News•January 26, 2016

Coal Moratorium Turns Spotlight to Oil, Gas Leases

Emboldened by the Obama administration’s pause on federal coal leasing, activists and scientists are now urging the government to bring federal oil and gas leasing in line with U.S. climate policy before the president leaves office next January.

The federal coal leasing moratorium announced in January marks a major turning point in the federal fossil fuels leasing program because it shows the government is willing to take steps to keep some fossil fuels in the ground as a way to address climate change, public lands policy experts say.

A rig drilling a natural gas well in the Piceance Basin of western Colorado.
Credit: Energy Tomorrow/flickr

“Halting coal leasing on federal lands puts the oil and gas folks on notice that the same thing could happen to them in the future,” said Jonathan Koomey, a Stanford University energy policy research fellow. “The moratorium is an important development because it highlights the need to keep fossil fuels in the ground.”

Critics of the federal leasing program say they were buoyed by comments made during President Obama’s State of the Union address, which came two months after he rejected a permit to build the Keystone XL Pipeline. Obama said that in order to account for fossil fuels’ costs to both taxpayers and the planet, he will push for changes in how both coal and oil are managed on public lands.

That pledge comes at a time of seismic changes in fossil fuels industries. Demand for coal is falling as it competes with natural gas as the leading fuel for electric power generation. Oil prices have fallen to their lowest point in more than a decade and there is a global imperative to cut fossil fuel consumption and greenhouse gas emissions to meet international climate goals following the Paris climate talks in December.

“We’re in a different world globally as far as orienting toward a low-carbon economy,” Rachel Cleetus, an economist in the climate and energy program at the Union of Concerned Scientists, said. “I think this is a significant moment where we take stock and try to build coherence into our fossil fuels program on public lands.”

Public lands are a significant but declining source of fossil fuels in the U.S. Whereas 40 percent of all the coal produced in the U.S. comes from public lands, most oil and gas is produced on private land. In 2014, about 21 percent of all U.S. crude oil came from federal land and waters, down from 36 percent in 2010. Only 11 percent of U.S. natural gas comes from public lands, down from nearly 18 percent in 2010.

Interior Department spokeswoman Leah Duran declined to comment on any plans the government might have for oil and gas leasing. Environmentalists, however, see federal lands’ declining role in the nation’s fossil fuel supply — and the revamp of the federal coal program — as an opportunity for the administration to make good on its promises to address climate change.

“The reality is we’ve already leased more fossil fuels than we can burn in order to stay below the 2 degree threshold scientists have deemed safe,” Marissa Knodel, a climate campaigner with Friends of the Earth, said.

A coal mine in Wyoming.
Credit: Kimon Berlin/filckr

Joe Smyth, a spokesman for Greenpeace, said the announcement of the coal leasing moratorium shows that the Obama administration understands the importance of addressing fossil fuel supply as part of its efforts to tackle climate change.

“It could be an opportunity to move forward on reforms of the federal oil and gas leasing programs,” Smyth said.

The oil and gas industry, which is opposed to any new restrictions on fossil fuels development on federal lands, believes there’s a possibility the administration could propose oil and gas leasing reforms and a moratorium before Obama leaves office, but it is unlikely.

“I think if they had more time, they’d probably do the same for us,” Kathleen Sgamma, vice-president of the Western Energy Alliance, an oil industry trade group, said. “It’s conceivable. I wouldn’t be surprised. I do think they’re running out of time.”

Other experts are more doubtful that the coal leasing moratorium and program review will bring changes to oil and gas leasing on public lands.

“I’m not sure you can read anything into this about the oil and gas program,” Mark Squillace, a natural resources law professor at the University of Colorado-Boulder, said. “Obviously, fossil fuels development will continue to be controversial, but the markets and the financial condition of the industry is fundamentally different.”

Robert Godby, an energy economist at the University of Wyoming, said the coal leasing review and moratorium is relevant only to coal. More important, he said, is the fact that public lands are becoming less and less consequential as sources of oil and gas because the fracking boom, which catapulted the U.S. to becoming the globe’s top oil producer, mostly occurred on private lands.

“I expect that trend to continue, so oil and gas leasing on federal lands, particularly with respect to natural gas, will be less of an issue if this continues,” Godby said.