A Court Ruling and a Revised GHG Metric Gives the Green Light to New Drilling

Matt Montalbano, Zondits staff, 5/13/2022

The Biden administration in March announced plans to resume drilling for oil and gas on federal lands. The reversal in policy was made after a federal appeals court granted a White House request to allow the administration to use a revamped metric for calculating the potential cost to society of carbon (SCC) emissions, bringing the value all the way up to $51 per metric ton from the previous value of $4.

“With this ruling, the Department continues its planning for responsible oil and gas development on America’s public lands and waters,” Interior Department spokeswoman Melissa Schwartz said in an emailed statement. “Calculating the social cost of greenhouse gas emissions provides important information that has been part of the foundation of the work the Interior Department has undertaken over the past year.”

The SCC is an analytical attempt to quantify the potential future damages of releasing additional greenhouse gas emissions in today’s dollars. This calculation is important when evaluating new drilling leases on public lands because the companies preparing the applications will need to account for the additional costs in their economic forecasts. According to the Institute for Policy Integrity (https://policyintegrity.org/), by failing to account fully for carbon pollution, policymakers would tip the scales in favor of dirtier energy sources, letting polluters pass the costs of carbon emissions onto the public.

Environmental groups quickly criticized the decision as a “failure of climate leadership.” Oil industry groups praise the move to open new drilling but are unhappy with the higher royalties they will pay and seek an increase in the amount of land opened for new drilling. New drilling leases are expected to have little effect on rising gas prices at the pumps. The administration promotes this move as the most reasonable path forward for the country but has not found many supporters on either side of the argument.

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