Department of Interior’s oil, gas and mineral revenue programs
At the hearing, Chairman Feinstein will call for passage of legislation she has sponsored to close a loophole that has allowed oil and gas companies to pay no royalty payments for drilling on the Outer Continental Shelf for leases negotiated in 1998 and 1999. This measure to close the loophole was stripped from the FY2008 Interior Appropriations bill.
Under this provision, the companies who have not renegotiated their existing contracts will have a choice.
- They can keep their existing leases royalty-free if they so choose, but be barred from bidding on new contracts, or
- They can agree to renegotiate these leases in good faith and be able to participate in the bidding for new leases.
- C. Stephen Allred, Assistant Secretary for Lands and Minerals Management, Department of the Interior
- Randall Luthi, Director, Minerals Management Service
Luthi Before Interior Appropriations Tomorrow
Randall Luthi, the controversial chief of the Department of Interior’s Minerals Management Service, will be testifying at a Senate Appropriations subcommittee tomorrow morning. His decision to hold the Chukchi Sea drilling lease sale two weeks ago, the first offshore sale in over a decade, while the Fish & Wildlife Service continues to delay its ruling on the endangerment of polar bears, has garnered protests from government scientists, environmental groups and Congressional Democrats.
Sen. Feinstein, the chair of the subcommittee, released the following statement:At the hearing, Chairman Feinstein will call for passage of legislation she has sponsored to close a loophole that has allowed oil and gas companies to pay no royalty payments for drilling on the Outer Continental Shelf for leases negotiated in 1998 and 1999. This measure to close the loophole was stripped from the FY2008 Interior Appropriations bill.
Feinstein has been pushing for this legislation at least since 2006, since the loophole in 1998 and 1999 leases issued under the Deep Water Royalty Relief Act of 1995 was discussed in Congressional hearings.
ExxonMobil Stands to Profit Handsomely in International Carbon Markets
ExxonMobil, the world’s largest company by both revenue and market capitalization, has a place on the world stage comparable to a major nation-state (only 23 nations in 2006 had a GDP greater than Exxon’s revenues of $347 billion, which rose 7% in 2007). Only 31 nations exceeded its annual greenhouse gas emissions in 2004 [UN MDG indicators, ExxonMobil CDP response]. If end-use emissions of ExxonMobil’s products are included, its carbon footprint of 1 billion metric tons of CO2 equivalent is exceeded only by five nations.
David Sassoon at Solve Climate asked Mario Lopez-Alcala, a senior analyst with Innovest Strategic Value Advisors, to estimate how the Kyoto Protocol impacts the company. Lopez-Alcala made some counter-intuitive discoveries.Turns out that under Kyoto, Exxon is responsible for abating only 9 million out of the 138 million tons of its carbon footprint—about 6.9% of its absolute exposure. Mario arrived at this figure by compiling a weighted average of the emissions targets affecting all Exxon operations around the world. His estimate for what it costs Exxon to abate those emissions, assuming it had to purchase carbon credits? About $1 billion a year. (He calculated net present value for the 2008-2012 Kyoto compliance period and applied a standard oil industry discount rate to arrive at the figure, based on an expected price of $28 per ton of carbon. He also had to add in to the calculation, abatement costs for reducing emissions to a baseline year.)
$1 billion annually is not a terribly large liability for a $400 billion company.
Furthermore:There’s also another aspect to Exxon’s carbon footprint: the 129 million tons of emissions that it is not required to reduce. It is an enormous carbon asset in a world in which carbon has a price, and it presents a tangible opportunity for enhancing profitability – even beyond $40.6 billion. By reducing those emissions – most simply through reduced flaring, co-generation, heat recuperation, and carbon capture and sequestration – Exxon could reap profits from selling carbon credits it generates. Mario reports that BP is the leader in the sector in taking advantage of these opportunities, which are tangible and positive already.
Sassoon concludes that from an investor (as well as moral) standpoint, ExxonMobil’s storied resistance to the science of climate change is a poor corporate position.
House Plans to Resubmit Renewable Tax Package Stall
Following the second one-vote defeat of the renewable tax package in the Senate last week, House leadership let slip they planned to re-introduce the oil-for-renewables legislation some time this week, for passage before the President’s Day recess.
