Squeeze the industry to please his party’s green base or keep output, revenue and high-paying employment flowing?
Talk at the latest climate-change shindig in Dubai has centred around the future of the oil industry and whether countries should pledge to phase out oil and gas production entirely or simply transform the industry in decades to come. Canada always talks a deep-green game at these affairs but are we really ready to nail shut the oil and gas coffin?
Maybe not. In Dubai Canada announced a cap-and-trade approach to oil and gas emissions but argued it won’t actually stop oil and gas production outright. The provinces, who yet again weren’t consulted, may not agree. Besides, promises are one thing. The record is another.
It also emerged in Dubai that the Emirates, seventh largest oil producer, is expecting to increase its production by a million barrels a day (mbd) by 2030. This is not a new trend. According to the U.S. Energy Information Service, the UAE increased production of oil and hydrocarbon liquids like coal oil by 15.3 per cent between 2015 and 2022, from 3.7 mbd to 4.2, fourth-most of all oil-producing economies. That’s much faster than world output, which was up only 3.6 per cent since 2015, reaching 100.1 mbd last year.
The irony — maybe even the hypocrisy — is that three countries in the Americas have increased their petroleum output even more than this Middle Eastern oil sheikhdom has: the U.S., Brazil and, yes, us: Canada.
The Biden administration, which is promising 2030 emissions will be half 2005 levels, has so far failed to stymie oil and gas development. U.S. petroleum and liquids production has soared by 33.9 per cent since 2015, reaching 20.3 mbd in 2022. Two-fifths of the increase has been on Biden’s watch. The U.S., not Saudi Arabia, is now the world’s leading oil producer, accounting for fully 20 per cent of global supply.
The Trudeau government has pledged that 2030 oil and gas emissions will be 42 per cent lower than in 2005. This has led to tensions with the oil- and gas-producing provinces, which are resisting emissions caps for oil, gas and electricity. Ottawa’s opposition to liquefied natural gas sales even as the U.S. and Qatar are making great inroads in the world market has had industry leaders scratching their heads. Even so, since the Liberals came to power in 2015, Canada’s oil and gas production has grown second fastest globally, at 26.7 per cent, to reach 5.6 mbd last year. Much of this growth is due to big investments in the oil sands before 2015 but the production increase has been accommodated by pipeline expansion, with the federally-owned TMX soon to come on stream.
Neither Biden nor Trudeau is attending COP28 but Brazil’s president, Lula de Silva, stormed in at the head of a delegation of 2000 to repeat a pledge to cut 2030 emissions to less than half 2005 levels. Much of reduction results from reforestation, however, not phasing out oil and gas. And, to the surprise of attendees, Lula announced that Brazil will align itself more closely with OPEC. No shock there. Since 2015, Brazil’s oil and gas production has risen by 20 per cent, making it the 8th largest producer in the world at 3.8 mbd last year. It now evidently sees itself as a player.
Besides the U.S. Canada, Brazil and UAE, only Iraq (at 10.4 per cent) and Kazakhstan (at 4.5 per cent) have seen their oil production grow faster than the world average since 2015. The rest have had little growth, with seven countries registering declines, including 22.4 per cent in Mexico and 36.7 per cent in Nigeria, the biggest drop anywhere.
The standstill or even loss in oil and gas production in many oil-producing countries since 2015 is due to several factors. Oil prices dropped by three-fifths after 2014 and the pandemic caused another crash. More recently, Saudi Arabia and Russia have persuaded OPEC+ to constrain production and push prices to over US$80 per barrel — mainly in order to replenish their treasuries. In some places, including Ghana, the U.K. and Norway, old fields are depleting. Elsewhere, but especially in Africa and Mexico, crime and political instability continue to discourage development. Finally, in the face of lagging demand, investors have encouraged companies to distribute profits rather than invest in greenfield oil and gas projects.
