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Manchin’s Climate Move Spurs Talk of Biden Pivot on Fossil Fuels

July 19, 2022, 9:30 AM

Sen. Joe Manchin’s decision to put the brakes on climate legislation until the fall is leading some green and industry groups to gear up for a potential post-midterm election crackdown by the Biden administration on fossil fuel development.

The need for a vote from Manchin (D-W.Va.) on climate legislation has been seen as a reason President Joe Biden’s administration has delayed making its preferences public regarding two major oil and gas proposals that would turn up the heat on climate change: offshore leasing in the Gulf of Mexico and the Willow oil and gas project in Alaska. Manchin is one of Congress’ leading champions of coal and other fossil fuels.

Environmentalists say they expect the Interior Department to take drastic measures to cut fossil fuels development after Manchin’s vote is no longer a concern and after voters, possibly swayed by federal oil leasing’s effects on gasoline prices, have already cast ballots.

“I could see a very plausible situation where after the midterms they feel empowered to go big,” said Brett Hartl, government affairs director for the Center for Biological Diversity Action Fund. “Hope springs eternal that eventually the Department of Interior and the Biden administration will match the president’s own rhetoric” promising a halt to oil and gas leasing.

ClearView Energy Partners LLC said that “if the White House has been modulating its oil and gas policy in recent months to woo Manchin’s support for clean energy incentives, then his latest defection could augment a post-election green pivot, including further strictures on federal lands.”

Overreach Expected

The Biden administration has been “overly sensitive” to politics in its approach to climate change thus far, and Manchin’s reluctance on a legislative package makes administrative action more important than ever, said Kyle Tisdel, a senior attorney at the Western Environmental Law Center in New Mexico.

“This is particularly true with public lands—the management of which exists at the apex of federal authority through the Constitution’s property clause,” Tisdel said in an email.

Industry groups expect the Biden administration to avoid oil and gas leasing as much as it can.

“Most likely what will happen is that they will overreach beyond their legal authority and there will be lawsuits to stop the most egregious examples,” said Kathleen Sgamma, president of the Western Energy Alliance, which represents oil and gas companies operating on federal lands.

The Interior Department declined to comment.

‘Politically Tone-Deaf’

If Democrats lose heavily in the midterms, Biden may be forced to answer for high energy prices and back off some of his agenda as the Obama administration did following the 2010 midterm elections, said Christopher Guith, senior vice president of the US Chamber of Commerce’s Global Energy Institute.

If voters rebuke Democrats, “do they double-down at that point, or do they make some slight modification to show they’re not politically tone deaf?” Guith said.

Alex Flint, a former Senate Energy and Natural Resources Committee staff director, is skeptical of any strategy that would have Biden administration curtail future oil and gas leasing as a fallback climate policy on the heels of the collapse of a congressional climate package.

Increasing concerns over natural gas shortages in Europe and high energy prices in the U.S. are unlikely to ease in the fall and winter, if not worsen, making a U.S. move to limit oil and gas leasing politically unpalatable, Flint said.

But great uncertainty remains over what executive authority Biden still has to address climate change following the Supreme Court’s decision limiting EPA authority over power plant emissions. And any move to dramatically restrict leasing in the wake of the decision is likely to be tied up in the courts—perhaps for years, he said.

Without new legislation, “you’re not likely to get dramatic change after the election. What you are more likely to get is a continuation of status quo,” said Flint, executive director of the Alliance for Market Solutions, which backs a carbon tax.

Optics of Energy Prices

Sarah Hunt, CEO of the Joseph Rainey Center for Public Policy, which backs conservative energy and climate solutions, said limiting U.S. oil and gas leases would have little benefit for the climate, as it would only shift such drilling to other nations to meet increased demands for fossil fuels.

But oil and gas leases take years to develop, and avoiding leasing in the short-term will have “zero” effect on energy prices anytime soon, said Hartl.

Extreme weather, including withering heat in Europe and wildfires and heat engulfing the Southwest, show the urgency of the US shutting off the supply of oil and gas and pivoting to clean energy, said Alexandra Adams, senior director for federal affairs at the Natural Resources Defense Council.

“It’s more clear than ever that we cannot lock in any more dependence on fossil fuels,” she said.

The Interior Department is expected to decide later this year whether to approve the Willow Master Development Plan, ConocoPhillips Alaska Inc.'s proposed oil drilling project on Alaska’s North Slope which would produce up to 629 million barrels of oil over 30 years.

As fossil fuels warm the climate and thaw the Arctic tundra, the company has said it will need chillers to keep the ground beneath its equipment frozen and its rigs upright as it produces more crude oil that will warm the climate even more.

The department is also planning to decide later this year whether to hold oil and gas lease sales in Alaska’s Cook Inlet and the Gulf of Mexico over the next five years.

To contact the reporter on this story: Bobby Magill at bmagill@bloombergindustry.com

To contact the editor responsible for this story: Chuck McCutcheon at cmccutcheon@bloombergindustry.com