Staring down the barrel of a Biden administration, the American Petroleum Institute recently unveiled what it called a “middle of the road” strategy for mitigating climate change in a world that’s still going to continue to need a viable oil and gas industry well into the future.
Energy demands have been projected to grow 50 percent by 2050, according to figures from the Energy Information Administration. The International Energy Agency, meanwhile, projects that even if every country meets goals under the Paris Climate Accord, oil and gas will still be 46 percent of that increased energy mix in 2040.
That means oil and gas will be around for a long time, API President and CEO Mike Sommers said, but it doesn’t mean the industry can’t continue to make enormous strides when it comes to climate change.
“America has made significant progress in reducing emissions to generational lows, but there’s more work to do, and there’s nobody better equipped to drive further progress than the people who solve some of the world’s toughest energy problems every day,” he said. “As our industry accelerates efforts to advance groundbreaking technologies, reduce emissions and drive transparent and consistent climate reporting, we urge lawmakers to support market-based policies that foster innovation.”
Among the market-based policies API proposed, however, is a buzzword that certainly raises eyebrows in the oil and gas sector. Namely, carbon pricing.
“Let’s be clear. A price on carbon is a tax on energy,” said American Energy Alliance President Thomas Pyle, in a statement reacting to its inclusion in API’s proposed action plan. “A national energy tax is an easy position for big, multinational companies to embrace because it gives the federal government what it wants (more tax revenue); attempts to appease the greens (it won’t); and compels customers to pay more in taxes to the federal government in the false hope of avoiding additional future regulations (the progressives have already ruled this out). Those who are left out of the conversation are consumers, small businesses, the poor, seniors, and those on fixed incomes — basically everyone.”
But national organizations weren’t the only groups to pan the idea. North Dakota entities representing oil and gas interests had a similar reaction.
“NDPC is concerned that any government intervention into the marketplace for carbon or any other mechanism does not solve challenges and tends to only inflate costs for consumers while hurting the ability of America’s oil and natural gas producers to compete on a global scale,” NDPC President Ron Ness said. “We plan to engage, as we always have, in the regulatory process to ensure our voice is heard and attempt to educate our government leaders on how different proposals will impact our operations.”
Ness said North Dakota’s oil and gas industry has continued to reduce emissions far more than other oil and gas producing nations, primarily through technological advancements.
“We are not ashamed of producing oil in North Dakota, or consuming it,” he added. “And we will continue to advocate for this industry that has improved lives all across the world and continues to provide economic opportunity for the citizens across our state.”
Geoff Simon, executive director of the Western Dakota Energy Association, which represents oil and gas producing counties in North Dakota, said carbon pricing is really just “virtue signaling,” and will drive up the costs of energy without doing anything meaningful for climate change.
“(It will cause) undue economic harm to American businesses, boosting their foreign competitors who incur no such penalty,” he said. “Higher energy prices also harm low income citizens the most, because they pay a disproportionate share of their income on energy.”
They are also potentially unfair to states that lie in harsher climates, like North Dakota, he added, where people consume more energy per capita than other part of the country.
Monte Besler, otherwise known as the Fracn8tr, is a member of the Williston Basin Chapter of the API. He sees these types of things as mostly political fanfare that is unlikely to bring real change.
“Reality is, little will change on these controversial issues, because full compliance is likely to have an immediate negative impact on everyone in the form of higher energy costs,” he said.
Sommer, meanwhile, said API is not advocating for a specific framework, or even a specific price. It wants to see a market-based approach that is transparent, and that eliminates duplicative regulations in the sector.
“A policy that we would not support is a government-first mandated approach,” he said. “But the other side says that we don’t need to do anything. What we’re pursuing here is what we think is the policy that is in the middle, and one that harnesses the power of markets to drive innovation,” he said. “That’s the main theme of the climate action framework we are unveiling today, which includes commitments that the API member companies are making to reduce emissions. It also includes government action that should be taken, and it has a key focus on innovation and technology, which is the only way that this country is going to meet the challenge of climate change.”
Sommers also said he sees a lot of room for common ground with the Biden administration in certain areas, among them, expansion of trade for American energy commodities like LNG.
“The debate in Washington has been bogged down by factions advocating for economic growth or environmental action,” Sommers said. “And the U.S. has proven over the last decade that we can do both. Drive down emissions, we can develop more energy and we can grow the economy.”