Today Katherine Ling reports in E&E News that timeline is now in doubt:The death of Rep. Tom Lantos (D-Calif.) and last-minute negotiations may delay House plans to take up a renewable energy tax incentive package later this week. Lantos died yesterday morning due to esophagus cancer complications. . .The bill was expected to be introduced this morning, according to Matthew Beck, a spokesman for House Ways and Means Committee Chairman Charlie Rangel (D-N.Y.). Beck said the committee was writing the bill but had not completed it yet as they were waiting for decisions from the leadership.
Polar Bear Fate Heats Up
Senate Hearing
In today’s Senate Environment and Public Works Committee hearing on the Fish and Wildlife Service’s now-illegal delay in ruling whether polar bears are an endangered species, Sen. Boxer (D-Calif.) sharply rebuked the FWS director Dale Hall. She noted that the Alaska field office sent a recommended decision to Hall on December 14th of last year. Hall refused to discuss the recommendation, saying it would be “inappropriate” to discuss internal deliberations.
Hall gave as his only reason for the delay past the January 8 deadline the need to present a “high-quality” decision that responds in full to the voluminous public comments received. He stated that there was no significant scientific uncertainty in the endangerment posed by global warming to polar bears, the only reason for delay the Endangered Species Act permits. Under repeated questioning from Sens. Boxer and Lautenberg (D-N.J.), Hall said he wanted to present a decision, if possible, by February 6th.
Hall noted that in many ways the Marine Mammals Protection Act provides stronger protection than the Endangered Species Act for polar bears even if a finding of endangerment were made – a claim criticized by Andrew Wetzler of NRDC, who noted that the MMPA does nothing to protect critical habitat, the matter which would affect the planned sale of drilling rights in the Chukchi Sea.
MMS Speaks
On that front, Ben Gemen reports for E&E News that Minerals Managment Service director Randall Luthi said any delay of the scheduled February 6 sale of Chukchi Sea leases would prevent any oil-and-gas exploration in 2008. However, he also stated that the agency position is that:there is no need for a delay, regardless of what FWS decides. He said that even in the absence of a listing, energy development is accompanied by several layers of environmental review and safeguards, including collaboration with FWS and the National Marine Fisheries Service.
Kerry Moves to Block
Meanwhile, Sen. Kerry (D-Mass.) introduced legislation yesterday that would block lease sales in the Arctic until Endangered Species Act decisions are made on the polar bear and its critical habitat, mirroring Rep. Markey’s (D-Mass.) proposed legislation in the House.
Internal Emails Show MMS Staff Outcry
Finally, Public Employees for Environmental Responsibility has released over the past week communications from MMS scientists pleading with the political appointees to delay the lease sale (contrary to Luthi’s January 17th testimony) and DOI directives forbidding MMS scientists to consider the possible threat of invasive species from opening the seas to drilling.
The threats and protections for the polar bear
Witnesses
Panel I- FWS Director Dale Hall
- Andrew Wetzler, Natural Resources Defense Council
- Margaret Williams, World Wildlife Fund
- Brendan Kelly, University of Alaska
- Richard Glenn, Alaskan Arctic resident and sea ice geologist
- J. Scott Armstrong, University of Pennsylvania Wharton School
Barrasso Once protection for the polar bear is finalized, agencies will be required by law to avoid jeopardizing the species. And the only way to do so is to reduce emissions.
10:22 Lieberman These species have inherent value. If I may go on a moment I was raised in a tradition, it says in the Bible that Adam and Eve have a responsibility to both work and protect the Garden and all that’s in it. We heard in a hearing nearly a year ago quite a remarkable accumulation of testimony. Mr. Hall identified a warming climate and the melting of sea ice as the primary reason polar bears are threatened as a species. 2/3 of the world’s polar bear population could be lost by the middle of the century. That could be a conservative projection. Some are troubled by the coincidence between the delay and the drilling leases.
10:28 Craig I’m just beginning to acquaint myself with this issue. I understand the climate change movement, the emotion involved in all of that, it’s difficult to predict the future. I’ve watched as various organizations have used the ESA as a wedge or a sledgehammer to shape human activities. I’m here to listen. I hope we don’t rush to judgment. History will only say, was it us, or was it Mother Nature? That is still an open question.
10:32 Mr. Hall We reopened and extended the comment period to allow the public to respond to the new USGS research. We expect to present a final decision to Sec. Kempthorne in the very near future. It is important to recognize that the polar bear is protected under several acts and treaties.
10:36 Boxer Did your staff present a recommendation to you?
Hall Yes. I’m working to the proper modes to explain all the questions. It’s not just making the decision, it’s the Congress and public being able to understand. This delay is my responsibility.