But top producers like the U.S. and Canada are not holding back and governments aren’t stopping them. Phase-out is all short-term cost in pursuit of climate gains that won’t be realized for decades, if at all. Nor are politicians willing to eliminate the tax revenues and high-paying jobs the industry generates. With energy security crucial in an increasingly dangerous world, oil-consuming countries are finding that intermittent renewable energy and other high-cost energy sources are no substitute for fossil fuels.
As the federal Liberals sink in the polls, they face a many-ways existential choice. Do they pursue their climate promises and phase out oil and gas? Or do they secure the benefits of oil and gas production for years to come? Or, a third option: do they say one thing but quietly do the other? Is it all, as Shakespeare would say, “much ado about nothing”?
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Months after President Joe Biden handed environmentalists a major win by pausing new liquefied natural gas (LNG) export terminals, activist groups are beginning to turn their attention to deepwater oil export hubs.
A coalition of 19 climate activist organizations — including the Sierra Club, Earthjustice and the Sunrise Movement’s New Orleans chapter — wrote a Thursday letter to Biden, Transportation Secretary Pete Buttigieg and Maritime Administration Administrator Adm. Ann Phillips urging the administration to halt approvals of proposed deepwater crude oil export facilities. The letter signals that the environmental lobby is turning its attention to a new target after the White House opted to pause new LNG export hub approvals in January following a considerableactivistcampaign.
“The undersigned urge the White House and Department of Transportation (DOT) to halt and reevaluate its licensing review of proposed deepwater crude oil export facilities to update and ensure the validity of the agency’s “national interest” determinations and related Deepwater Port Act (DWPA) project review,” the activist groups wrote. “The licensing of massive deepwater crude oil exports leads to disastrous climate-disrupting pollution and environmental injustices and would lock in decades of fossil fuel dependence that undercut the pathway to a clean energy economy.”
“At minimum, we ask the Administration to update its outdated analysis under the DWPA and National Environmental Policy Act (NEPA) to address the harms generated by expansive oil exports on the climate, as well as consequences for environmental justice communities along the Gulf Coast, and for the national interest in energy sufficiency,” they continued.
American oil exports are “key” to global supply, especially in the wake of Russia’s invasion of Ukraine and the resulting changes in global energy markets, according to Bloomberg News. The U.S. became a net oil exporter in 2020 for the first time since 1949, according to the U.S. Energy Information Administration, and global oil demand is expected to grow through at least 2028, according to the International Energy Agency.
“It’s hard to call yourself a Climate President when more fossil fuels are being produced and exported by the U.S. than ever before,” James Hiatt, founder of For a Better Bayou, one of the letter’s signatories, said in a statement. “Approving massive oil export terminals in the Gulf of Mexico not only exacerbates our deadly fossil fuel addiction, but also blatantly disregards the health and wellbeing of environmental justice communities in the region. This administration is acting less like a beacon of hope and more like an enabler of dirty energy. It is time for a course correction towards real climate action.”
Biden handed environmental activists a huge victory when he paused approvals for new LNG export terminals in January, instructing his administration to closely examine the climate impacts of proposed facilities alongside economic and security considerations. The LNG pause stands as one of Biden’s biggest decisions on climate through his first term, and activists applauded the move while elected Republicans and the oil and gas industry have strongly opposed it.
Well-funded environmental organizations and young voters figure to be key bastions of support for Biden in the 2024 election cycle as he attempts to secure a second term in office and prevent the return of former President Donald Trump. While the Biden administration has spent more than $1 trillion and pushed stringent regulations to advance its sweeping climate agenda, most voters remain most concerned about the economy, inflation and immigration, with a much smaller share identifying climate change as the top issue facing the country, according to recent pollingdata.
Neither the White House nor the DOT responded immediately to requests for comment.
The U.S. Environmental Protection Agency (EPA) announced new regulations on April 25 that would force coal-fired power plants to reduce or capture 90 percent of their carbon dioxide emissions by 2039, one year earlier than in the rule originally proposed in May 2023.
