The industry trade group uses faulty economic analysis.
By Mary Ellen Kustin
The U.S. Chamber of Commerce last week launched a new attack on Hillary Clinton that aims to stoke fear in western states that the presidential candidate intends to fully halt the production of all oil, gas, and coal on federal lands and waters. The attack, which is based on both a false claim about Clinton’s policy positions and faulty economic analysis, seems to draw from Donald Trump’s playbook of presenting fictional scenarios as fact.
The report, issued last week by the U.S. Chamber of Commerce’s Institute for 21st Century Energy, is premised on two patently false claims.
First, the report envisions a scenario in which all energy development on publicly-owned federal land and water, including the Gulf of Mexico, ends immediately. Under this scenario, local communities that currently rely on fossil fuel extraction would suffer severe job losses, declines in tax revenues, and economic dislocation. The report asserts that if this happens, federal and state governments would forego $11.3 billion per year in revenues.
This scenario, however, is absurd from both a policy and legal standpoint. Neither Hillary Clinton, Bernie Sanders, nor any other major presidential candidate has advocated for the immediate cessation of oil, gas, and coal production on public lands. In the primary, the Democratic candidates for president emphasized the need to transition from fossil fuel energy sources to clean energy sources on public lands and debated whether new oil, gas, and coal leases should be sold to companies.
According to Clinton’s policy platform, her administration would “reform onshore coal, oil, and gas leases to ensure taxpayers are getting a fair deal, raising royalty rates, which currently lag below the rates on state and private lands, and close loopholes.” Clinton has emphasized the need to phase down the leasing of new fossil fuels on public lands and has outlined a plan to increase the production of renewable energy on public lands 10-fold in the next 10 years. According to her platform, Clinton will “ensure that new leasing decisions account for the accelerating pace of the clean energy transition so taxpayers are protected as the U.S. and global energy market changes.”
According to a recent analysis by Headwaters Economics, Clinton’s focus on raising royalty rates and closing loopholes would provide economic and fiscal benefits to local communities. The independent, nonprofit, Montana-based research group found that states with federally leased coal generated $1.1 billion in government revenue in 2014 from extracting coal.
Even when the Chamber’s report dials back the hyperbole to consider a scenario in which extraction continues from the land the U.S. government has already leased, the report flies in the face of findings by the Congressional Budget Office.
The Chamber claims that if the federal government stopped selling new coal, oil, and gas leases, onshore oil and gas production royalties would decline more than 50 percent within five years and by 75 percent over the next 15 years. An April 2016 CBO report found, however that onshore oil and gas leases less than 10 years old accounted for only six percent of total production royalties and leases less than 20 years accounted for only 20 percent of all royalties (based on the most recent available data from 2013).
So, instead of the dramatic drop-off in royalty revenues that the Chamber predicts, CBO data indicate that if the federal government never issued another lease — a position that neither Hillary Clinton nor Donald Trump is advocating — production would likely remain above 90 percent of existing levels in 10 years and around 80 percent in 20 years.
The Chamber’s report also fails to take into account the potential greenhouse gas emissions associated with the vast undeveloped fossil fuel supplies on public lands that have already been leased to companies.
Existing leases could already provide enough fossil fuels to continue producing two to three decades after global emissions (continuing at 2014 levels) make it unlikely to curb climate change of below 1.5 degrees Celsius, according to an analysis released last month by the Center of Biological Diversity and Friends of the Earth.
This level of warming is significant given that the member nations of the U.N. Framework Convention on Climate Change agreed in Paris in December 2015 “to pursue efforts to limit the temperature increase to 1.5 degrees Celsius above preindustrial levels, recognizing that this would significantly reduce the risks and impacts of climate change.”