Apr 18, 2022 - Energy & Environment

Biden expanding drilling leases despite climate goals

Illustration of an oil rig with a "For Lease" sign hanging from the top like a real estate sign

Illustration: Annelise Capossela/Axios

The Biden administration's leasing policy finds a White House grappling with the dueling pressures of tight energy markets and a fast-warming planet.

Catch up fast: The Interior Department will resume selling oil-and-gas leases on federal lands but raise the fees companies must pay on what they produce, the agency said Friday afternoon.

  • Interior said it will publish notices this week for the first onshore lease sales since President Biden froze the program soon after taking office, offering 144,000 acres.

Zoom in: Interior vowed the policy, which follows a long review of the climate and financial effects of leasing, is not business as usual.

  • Interior said the acreage offered is only one-fifth the amount companies had called for auctioning.
  • This "pragmatic approach focuses leasing on parcels near existing development and infrastructure," Interior said, vowing it will "help conserve the resilience of intact public lands and functioning ecosystems."
  • Royalties rise from 12.5% to 18.75% to "ensure fair return for the American taxpayer."

What they're saying: Friday's announcement on the eve of a holiday weekend pleased almost nobody.

  • Several environmental groups blasted the decision, though some of the large, Democratically-aligned groups held their fire.
  • "Candidate Biden promised to end new oil and gas leasing on public lands, but President Biden is prioritizing oil executive profits over future generations," Friends of the Earth's Nicole Ghio said in a statement.
  • Evergreen Action called the acreage reduction "encouraging" but nonetheless said leasing "conflicts" with administration climate goals.

The other side: Multiple industry groups offered qualified praise mixed with criticism.

  • The American Petroleum Institute said it was pleased to see the leasing resumption, but "we are concerned that this action adds new barriers to increasing energy production, including removing some of the most significant parcels."
  • "At a time of high energy costs, these changes to long-standing fair and reasonable lease terms may further discourage oil and natural gas investment on federal lands."

Flashback: Biden paused new leasing soon after taking office to enable a federal review. But AP notes "A federal judge in Louisiana ordered the sales to resume, saying Interior officials had offered no 'rational explanation' for canceling them."

The big picture: Biden vowed to thwart new oil-and-gas development on federal lands during the campaign as part of a wider push on climate change.

  • But the White House has moderated its posture amid the gasoline price surge and the political jeopardy it brings; recently it called for faster domestic output increases.
  • Russia's war on Ukraine has caused a commodity shock, and also prompted new White House support for boosting LNG exports to Europe.
Data: BLM, DOI, EIA, Barclays Research; Chart: Thomas Oide/Axios
  • Large volumes of oil are produced on federal lands and waters, but their share of total U.S. output has shrunk thanks to the shale boom that unfolded largely on private acreage.
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