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The Biden Administration’s Drilling Auction Shows Why the Paris Agreement Isn’t Enough

There’s no way to fix the climate without transitioning off fossil fuels. But rich nations still aren’t planning for that.

Tom Pennington/Getty Images
A semi-submersible drilling platform in the Gulf of Mexico

Fossil fuels amount to 86 percent of annual carbon dioxide emissions and a significant portion of methane, nitrous oxide, and black carbon emissions. But amazingly, the Paris Agreement, the world’s designated tool for dealing with climate change, doesn’t mention fossil fuels once, let alone provide a framework for scaling them down at the rapid pace required. It’s that ambiguity that allows for seemingly contradictory information to coexist: Over the last two weeks, the United States has cast itself as a climate leader at U.N. climate talks in Scotland. On Wednesday, the administration opened the largest oil and gas lease sale in U.S. history, despite having myriad options available to keep it from happening.

In its defense, the White House pointed to a preliminary injunction issued by a federal judge in June, saying that its proposed pause on new leases would be illegal. But as environmental groups have pointed out, nothing in the injunction mandated that the administration had to go ahead with this particular sale, and the administration could have asked for a stay on the injunction. In all, 33 companies placed 308 bids on the 15,000 total Gulf of Mexico blocks, bringing in $191 million. Top bidders included familiar faces like ExxonMobil, which snapped up 90 blocks, and Chevron, which got 30. BP—the British oil giant sent representatives to  COP26 to burnish the company’s climate credentials—placed 50 bids, making it the second-highest bidder after Exxon. Even allegedly responsible oil companies aren’t too shy about snapping up new places to drill. 

Meanwhile, the dam that has kept serious discussion about fossil fuel production out of the halls of U.N. climate talks finally appeared to be breaking under pressure in Glasgow last week. Language in the Glasgow Climate Pact, finalized Saturday, contains the first-ever reference to fossil fuels in the process to implement the Paris Agreement, meagre as it is. More substantively, over 20 countries pledged to end overseas financing for oil and gas, diverting those funds to clean energy. Eleven governments announced the formation of the Beyond Oil and Gas Alliance, or BOGA, hoping its launch at COP26 would “mark the beginning of the end of oil and gas.”

The energy transition, though, is the mother of all planning problems, involving everything from financial regulations to coordinated public investment programs to widespread debt relief to trade rules. The comfortingly smooth curve of climate and energy modeling suggests that as renewables get cheaper and fossil fuels get more expensive, the world will move seamlessly toward decarbonization as consumers swap one fuel for another. Yet current projections suggest that won’t happen fast enough. And markets don’t do a great job of looking out for people whose lifeblood is getting replaced. “We can’t allow the markets to decide the fate of humanity,” Tzeporah Berman, chair of the group aiming to create a Fossil Fuel Non-Proliferation Treaty Initiative and international program director of Stand.Earth, told me, pointing to the many people who would suffer under an unmanaged transition. “What we’re asking for is a plan. We’re asking countries to plan for a managed decline of fossil fuel production in line with the Paris Agreement.”

The need for that has come into sharper focus throughout 2021. In May, the hardly progressive International Energy Agency—started by none other than Henry Kissinger—found that no new fossil fuel infrastructure would be consistent with capping warming at 1.5 degrees Celsius (2.7 degrees Fahrenheit). Currently, the world’s governments are on track to produce double the amount of fossil fuels that is consistent with that target. Meeting it would require cutting coal, oil, and gas production by 69, 31, and 28 percent respectively over the next decade.

Coal, in particular, has become an easy punching bag as the lowest-hanging fruit of the energy transition. But as the debacle over whether to call for a coal “phaseout” or “phase down” in the Glasgow Climate Pact showed—where wealthy nations placed the blame on India for preferring the latter—that can overlook conditions in developing economies. “The West still uses oil and gas, so it isn’t yet a culprit. It will become a culprit when they are closer to another technology they can easily use to leapfrog,” Harjeet Singh, senior adviser to Climate Action Network International, who’s worked on the Treaty Initiative, told me. “They will not provide that technology to other countries. And so, 10 or 20 years later, they will blame them for using natural gas.… Everybody’s focusing on coal because that is a fuel for developing countries.”

For many fossil fuel producers, meeting the punishingly short timeline left to transition off them could be exceptionally painful. The Civil Society Equity Review this year tracked the implications of a transition to clean energy and fossil fuel phaseouts on the countries that depend the most on coal, oil, and gas. Researchers found that in India, there are 21 million people employed in fossil fuels and adjacent industries; in the Democratic Republic of the Congo, oil revenues make up nearly 60 percent of government budgets, compared to less than 1 percent in the U.S. The U.K.-based think tank Carbon Tracker has found that having even a 50 percent chance of capping warming at 1.65 degrees Celsius could entail a $13 trillion shortfall in expected oil and gas revenues over the next two decades. Wealthy countries that depend less on fossil fuel revenues—and who have the most capacity to make a quicker jump to renewables—should make that transition the most quickly, and support others to do the same.

