Last month, U.S. Interior Secretary Sally Jewell announced that two potential Arctic offshore drilling lease sales would be canceled. She did not mention climate concerns, instead citing “current market conditions and low industry interest” — most notably Shell’s decision to withdraw from Arctic oil exploration.
Yet even if the climate were not on Jewell’s mind, by choosing not to award new leases for Arctic drilling she and President Obama are in fact conducting a very important climate policy experiment. They are providing a real-life test of what we call “supply-side” climate policy.
Supply-side climate policy is a potentially potent complement to efforts to reduce the use of fossil fuels, and one that policymakers are only beginning to grasp. The idea is to limit fossil-fuel supplies — by removing financial incentives, or as in this case, avoiding new drilling — to help reach climate goals.
Some may argue that leaving oil and coal in the ground that would have otherwise been exploited makes little difference for the climate. The Earth’s stores of fossil fuels are vast, and the forgone supply from any one canceled project, in the Arctic or elsewhere, can easily be made up somewhere else. In that view, canceling new oil leases would have no effect on global oil supply and related CO2 emissions.
However, there are good reasons to question that conclusion.
Source: The Seattle Times, US