The largest U.S. oil and gas lobby group is promising to fight President-elect Joe Biden’s proposed ban on new oil and gas drilling on public lands and waters, but the fossil fuel industry also sees opportunities to work with the new administration on combating climate change.
“If he is interested in finding commonsense solutions, President Biden has a willing and able partner in the oil and gas industry,” Mike Sommers, the CEO of the American Petroleum Institute, told the Washington Examiner in an exclusive interview ahead of its State of American Energy event on Wednesday, in which the industry previews priorities for the new year.
On its face, the oil and gas industry is at risk from Biden’s aggressive agenda to combat climate change that calls for eliminating greenhouse gases from the economy by 2050. Meeting that goal would require ending the use of nearly all fossil fuels unless companies used technologies to capture their emissions.
But the industry somewhat dodged a bullet with Democrats’ nomination of Biden, a former senator who was known as a centrist deal-maker, compared to more liberal candidates such as Bernie Sanders and Elizabeth Warren, who proposed total bans on fracking, the drilling technique that drove the shale boom.
Sommers, who was an aide to former GOP House Speaker John Boehner, charted out potential areas of cooperation with Biden, listing trade, regulation of methane, and spending on capture technologies. The API opposed President Trump’s trade war with China that resulted in tariffs on U.S. oil and natural gas and on imports of foreign steel used to build pipelines, even as it supported the outgoing president’s promotion of more fossil fuel development. Biden could change course on trade, Sommers said, enabling the United States to export oil and gas to countries such as China that rely on dirtier coal.
“I would think a president concerned about America’s trade deficit would want to work with us on exporting that American environmental progress around the world,” Sommers said.
Sommers also said the API would support Biden’s decision to strengthen regulation of methane, the main ingredient of natural gas and a powerful greenhouse gas.
The API previously backed the Trump administration’s elimination of direct regulation of methane, arguing that existing regulations that indirectly capture methane, along with state rules and voluntary actions by companies, are sufficient. But Sommers suggested that position is untenable now, as Biden has promised stricter actions to curb methane and other countries in Europe move in the same direction, putting the U.S. at a competitive disadvantage.
“If they did it right and do it in a way that is consistent with our principles, there is going to be common ground with methane regulations,” Sommers said of the Biden administration. “If I am a new administration, I would want the people actually in the business who know the business at the table as I am writing a regulation.”
The main exception to the API’s openness to Biden’s agenda is his promise to target fossil fuel production on public lands and offshore waters, an area responsible for nearly a quarter of U.S. greenhouse gas emissions from energy production. The API argues the policy, which Biden’s nominee for Interior secretary, Deb Haaland, could pursue without Congress, would lead to increased energy imports and higher prices for oil and also harm the budgets of states such as New Mexico that rely on royalty payments from federal drilling.
“The consequences would be absolutely devastating to American communities and the American public,” Sommers said. “We will be making that position clear to the Biden administration.”
The oil lobby group is also skeptical of proposals by Biden and Democrats to help affected fossil fuel workers transition to jobs in cleaner energy or to compensate state and counties for the hit on revenues from a leasing ban.
“The idea that you are going to seek to undermine or eliminate an industry and then provide them with government jobs in a New Deal-type of fashion is pretty insulting to U.S. oil and gas workers,” Sommers said, adding that oil and gas employers pay almost twice as much in salary as the average U.S. job and are highly unionized.
But with Democrats only holding the smallest possible majority in the Senate, Sommers is optimistic a centrist middle can block sweeping climate policies such as a mandate for carbon-free electricity or a price on carbon that would lead to a faster move away from fossil fuels.
Sommers predicted Democrats’ limited opportunities for major legislation would come through Senate reconciliation, a procedural tool that enables the passage of fiscal legislation with a simple majority instead of 60 votes, meaning Republican votes aren’t necessary.
“We are confident the U.S. has elected a pro-energy majority in the House and Senate, and we also believe bipartisanship is the key to good policymaking,” Sommers said.
The oil and gas industry has been pummeled by the pandemic because the coronavirus discouraged people from driving and flying, leading to a crash in prices, but Sommers dismissed concerns that his group would have weak leverage with Biden.
In a recent development demonstrating the challenges, the Trump administration this month failed to generate much interest in a lease sale for drilling in Alaska’s Arctic National Wildlife Refuge, a disappointing result after industry and Republicans targeted the area for oil development for decades.
“It shouldn’t surprise anyone the lease sale wasn’t all that popular and that the capital isn’t there to invest in big new projects at this time,” Sommers said. “But we are confident once we get the vaccine behind us, this industry is poised for a very solid 2021 and 2022, and you will continue to see oil companies invest in these kinds of projects.”
Sommers would not say if he supports Biden’s goal for net-zero emissions across the economy by 2050, a target United Nations scientists say is necessary to avoid the worst consequences of climate change.
The U.S. has led the world in reductions of greenhouse gas emissions since 2005, mostly through private-sector innovation that has enabled natural gas and renewables to replace coal. But it is not on pace to meet the U.N. target.
“He can’t do it without us,” Sommers said, noting the U.S. would have to invest significantly in carbon capture technologies for fossil fuel projects to reach net-zero emissions. “We are interested in being a partner to continue to drive emissions lower every year.”