assume that every barrel of oil not produced in the U.S. will be produced elsewhere. The study comes as the Interior Department considers opening up most federal waters in the Atlantic, Pacific and Arctic to new drilling.

“Our models show that each barrel of U.S. oil left undeveloped leads to about a half-barrel drop in global oil consumption,” said Pete Erickson, an SEI senior scientist who co-authored the study. “In the long term, the smart choice –for the climate and the economy – is to phase down oil and gas production, not ramp it up.”

SEI researchers specifically examined the policies proposed in the “Keep It in the Ground Act,” as introduced in Congress in 2015 and 2016. The latest version was introduced at the beginning of the current Congress by Sens. Jeff Merkley (D-Ore.) and Bernie Sanders (I-Vt.).

The study confirmed that the bill’s policies would have a substantial benefit in reducing global emissions – and thus help meet the Paris Agreement goal of keeping warming below 2°C.

Key findings include:

• Restricting future lease issuance and renewal could lead to a 37 percent reduction in U.S. federal fossil fuel production in 2030.
• That decline would lead to slightly higher fuel prices – prompting added production from other sources – but the net effect would still reduce CO₂ emissions by 280 million metric tons in 2030.
• Limiting new federal coal leases would cost about $20 per ton of CO₂ in 2030, well within the range of costs associated with other options for reducing emissions.
• Limiting new federal oil leases would help limit carbon lock-in. Most oil extracted from federal lands comes from large, capital intensive offshore oil fields that – once built – will continue pumping oil almost regardless of price. For that reason, limiting new offshore oil could protect against future economic losses and ‘stranded assets’.
• State-level action in Western States could yield global climate benefits. The study’s results show that limiting oil and coal production in a half-dozen states would effectively limit global CO₂ emissions.

The findings could also help inform the environmental review of projects that affect future fossil fuel supply. Currently, reviews under the National Environmental Policy Act often assume that any oil not produced in the U.S. would be produced elsewhere.

But SEI researchers found that assumption is not supported by economic principles. In other words, every ton of coal or barrel of oil left in the ground would result in a drop in global consumption and a decrease in greenhouse gas emissions.

“Our findings help cast aside the irrational belief in perfect substitution or, as some have called it, ‘whack-a-mole’. In most cases, leaving coal or oil resources undeveloped will lead to global CO₂ benefits,” said Michael Lazarus, co-author of the study and director of SEI’s U.S. Center.