But that hasn’t been the case. The U.S., Norway, the U.K., Canada, and Australia, a study organized by the Fossil Fuel Non-Proliferation Treaty Initiative found, are on track to reduce coal production by just 30 percent through 2030, as they increase oil and gas production by 33 and 27 percent, respectively. Through 2030, the U.S. is poised to expand its gas production by four times more than Canada, Saudi Arabia, Russia, and Qatar combined.

“What infuriates me, after all these years—the Western world has not been able to get off oil addiction or phase out fossil fuels,” said Meena Raman, head of programs at the Third World Institute. “If you look at the Production Gap Report, it clearly shows they are not retreating. And these are the countries with all the technologies, all the capacity” to do so, she added—countries that arrive at U.N. climate talks lecturing poorer nations about coal use. “They’re not moving fast enough. And then you’re preaching to the developing world that you can do it. And you don’t do it, and you want the others to do it.”

So in a week defined by high-profile announcements, BOGA’s formation may well have been the most significant. Core member governments—currently co-chairs Denmark and Costa Rica, as well as France, Greenland, Ireland, Quebec, Sweden, and Wales—have committed to ending new concessions, licensing, or leasing rounds for oil and gas production and exploration, and to setting a Paris-aligned date for ending oil and gas production and exploration within their territorial boundaries. Associate members California, New Zealand, and Portugal have “taken significant concrete steps that contribute to the reduction of oil and gas production,” like the Golden State’s recent move to ban drilling within 3,200 feet of homes and schools. As a “Friend of BOGA,” Italy has committed to working to help align oil and gas production with the Paris Agreement’s targets. Together, they hope to convene a multilateral process for sorting out the nitty-gritty details of the energy transition.

The world’s energy companies “all want to be the last barrel sold,” Tzeporah said of both private and state-owned drillers. The Paris Agreement is simply “not designed to negotiate who gets to produce and how much and where. And so we do need other mechanisms and other negotiations,” which is why she sees the treaty as a chance for a broader multilateral conversation on how to plan an equitable energy transition. For that, net-zero commitments, which rely on hypothetical carbon capture down the line, don’t cut it. “As long as net-zero commitments allow fossil fuel production expansion, then they’re a fraud,” she told me. “The fossil fuel industry has been successful for decades in convincing decision-makers that they can decouple emissions from fossil fuel production.”

Given the structure of the Paris Agreement, changes to phase out fossil fuels would need to happen at the national level, through the Nationally Determined Contributions meant to add up to limiting warming to “well below” two degrees Celsius. Just one part of the agreement—Article 6—deals with international coordination to reduce emissions, and almost all of it is dedicated to setting up a carbon market that allows for emissions to be offset through carbon credits. Among the minor victories of COP26 was establishing a mechanism to ensure that market could reduce emissions overall, instead of just moving them around. Only one piece of Article 6, 6.8, deals with “non-market” approaches, such as coordinated public investment and carbon taxes. How precisely that will be implemented remains to be seen. The Civil Society Equity Review does lay out several ways the UNFCCC could take fossil fuel supply issues more seriously, including adding items on just transition efforts to required transparency reports.

None of BOGA’s founding members are major oil and gas producers, of course. Its advocates say that shows BOGA is serious. “I think it’s a success story of BOGA that it did not give in to the temptation to lower the bar for entry so that more people could rush into it, as we saw in several of the announcements last week,” said Catherine Abreau, the Canada-based founder and executive director of the climate group Destination Zero, who serves on the Fossil Fuel Non-Proliferation Steering Committee and has been helping to coordinate BOGA. During the first week of COP26, the U.K. presidency eagerly announced that more than 40 countries had agreed to phase out coal by 2030. Just 23 countries on that list were making a new pledge, and several don’t use any coal at all. Poland, one of Europe’s biggest coal producers, claimed after the announcement it hadn’t understood what it was signing up for, saying it would only phase out coal by the 2040s.

Transitioning off fossil fuels will require not just public investment in clean energy but real constraints on existing production, as well tools like debt relief and technology transfers that create pathways for poorer countries with reserves to develop without exploiting them. “The IMF, the World Bank, multilateral development banks—these are the spaces where we need to be having these conversations and making this stuff real,” Abreu said. Without real material commitments, developing countries may not be receptive to shifting off fossil fuels—especially when being pushed to do so by wealthy countries who have no intention of limiting fossil fuel production themselves or mounting the cash to make that possible for others.

The U.S. did not sign the coal phaseout pledge. Now it has followed up on COP26 with a massive drilling auction. And that creates some cognitive dissonance: While the Biden administration has repeatedly called climate change an “existential threat,” it’s not going too far out of its way to deal with its main contributor. Nor is it inspiring trust among other countries it’s asking to lead the charge.