Oil sector seeks inroads with Biden
WASHINGTON — Shortly after Donald Trump took office in 2017, the American Petroleum Institute reached out to members of Congress, urging them to repeal methane regulations put in place by the Obama administration.
Since methane, better known as natural gas, has value as a commodity, the oil industry’s biggest lobbying group claimed drillers were unlikely to let it just escape from leaky pipes and drilling equipment. Emissions estimates by the Environmental Protection Agency, however, showed oil and gas companies were doing just that.
Four years later, with President Joe Biden in the White House, the oil industry’s largest lobbying group has reversed course, pledging to work with the administration to restore federal methane regulations rolled back by Trump.
The about-face comes as
lobbyists representing oil and gas companies in Washington try to navigate a new administration that has put climate change near the top of its priority list, even as the government spends trillions of dollars on economic relief and COVID-19 continues to kill more than 4,000 Americans a day.
“I think the American people and the industry I am in have evolved on this issue (of climate change),” Mike Sommers, president of the American Petroleum Institute, said in an interview. “I was really taken by President Biden’s tone (during the inauguration) and the importance on working together to solve the big problems. If he’s serious about working across industries, he’ll find a partner in the oil and gas industry.”
How long the détente will last is anyone’s guess.
Oil lobbyists made similar attempts to win points in the early days of the Obama administration, only to spend most of the next eight years fighting it in court.
But much has changed over the past four years, after Trump upended U.S. efforts to address climate change, pulled out of the Paris accord and rolled back emissions regulations.
Over that time, the public grew more concerned about climate change as the frequency and magnitude of wildfires, hurricanes and flooding increased. Investors, meanwhile, have become skeptical that petroleum demand will continue to rise in the decades ahead and that oil companies can adjust their businesses to a lowcarbon world.
The backlash against Trump’s climate policies went beyond environmentalists to corporate boardrooms. When Trump rolled back methane regulations, three of the world’s biggest oil companies — Exxon Mobil, BP and Royal Dutch Shell — spoke out, warning that the administration was going in the wrong direction, even as API endorsed the move.
Tensions within the industry
The question of how to address climate change for an industry that bears a significant part of the responsibility is creating tension between companies and their lobbyists in Washington. The French major Total, which is trying to reposition itself as an energy company, not just an oil company, left API this month, saying it couldn’t condone the group’s support of candidates who argued against U.S. participation in the Paris accord.
“I think four years under the Trump administration has made clear to the industry that a total lack of oversight is not good for the industry,” said Andrew Logan, a senior director at CERES, a nonprofit that urges more sustainable investing. “There’s going to be big fights (with Biden), like on offshore drilling. But I don’t think we’re going to see the complete butting heads we saw under the Obama administration.”
The test of that relationship is coming early, as Biden checks off one campaign promise after another on climate change.
During his first 48 hours in the White Office, he not only rejoined the Paris agreement but also canceled the construction permit for the final leg of the Keystone XL pipeline, which connects oil sands in western Canada with refineries in Houston. He suspended all new fossil fuel leasing on federal lands and waters, including the Gulf of Mexico, for 60 days.
‘Happening very fast’
Anne Bradbury, president of the American Exploration and Production Council, which represents midsize oil companies including the Houston firms EOG Resources and Apache, said the actions were expected but that the speed at which Biden has moved is concerning.
“It does seem like it is happening very fast and without any industry consultation whatsoever,” she said. “We hope moving forward, as they develop the final regs and policies, we’re able to help shape those discussions.”
After decades of battles over climate change, during which oil executives routinely questioned the findings of climate scientists, oil lobbyists face a tough climb to present themselves to the Biden administration as advocates for “smart regulation.”
The two sides share points of agreement, such as the need to invest in carbon capture technology that would allow fossil fuel emissions to be stored underground or turned into products such as cement. The United Nations says carbon capture is critical to cutting global greenhouse gas emissions to net-zero by midcentury and avoiding the worst consequences of climate change.
But on larger issues such as the transition to electric vehicles and reducing oil and gas production, there seems to be little room for negotiation.
“API sees the writing on the wall, and after spending the last decade doing everything within their power to oppose and tear down methane rules, they’re now trying to get a seat at the table,” said Matt Watson, vice president of the Environmental Defense Fund. “There is no reason to think they’re going to engage productively in the rule-making process. They’re going to try to make sure the rules are as weak as possible.”
For now, oil lobbyists say they can find common ground. Asked whether the ban on federal leasing and similar moves could provoke a larger clash with the new administration, Sommers, the API president, said the actions would not prevent the industry from working with the administration on other parts of Biden’s climate plan.
“We’re going to work with this administration when we can,” Sommers said, “and oppose them when we have to.”