Boxer I wouldn’t want that responsibility to be on my shoulders. Look at Mr. Johnson. He hasn’t given one ounce of paperwork to justify his decision. So there’s a precedent. According to Bruce Woods the completed decision from the Alaska field office was sent to HQ December 14th. What was the recommendation?
Hall It would inappropriate for me to discuss internal deliberations.
Boxer You do understand there is a lease sale?
Hall Yes.
Boxer Am I correct that you have not filed a notice for a delay due to significant scientific uncertainty?
Hall I delayed to get all the information together. The quality of the answer is important. We owe those public comments to be responded to.
Hall The vast majority of the public comments supported the science that would support a listing.
We did not believe that there was ample scientific disagreement to warrant using that clause of the Act.
Boxer Have you been in communication with anyone at the White House about the decision?
Hall No, ma’am. I notified the Secretary and the Secretary notified the President.
Boxer I hope you would reconsider this.
Hall I do not take this lightly. But I am committed to getting a high quality decision out there. I don’t want to overpush our staff.
Boxer Can you do it before February 6?
Hall That was our projected date. We’re pushing to get there.
Boxer If you need some staff assistants, we would help you. It would mean a lot to me.
Hall Our staff has worked very hard.
10:52 Lautenberg Did you say February 6 is not possible?
Hall No, we’re trying to make that goal.
Lautenberg Why don’t you make the recommendation that no driling should take place?
Hall It’s a lease sale exercise. Under that exercise our staff in Alaska did work with MMS.
Lautenberg You’re a person of some significant respect in the environmental community. You understand what you’re doing will make a difference how we approach the leases. We need your help to protect the situation.
Barrasso questioning.
11:00 Hall I don’t believe it’s possible for us to meet the legal standard to reach take for emissions done somewhere else on the globe. Right now the greenhouse gas discussions are from all sources. To be able to track something from the action to the effect we have to have the science that makes the bridge. We can’t get there today. When you reach into CAFE standards and industry and our homes we don’t know how to make that responsible for the loss of polar bears. That is the requirement under the law.
11:02 Lieberman You’re a life FWS person. Did you view the USGS survey as credible?
Hall We do. The conclusion was that 2/3 of the habitat they need would be gone.
Lieberman If polar bears are declared endangered, how would that affect the Chukchi lease sale?
Hall There would be a Section 7 consultation. If the lease sales went forward, then the next steps would be industry proposals and then we would consult under the laws.
Section 7 consultation says that no agency take action that may jeopardize the continued existence of a species.
Lieberman The MMS admits between 750-1000 oil spills are likely due to this lease sale. I believe the greatest threat is ice loss. But this is also a source of danger. Would you agree?
Hall Yes, I do.
11:07 Craig This is one senator who’s not going to tell you to rush the science. Take your time. Get the science right. I don’t want you to rush it to stop a lease sale. Some senators want to use this as a blocking tactic. There’s a process.
11:10 Klobuchar I must say I’m concerned. The first petition was made in February 2005.
Hall The standards for ESA and Marine Mammal Protection Act are very close. If it were listed under the ESA one of the first things we’d want to do is synchronize the ESA and MMPA actions.
I firmly believe we should consider the Arctic as an ecosystem. There will be winners and losers.
Warner I believe the polar bear should be listed as endangered.
11:52 Wetzler There is nothing in the MMPA that requires that critical habitat be protected as there is in the ESA.
Rep. Markey Introduces Bill to Block Alaska Drilling Pending Polar Bear Decision
Rep. Edward Markey (D-Mass.) has released the text of legislation which, if enacted, would forbid the sale of off-shore drilling rights in the Chukchi Sea, which includes polar bear habitat, until the U.S. Fish and Wildlife Service makes its long-delayed determination whether the polar bear is endangered and what its critical habitat is.
At today’s hearing, FWS director Dale Hill made it clear that he recognizes that the polar bear is definitely losing habitat and has been delaying his determination to make it “clear”; he also stated, “We need to do something about climate change starting yesterday.”
Minerals Management Service Director Randall Luthi admitted that if the lease auction goes forward, it would be impossible to revoke the leases even if they are found to be in conflict with a later endangerment listing of the polar bear.
Polluters Believe This May Be the Best Year for Climate Legislation
Representatives of the coal, oil, and gas lobby met yesterday at the United States Energy Association’s “State of the Energy Industry” conference at the National Press Club in Washington. They agreed that Lieberman-Warner may be the best legislation they can hope for, especially if issues like polar bear habitat set the standard for legislation.
