In the News

The bad news is that when methane escapes into the atmosphere unburned, it can trap a lot more heat than an equivalent amount of CO2 — up to 86 times more over a 20-year period, according to the Intergovernmental Panel on Climate Change.

The U.S. government could learn important lessons on offshore leasing from financial markets and oil companies.

Is the Bureau of Ocean Energy Management acting illegally on the approval of new offshore lease sales? During today’s OnPoint, Michael Livermore, a professor at the University of Virginia School of Law and a senior adviser at the Institute for Policy Integrity, discusses his recent argument before the U.S. Circuit Court for the District of Columbia on a case pertaining to the economic analysis used by the Interior Department in its sales of new leases.

“Interior fails to give the same treatment to environmental and social costs and gives no explanation for the different treatment,” CSE’s counsel Michael Livermore said during Thursday’s oral arguments.

Methane’s interstate — and, indeed, international — impacts make it particularly well-suited to federal regulation. If lawmakers are serious about reducing risks from climate change, they will need to regulate fugitive methane emissions from “upstream” sources — the wells, pipelines and storage tanks used for gas extraction, processing and delivery.

Environmental Protection Agency performance standards are needed to constrain emissions of “fugitive” methane generated by hydraulic fracturing from upstream sources such as natural gas wells, pipelines and storage tanks, Richard Revesz said at a House subcommittee hearing today.

Environmentalists on Monday are set to file a lawsuit challenging the Obama administration’s plans to sell offshore drilling leases over the next five years, with a novel argument: that the government overlooked the value of waiting to harvest oil and gas from those coastal waters.

The economic-driven approach is a new one for offshore drilling critics, who have separately accused the government of moving too swiftly to approve new oil and natural gas exploration after the Deepwater Horizon disaster and ignoring the environmental effects of the work.

Michael Livermore of the Center for Policy Integrity, which is helping to represent CSE, said the plan should be re-done because Interior failed to consider the economic value of not going ahead with leasing in some cases.

He noted that when leasing for development of publicly-owned resources is delayed, there is more time to learn about environmental sensitivities and development technology improves, among other considerations.

“When you don’t take into account the value of delay, you end up subjecting too much of the outer continental shelf to leasing,” Livermore told The Hill.

“That option value is owned by the American public and ought to be considered by the agency,” said Livermore, the executive director of the Institute, which is based at New York University’s law school.

In an ideal world, our nation’s energy markets would be unbiased—no one would get subsidies or tax breaks, and prices on air pollution would make sure that health and environmental costs were not externalized onto the public.

But that is not the world we live in today. Giveaways for oil and other fossil fuels, estimated to be on the order of $4 billion per year or more, distort the economics of how we power our homes, businesses and cars, often in ways that are not beneficial to the American public.

The BP disaster was a stark reminder of the risks involved in accessing America’s oil reserves. One year later, too little action has been taken by the government to prevent a similar incident.

While incorporating a “safety case” methodology into the laws and regulations governing offshore drilling may be helpful, a regulatory scheme that grants permission to drill too soon is fundamentally problematic. Even if an oil company were to identify all the risks of a drilling operation and implement safety plans to address them, the relatively less developed safety technology available today coupled with the more advanced (and more risky) drilling technology keeps the potential for disaster higher than necessary.