Other newly announced coal regulations include a final rule “strengthening and updating the Mercury and Air Toxics Standards (MATS) for coal-fired power plants, tightening the emissions standard for toxic metals by 67 percent, finalizing a 70 percent reduction in the emissions standard for mercury from existing lignite-fired sources,” and another rule to “reduce pollutants discharged through wastewater from coal-fired power plants by more than 660 million pounds per year.” The EPA also issued an additional rule to require the safe management of coal ash in locations not previously covered by federal regulations.
“Today, EPA is proud to make good on the Biden-Harris administration’s vision to tackle climate change and to protect all communities from pollution in our air, water, and in our neighborhoods,” said EPA Administrator Michael S. Regan.“By developing these standards in a clear, transparent, inclusive manner, EPA is cutting pollution while ensuring that power companies can make smart investments and continue to deliver reliable electricity for all Americans.”
EPA estimates its new regulations will reduce carbon dioxide emissions by 1.38 billion metric tons by 2047 and create $370 billion in “climate and public health net benefits” over the next twenty years.
Coal in a Regulatory Decline
Partially due to increasingly stringent regulations, electricity generation from coal has fallen from 52 percent of the nation’s total output in the 1990s to just 16.2 percent in 2023. Critics of the new regulations, including Jason Isaac, CEO of the American Energy Institute, argue that EPA’s new rules would make it impossible to open new coal plants and will effectively force those already online to shut down operations.
“These rules are a direct attack on an important and necessary source of American energy—one of our most affordable, reliable resources, and one that is essential here and growing in use around the world,” said Isaac. “The ignorance of this administration is negligent at best, criminal at worst, relegating the least among us to more expensive energy, or even none at all, as millions of Americans are finding out by having their electricity disconnected.
“On one hand they push to electrify everything and then with the other leave us with unreliable electricity,” Isaac said. “The Biden administration is hell bent on destroying coal and reaching new levels of recklessness.”
‘De Facto Ban’ on Coal
The new regulations almost assuredly will face legal challenges from the coal industry and others, says Steve Milloy, founder of JunkScience.com.
“Another unconstitutional EPA rule from the Biden regime that will be DOA at [the Supreme Court] but not until much harm has been caused,” said Milloy. “Congress has not authorized EPA to issue regulations that operate as a de facto ban on coal plants, yet that’s what this regulation amounts to because it mandates emissions control technology (i.e., carbon capture and sequestration) which does not, and will never, exist for coal plants.”
EPA, by contrast, says carbon capture and sequestration (CCS) is the “best system of emission reduction for the longest-running existing coal units” and a “cost-reasonable emission control technology that can be applied directly to power plants and can reduce 90 percent of carbon dioxide emissions from the plants.”
“The requirement for imaginary technology violates Clean Air Act notions of only requiring the best available and adequately tested technology,” Milloy said. “The de facto ban violates the 2022 [Supreme Court] decision in West Virginia v. EPA, which established the major questions doctrine, under which agencies cannot undertake significant new actions, like banning coal plants, without authorization from Congress.”
Natural Gas Targeted, Too
Coal plants were not the only target of new EPA regulations, as natural gas power plants are also now required to eliminate or capture 90 percent of their carbon dioxide emissions by 2032, three years earlier than called for when the draft rule was originally proposed in 2023.
The EPA is acting as if it has absolute power unconstrained by the law and prior court rulings, Darren Bakst, director of the Competitive Enterprise Institute’s Center on Energy & Environment, says in a press release.
“The [EPA] absurdly thinks its authority to regulate means it has the authority to shut down businesses,” said Bakst. “Establishing new regulations for power plants does not mean the agency can effectively force them out of business.
“This is Clean Power Plan Part II, but like with many sequels, it is worse,” Bakst said.
Tim Benson ([email protected]) is a senior policy analyst with Heartland Impact.
For more on the Biden administrations power regulations, click here.