Katherine Ling reports for E&E Daily that David Parker, president and CEO of the American Gas Association, said “Who would you rather have writing a bill in the Senate? I might guess it may set a tone for business to fully work with the Senate this year.” He continued that “the polar bear habitat is going to really drive this [climate change] debate. We all have a big education job to do and I think we need to do it collectively.”
Bill Scher has further commentary at Blog for Our Future.
While most panelists agreed it was not likely that a full bill capping greenhouse gas emissions would pass this session, they said a great deal could be accomplished in laying the groundwork this year.Tom Kuhn, president and CEO of Edison Electric Institute, predicted there will be a floor vote in the Senate this year on a climate bill. “No matter what happens on those votes, that will set the marker for what we do in the future,” he said, especially if there is White House involvement.
David Parker, president and CEO of the American Gas Association, agreed with Kuhn. Despite a general disagreement the energy industries have with the climate bill sponsored by Sens. Joe Lieberman (I-Conn.) and John Warner (R-Va.), he said, future legislation could be even harder on the industry.
“Warner is retiring this year, and then the question is, ‘Who comes into play?’” Parker said. Potentially, Sens. Barbara Boxer (D-Calif.) and Bernie Sanders (I-Vt.) – who both favor greater emission limits than those in the Lieberman-Warner bill – could lead the next attempt to pass climate change legislation under a Democratic president, he said.
“Who would you rather have writing a bill in the Senate? I might guess it may set a tone for business to fully work with the Senate this year,” he said.
Achieving workable legislation will require educating policymakers and the public a great deal more on energy markets, panelists said.
Parker said he was worried that “the polar bear habitat is going to really drive this [climate change] debate. We all have a big education job to do and I think we need to do it collectively.”
President Signs Energy Bill; NYT Praises Dingell, Slams Landrieu
The Energy Bill: A Hero and a VillainPresident Bush has just signed into law an energy bill that could have been even better but still remains an impressive achievement. The long struggle to produce that bill yielded the usual quotient of heroes and villains, but two deserve special mention:
John Dingell, who could have been a villain but chose to be a hero; and Mary Landrieu, who could have been a hero but chose to be a villain.
Mr. Dingell was a most unlikely hero. A Michigan Democrat and a reliable defender of the automobile industry, he had long resisted efforts to mandate new fuel efficiency standards, which had not been updated for more than 30 years.
But there has always been a softer, “greener” side to this crusty octogenarian that people often overlook. An architect of the original Clean Water Act of 1972, he cares a lot about wetlands preservation, endangered species and other environmental causes. He is also a fairly recent convert to the climate change issue, describing the global warming threat with phrases like “Hannibal is at the gates.”
So when Nancy Pelosi, the House Speaker, made a personal pledge to upgrade fuel efficiency standards, Mr. Dingell agreed, in exchange for one or two modest concessions, to get out of the way. He did more than that. When environmentalists complained that the Senate’s mandate for a huge increase in ethanol could threaten forests, wetlands and conservation areas, Mr. Dingell made sure the final bill contained the necessary safeguards. He also insisted on a provision requiring that ethanol from corn or any other source produce a net benefit in terms of greenhouse gas emissions.
Ms. Landrieu was an altogether different story. The Louisiana Democrat broke ranks with her Democratic colleagues and gave President Bush and the Republican leadership the one-vote margin they needed to strike a key provision that would have rescinded about $12 billion in tax breaks for the oil industry and shifted the money to research and development of cleaner sources of energy.
The White House argued that these tax breaks were necessary to insure the oil industry’s economic health and to protect consumers at the pump. Given industry’s $100 billion-per-year profits, these arguments were absurd on their face, but Ms. Landrieu promoted both of them and added one of her own: The energy bill was “one-sided policymaking” that left “Louisiana footing the bill.”
Never mind that the rest of the country is footing the bill for the repair and restoration of Louisiana in the aftermath of Hurricane Katrina. That is a just and worthy cause and one that the nation is willing to help pay for. But isn’t reducing oil dependency and global warming emissions by rewarding traditional fossil fuels a bit less, and rewarding newer, cleaner fuels a bit more, also a just and worthy cause? One that Louisiana could help pay for? That is something Ms. Landrieu might ask herself the next time she puts her state’s interest ahead of the nation’s.