White House May Freeze Extraction Leases on Federal Land, Slash Fossil Subsidies
The Obama Administration is considering halting new fossil extraction leases on federal lands and waters and eliminating fossil fuel subsidies in an effort to bring U.S. hydrocarbon production in line with the carbon reduction targets in the Paris Agreement.
A conference at Oxford University last week focused on a range of “supply-side” options for advancing climate policy, including fossil fuel-free zones, moratoria on new coal mines, subsidy reform, and litigation, reports Peter Erickson, Seattle-based senior scientist at the Stockholm Environment Institute (SEI). And as President Barack Obama enters the final months of his presidency, a focus on leases and subsidies is “getting serious consideration” from Administration officials.
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Erickson writes that a freeze on new fossil leases in the U.S. could reduce global greenhouse gas emissions by 100 million tonnes in 2030, while a surcharge to better reflect the social cost of carbon would save 10 to 300 million tonnes per year after 2025.
That approach alone won’t get the job done, though, since federal lands only account for a minority of U.S. fossil production. That’s why the Administration is also mulling long-overdue action on fossil fuel subsidies. “The Obama Administration has already proposed eliminating most subsidies to fossil fuel producers,” a move that would save taxpayers several billion dollars per year, Erickson notes.
“Crucially, since these subsidies are often directed to upfront investment, they can have a far outsized effect on investment on the ground,” he writes. “This is because investors see money up front as having much more value than money later, and so the subsidies can push many projects into the black that would otherwise be in the red.” A forthcoming SEI analysis “indicates that as much as half of future US oil production could be dependent on these subsidies, and that repealing them could have substantial effects on global CO2 emissions.”