The Climate Costs of BOEM’s Offshore Leasing Plan Are Severe. Why Does BOEM Ignore Them?

The Bureau of Ocean Energy Management (BOEM) released its long-awaited 2023–2028 Proposed Program for offshore oil and gas leasing earlier this summer. Unlike previous five-year plans, the Proposed Program does not declare a “preferred” schedule of lease sales, leaving open the possibility of scheduling anywhere from zero to eleven sales. BOEM’s decision, expected in the coming months, rests on how it balances the nation’s energy needs — including its assessment of the environmental impacts of leasing.

Yet the current Proposed Program fails to adequately assess one of the most salient issues in reaching this balance: the climate impact of oil and gas leasing.

Granted, the Proposed Program does include estimates of downstream (end use) greenhouse gas emissions from different leasing alternatives, which is a start. But those estimates are buried in an appendix to BOEM’s environmental analysis. The costs of downstream greenhouse gas emissions don’t even make it into BOEM’s final accounting of net benefits. And even BOEM’s marooned calculations severely underestimate the cost of greenhouse gas emissions from the leasing program.

BOEM cannot reach a leasing decision that best serves the public interest without rectifying these major analytical shortcomings. This week, Policy Integrity published two reports on the Proposed Program urging BOEM to do just that.

First, BOEM should include all emissions in its net benefits analysis. In the Proposed Program, BOEM claims that it cannot consider downstream greenhouse gas emissions when choosing a leasing program because of a 2009 D.C. Circuit case, Center for Biological Diversity v. Department of the Interior. But the agency misreads that case, which holds merely that BOEM is not required to consider downstream greenhouse gas emissions in its leasing program.

The case is also at odds with other court decisions and both the legislative and regulatory history of offshore leasing. The Ninth Circuit recently recognized BOEM’s authority to consider downstream emissions in offshore leasing, and the D.C. Circuit itself later held that BOEM could consider non-local environmental effects. Consistent with these cases, the legislative history of the Outer Continental Shelf Lands Act demonstrates that Congress intended for the agency to consider a broad set of factors, including the downstream impacts of alternative fuel sources. In fact, the agency has considered downstream environmental impacts for decades, and it should do so now.

Second, when BOEM includes downstream greenhouse gas emissions in its analysis, it should ensure that they receive proper consideration by conducting a better substitution analysis and incorporating a broader set of valuations for the social cost of greenhouse gases. In the Proposed Program, BOEM conducts an energy substitution analysis finding that most oil and gas produced offshore merely substitutes for other fossil-fuel sources, and so its net climate impacts are limited. But that analysis relies on outdated laws and regulations and unrealistically assumes that current policies will remain unchanged for the remainder of the century.

Policy Integrity’s original economic analysis illustrates that under more aggressive decarbonization pathways, offshore leasing would displace renewables much more, and other fossil-fuel sources much less, than BOEM projects — potentially tripling or quadrupling the agency’s estimate of total net greenhouse gas emissions. Coupled with higher valuations for the social cost of greenhouse gases in line with the recommendations of the federal Interagency Working Group on the Social Cost of Greenhouse Gases, the climate costs of the Proposed Program alone may exceed the program’s total benefits.

BOEM should more seriously consider the climate impacts of offshore leasing before finalizing its leasing program. It can do so by including downstream greenhouse gas emissions in its final net benefits analysis, incorporating a range of future decarbonization pathways, and recalibrating key modeling parameters in line with reasonable assumptions. Otherwise, BOEM risks setting leasing policy that is incompatible with the climate challenges we face.

For more information on Policy Integrity’s comments, which cover the issues above and more, follow the link above.

By Laura Figueroa and Minhong Xu.