The Biden administration has reinstated restrictive policies under the guise of environmental protections that impact the construction of major infrastructure projects in the United States, including pipelines and highways. The timing could not be worse.
Federal government regulatory intervention is on the rise. The new rule will require federal agencies to examine the climate impact of infrastructure projects under the National Environmental Policy Act (NEPA), a 1970 law that requires the government to assess the environmental outcomes.
Critics say that the Biden administration took these measures to reverse his predecessor’s policy liberalization, leading to an unprecedented increase in America’s hydrocarbon production.
This move has come under scrutiny amid the skyrocketing prices for oil and natural gas domestically and internationally and the need for the US to ramp up liquefied natural gas (LNG) exports to Europe as it reduces its dependence on Russian gas. Last year, the EU imported 27% of its oil and more than 40% of its natural gas from its eastern neighbor. As the energy prices grow, the Kremlin will receive a third more revenue from its principal exports than a year prior.
Paradoxically, the Biden administration is under mounting pressure to increase energy production. Last month, the US struck a deal with the EU to increase its LNG supply to the 27-member bloc after President Joe Biden met with Europe Commissions President Ursula von der Leyen.
These restored environmental protections are supposed to demonstrate President Joe Biden’s commitment to his climate agenda before the crucial November 2022 Congressional midterms. However, concern over rising prices and the US energy supply has led to the reversal of Biden’s restrictive policies that prohibited drilling for oil and gas on federal land.
The US Department of the Interior has announced that it will resume selling oil and gas leases on federal lands on April 15. While the Department increased royalties for companies to 18.75% from 12.5%, climate activists are furious with the Biden administration. Environmental groups view this move by President Biden as a reversal of his earlier promise to end new oil and gas leasing on public lands and his commitment to a clean energy policy.
Almost immediately after taking office, President Biden rejoined the Paris Climate Agreement, reversed substantial Trump-era policies, and committed himself to tackling climate change.
The President issued an executive order which imposed a moratorium on new oil and gas leases on federal land and water. Despite Biden’s promise to ban new drilling on public lands, a federal judge succeeded in overturning the order.
At the beginning of his presidency, Biden was resolute on combatting climate change and promoting a clean energy transition. However, Russia’s war in Ukraine has resulted in rising prices for oil and gas domestically and abroad, altering the entire energy-related policy calculus.
The environmental restrictions alongside the sale of federal oil and gas leases demonstrate discord within the Biden administration.
Biden is trying to placate the “green” electoral base while having the eyes on the Election Day in November. On the one hand, the administration is desperate to lower prices at the pump for Americans and help our European allies. On the other, Biden wants to prove that he has not given up on his clean energy agenda.
What has become apparent is that energy demand has risen as the world is recovering from the COVID pandemic and will continue to do so. As the energy demand increases, the US had to turn toward the Gulf Arab allies to increase energy exports while depriving our own state and local governments of much-needed revenue. Moreover, the Biden administration’s clean energy ambitions have the potential to leave hundreds of thousands of Americans unemployed.
Offended by the Biden administration policies, Prince Mohammad bin Salman of Saudi Arabia refused to take the U.S. President’s phone calls, and the UAE made it clear that the output increase is not in the cards.
The reinstatement of environmental protections is also ill-timed, considering Europe’s desperate need to wean itself off Russian oil and gas. The environmental restrictions are an obstacle to the US trying to increase the output and help replace Europe’s energy supply. Even as Russia’s war in Ukraine enters its second phase with the offensive in the country’s south and east, Europe is still heavily reliant on Russian oil and gas.
In an attempt to achieve independence from Russian energy in the near future, the European Commission announced plans for a rapid energy transition. The plan first and foremost ensures that Europe has enough gas on reserve for next winter. It also contains measures to begin diversifying Europe’s suppliers of pipeline LNG, importing more natural gas from nations such as the US, enabling faster permitting for renewables projects, and cutting overall demand for Russian gas by two-thirds by the end of the year.
However, it will be challenging for Europe to end its dependence on Russian oil and gas. The US should help European countries fully sanction the Russian energy sector.
Biden has taken several steps to aid Europe in the last few months. He authorized a large release of the Strategic Petroleum Reserve, resumed selling leases to drill on federal lands, and allowed the sale of ethanol-based gasoline beginning in the summer.
The war in Europe is dictating the U.S. policy priorities. The Biden Administration must prioritize the urgent need to increase domestic production of oil and natural gas. Since the start of the war in Ukraine, the EU has paid over €35 billion to Russia for energy imports. President Volodymyr Zelenskyy calls for immediate weapons supplies from allies to secure the fate of Mariupol, with thousands trapped in the city facing starvation. The world must do everything to stop the Europeans from bankrolling Putin’s war machine.
Every second counts.
With assistance from Julianna Rodrigues
