Oil Change International

Exposing the true costs of fossil fuels

President Obama just applied the Climate Test to Arctic drilling

Tuesday afternoon, President Obama and Canadian Prime Minister Trudeau announced new parallel actions to indefinitely ban offshore oil drilling in portions of the Arctic and Atlantic oceans. These are critical steps to safeguard not only our waters and shorelines, but also our climate.

Industry leaders and fossil-fuel friendly politicians have, of course, already come out saying they’ll challenge these steps and try to undo them. However, legal experts have suggested that because the President chose to use Section 12(a) of the Outer Continental Shelf Lands Act (OCSLA) to withdraw these waters from drilling means that such efforts to repeal Obama’s actions would either be unsuccessful or result in years-long court battles.

But beyond the politics of what may lie ahead, a closer look at the White House fact sheet detailing the withdrawal of Arctic waters from offshore drilling shows a critically important detail to how they made this decision: The White House used a climate test as one of the rationales for ending drilling in the Arctic.

What is a climate test? It is a way of assessing whether any proposed energy project or policy is aligned with the goals laid out in the Paris Agreement to stay below 2ºC and aim towards limiting warming to 1.5ºC. More on the Climate Test can be found at http://www.climatetest.org/. The concept was actually introduced by President Obama himself during his climate speech at Georgetown University in 2013, where he suggested the Keystone XL pipeline should not be approved if it exacerbated our climate crisis…a rationale he eventually used as one of several reasons to stop the pipeline last year.

Over the past few years, we and many others have shown why Arctic drilling fails the Climate Test. Last year, we published “Untouchable: The climate case against Arctic drilling,” which showed that Arctic drilling would be a multi-billion dollar bet that the world would fail to address climate change – because if we address climate change effectively, Arctic oil will not be economically viable by the time the development reaches the extraction phase.

And this year, two key studies came out that hammered this point home. First, we released “The Sky’s Limit,” where for the first time we showed that existing fossil fuel projects will fill up our global carbon budget, and therefore any new fossil fuel development takes us beyond our agreed climate limits. Also this year, the Stockholm Environment Institute published a key study showing that U.S. offshore oil development must come to an end if we are to achieve the climate goals laid out in the Paris Agreement.

All of these studies point to the same conclusion: Offshore drilling, particularly in the Arctic, fails any reasonable climate test. Until Tuesday, President Obama’s team had not acknowledged this simple fact. But on Tuesday they did.

In a White House fact sheet accompanying the announcement, they wrote:

This action is consistent with the steps the United States and the international community will take in the coming decades to transition energy systems away from fossil fuels – particularly because any potential significant Arctic offshore production would only occur around the middle of this century, a timeline that is incongruous with our nation’s need and international commitments to reduce carbon emissions.

This is a critical admission. With this, the administration is saying that by the time any Arctic drilling would have successfully begun producing oil for sale, we should be well on our way to ending our addiction to oil. In other words, Arctic oil will have no market if we actually stop using oil swiftly enough to live up to our international commitments to tackle the climate crisis.

This sort of analysis lies at the heart of the Climate Test. It seeks to answer the question: “Does this project have any place in a world where we tackle the climate crisis?” Here, the Obama Administration is clearly answering this question with a resounding no, when it comes to Arctic drilling.

The fact sheet goes into greater detail on this point:

Lengthy Production Timeline
It is also important to note that this action is consistent with the steps the United States and the international community will take in the coming decades to reduce carbon pollution. In contrast, if lease sales were to occur and production take place, it would be at a time when the scientific realities of climate change dictate that the United States and the international community must be transitioning its energy systems away from fossil fuels.

  • Even at substantially higher oil prices, production would not begin for at least 10 years following a lease sale, which could occur in the mid-to late 2030’s at the earliest, and last up to 75 years.
  • No infrastructure or production exists in the Chukchi Sea.
  • In the Chukchi Sea, production could require 190 separate onshore pipeline miles each for oil and gas and 300 separate onshore pipeline miles for both oil and gas, requiring substantial and enormously expensive new infrastructure in sensitive places.

These timelines would only bring significant new oil and gas resources into the market at a time when the United States and its international partners must be transitioning to alternative energy sources to reduce emissions. While many agree that, during the transition to cleaner energy sources, the United States will continue to rely on oil and gas resources for some period of time, there is ample supply for that purpose in mature areas such as the Gulf of Mexico.

Before addressing this section, one critical disagreement should be highlighted. We at Oil Change International disagree with the perspective that “mature areas such as the Gulf of Mexico” should be left as sacrifice zones for continued oil drilling. Oil development in the Gulf of Mexico should be put on a path of managed decline with a just transition to protect communities from the ravages of oil production in the region as well as the economic impacts of transitioning its economy away from oil development.

That said, this section highlights some critical thinking from the Obama Administration’s team. In particular, the concept of “carbon lock-in” is introduced by highlighting that production in the region could last for more than 75 years if begun today. This concept, discussed in useful detail in SEI’s analysis, suggests that fossil fuel infrastructure built today will have impacts on our efforts to move away from fossil fuels for years to come.

Building the massive infrastructure necessary to drill in places like the Arctic requires extremely large capital expenditures. Once that capital is spent, oil companies have an incentive to make a return on that investment – by extracting as much oil as possible for as long as possible using the infrastructure they’ve built. So, decisions to allow investments to move forward now don’t just impact us today, but impact our ability to meet our climate goals for decades to come.

By examining the outlook for future markets in the context of achieving our climate objectives, the Obama White House today has operationalized the Climate Test President Obama presaged in his 2013 Georgetown climate speech. While it may be in the 11th hour of the Obama administration’s tenure, this precedent should give hope to many who fight fossil fuel infrastructure around the country.

The Climate Test may not be put into policy at the federal level in the short term due to Donald Trump’s climate-denying fossil-friendly disposition, but decision-makers at all levels can and should apply this test as they consider energy projects in their jurisdictions. States like California, Oregon, Washington, Virginia, and many others could implement state-level Climate Tests as a check against federal anti-climate efforts in the years to come.

For now, there are some important highlights from this week’s announcements: Arctic and Atlantic waters will see no new oil development for years to come. And, in addition to the amazing community-led resistance to drilling in the Arctic and along the Atlantic coast, we have the Climate Test to thank for that as well.

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