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Info Service on Climate Change (Nov23/10) Penang, 22 Nov (Kanaga Raja) — Oil and gas production in the United States will continue to grow despite the Inflation Reduction Act (IRA)’s support for clean energy, with oil production rising by 13% and gas production by 7%, according to a new report by Oil Change International, a US-based research and advocacy organization. According to the report, titled “Biden’s Fossil Fuel Fail: How US Oil and Gas Supply Rises under the Inflation Reduction Act, Exacerbating Environmental Injustice,” projections show that the IRA may fall significantly short of achieving the United States’ stated Paris Agreement goal of reducing emissions by 50-52% below 2005 levels by 2030. The central scenario projects a 16-18 percentage point gap in meeting this target, emphasizing the need for additional policies to ensure faster emissions decline this decade and beyond, said Oil Change International. “The Biden administration touts the Inflation Reduction Act as a centerpiece of its achievements on climate. In reality, the bill leaves a massive escape hatch for the fossil fuel industry to continue business as usual. To align with global climate goals, President Biden and his administration must phase out the export of oil and gas, end fossil fuel leasing on federal lands, and stop all approvals for new fossil fuel infrastructure projects,” said Collin Rees, United States Campaign Manager at Oil Change International. The report, released ahead of COP28 (Conference of the Parties of the UN Framework Convention on Climate Change), to be held in Dubai at the end of this month, presents previously unpublished data from the Rhodium Group’s Climate Deck model, which projects an overall rise in oil and gas production under the IRA. Specifically, the report said that the results demonstrate that the IRA supports a modest decline in US oil and gas demand while allowing an increase in oil and gas production and a dramatic rise in oil and gas exports. The report underscored that the IRA by itself will not drive the phase-out of oil and gas production in the United States, which is widely recognized as necessary to achieve global climate goals. In fact, it said that the IRA enables the continued expansion of oil and gas production, keeping the United States on course to be the biggest expander of oil and gas extraction in the world through 2050 and worsening a fossil- fueled public health crisis in front-line communities. The report said that “if the Biden administration is to realize the purported goals of the IRA and live up to the President’s promises to lead on climate and environmental justice, it must urgently do more to phase out US oil and gas extraction alongside demand.” “This means phasing out fossil fuel exports, ending leasing for extraction on federal lands, and stopping approval of new fossil fuel infrastructure projects.” RISING FOSSIL FUEL PRODUCTION UNDER IRA According to the report, the Rhodium Group’s model projects that despite the IRA’s investment in renewable energy, electric vehicles, and batteries, the United States could still miss its Paris Agreement goal of reducing US emissions by 50 to 52% below 2005 levels by 2030. “The model’s mid-emissions pathway suggests that US greenhouse gas emissions will total 4.42 billion metric tons in 2030. This is 34% below 2005 levels and misses the US Paris Agreement goal by 16 to 18 percentage points.” The report noted that this goal is already insufficient to limit global temperature rise to 1.5 degrees Celsius. “This is especially damning considering the United States’ responsibility as the world’s largest historical climate polluter to cut its emissions faster than the global average,” it said. The model’s low-emissions pathway suggests that emissions could be reduced by 51% by 2035. In other words, the best case outcome from the IRA would be the United States achieving its already insufficient 2030 goal five years late, it added. It said many of the IRA’s provisions expire in the 2030s. Therefore, additional policies are needed to continue and accelerate emissions decline. Citing a discussion in the Rhodium Group’s report on the “decoupling” of domestic fossil gas production and consumption, Oil Change International said that in the report’s mid-emissions scenario, US production of fossil gas could rise despite declining domestic demand, with the difference exported to global markets. “Only in the low-emissions scenario, which is based on assumptions of higher prices for fossil fuels and lower prices for clean energy, would gas production decline. However, even in this scenario, fossil fuel exports would substantially increase,” it added. Digging deeper into the data from the Rhodium Group Climate Deck model to get a better understanding of what the model says about oil and gas flows in the United States under the Inflation Reduction Act, the report said the additional data revealed that in the mid-emissions scenario, moderate declines in US domestic consumption of oil and gas stimulated by the IRA’s support for renewable energy and electric vehicle adoption are countered by significant increases in US oil and gas extraction, with the difference exported to global markets. “This is in direct conflict with the urgent need for oil and gas extraction to peak immediately and decline rapidly by 2030 to hold open the path to a livable climate. The projected growth in US oil and gas exports substantially undermines domestic emissions reductions,” said the report. It also said the Rhodium Group’s projections of US fossil gas trends under the implementation of the IRA paint a concerning picture. It said while domestic fossil gas demand in the United States is expected to decline by 16% by 2035, production is expected to rise by 7%, and gas exports are expected to almost double, driven by the expansion of US fracking and liquefied natural gas (LNG) export terminals. “The majority of fossil gas demand decline is expected in the power sector, where gas-powered generation is expected to be replaced by solar and wind power.” However, the report said this is offset by rising demand in the industrial sector and stagnant demand in other gas consumption sectors. “Within the industrial sector, the model projects that the oil and gas industry itself will see the largest growth in fossil gas consumption.” The report said of 20 sub-sectors tracked within the industrial sector, the three with the largest projected growth in gas consumption – Chemicals, Liquefied Natural Gas (LNG) Export, and Natural Gas Plant and Lease (this includes gas used at well sites and gas processing plants) – are connected to extraction, processing, exporting, and manufacturing products from the oil and gas sector. The demand for gas in the LNG export sector is projected to grow by 140% by 2035, highlighting the energy intensity of the oil and gas industry and the associated petrochemical industry, it added. Overall, the report said that US domestic petroleum demand is expected to decline by 10%. Despite this drop, production is expected to increase by 13% and exports by 23%. “This is, once again, a startling failure of current US policy: As rising exports of oil and oil products fuel the climate crisis, the United States will be exporting emissions and claiming progress at home,” it added. AGGRESSIVE EXPANSION PLANS The report also said the United States is by far the largest oil and gas producer in the world – it was responsible for one in every five barrels of oil and gas extracted globally in 2022. It said that in the same year, the United States led the world in new oil and gas extraction projects committed to development, and is also the world’s largest historical emitter of carbon dioxide. The report further said the United States is poised to be the world’s largest expander of oil and gas extraction from 2023 to 2050, single-handedly contributing more than one-third of planned global expansion. It said much of the United States’ planned expansion is tied to oil and gas fracking and LNG export, centred in the Permian Basin of Texas and New Mexico, along the US Gulf Coast, and in Appalachia. “Communities that have long borne the toxic burden of oil and gas industry pollution, especially Black, brown, Indigenous, people of colour, and low-income communities, are fighting a wave of new infrastructure primarily designed to serve export markets.” Despite pledging climate leadership, President Biden’s policies have facilitated the continued expansion of fossil fuel production in the United States, the report emphasized. It said in the last year alone, the Biden administration green-lit the Alaska Willow Project, approved oil and gas export facilities in Alaska and along the Gulf Coast, held two massive oil and gas lease sales in the Gulf of Mexico, approved five more years of offshore drilling, fast-tracked the Mountain Valley Pipeline, and oversaw the weakening of bedrock environmental laws, making it easier for fossil fuel infrastructure to move forward. More US onshore and offshore oil and gas lease sales are planned in 2023 and beyond, despite President Biden’s promises to end federal leasing and drilling, it added. The report noted that the Inflation Reduction Act includes “mandates for new fossil fuel leasing and incentivizes dangerous distractions like carbon capture and storage and fossil hydrogen production with generous tax breaks.” It said that carbon capture already has a 50-year history in the United States. In that time, it has shown itself to be ineffective at reducing emissions. The vast majority of carbon captured in the United States has been used to increase oil production in aging oil wells using a process called “enhanced oil recovery.” This not only leads to more emissions from oil production and consumption but also has a poor record of keeping the carbon underground, said the report. “Producing fossil hydrogen is similarly ineffective, as combining carbon capture with the steam reforming of fossil gas could be even worse for the climate than burning gas directly when upstream methane emissions are taken into account.” Furthermore, the report said the build-out of carbon capture and hydrogen systems requires extensive pipelines that impact front-line communities. Incentivizing these practices does not mitigate emissions; instead, it prolongs the life of the oil and gas industry and exacerbates impacts on front-line communities, it added. IMPACT ON FRONTLINE COMMUNITIES The report stressed that the massive increase in oil and gas exports allowed by the Inflation Reduction Act means more extraction, pipelines, refineries, petrochemical facilities, and oil and gas export terminals. “Impacts on front-line communities across the supply chain from this build-out will be severe and continue to undercut President Biden and the IRA’s claims to work to ameliorate environmental injustice,” it cautioned. It said these impacts will fall predominantly on Black, brown, Indigenous, people of colour, and low-income communities, and that global communities living near LNG infrastructure will experience similar impacts from imports. It said the communities that will be most impacted by the IRA’s failure to constrain oil and gas production are among those already most affected by environmental injustice and existing infrastructure, including communities in the historic sacrifice zones such as the Permian Basin in Texas and New Mexico, “Cancer Alley” along the Mississippi River in Louisiana, the Gulf Coast, and Appalachia. Highlighting several community case studies, the report said that Freeport, Texas, “is an instructive case on the multi-faceted harms of oil and gas production infrastructure.” It said Freeport is a Gulf Coast hub for fossil fuel processing and export, with an economy driven by chemical production and fossil fuel export and a population that is over 75% non-white. In June 2022, a major explosion and fireball ripped through the Freeport LNG facility, driving flames dozens of feet in the air, out-gassing toxic chemicals, and rattling windows miles away. The export terminal was initially shut down with plans to reopen within a month. Following community opposition and pressure to release more information about the incident, the damage was revealed to be more extensive than initially reported, and the plant remained closed for over six months, it said. After investigating, regulators found the explosion was entirely preventable and blasted the plant’s management, finding “systemic failures” including inadequate operating procedures, insufficient testing, and human error. The report said Cancer Alley in Louisiana is infamous worldwide as a site of stark environmental injustice – the 85-mile stretch from Baton Rouge to New Orleans is lined with over 200 petrochemical plants and refineries. “The location of these facilities is a direct legacy of US slavery, as many of the riverside plantations owned by enslavers were sold for profit and provided extensive acreage for petrochemical and industrial build-out in the twentieth century.” Despite recent improvements in air quality across the United States as a whole, air quality in Cancer Alley is steadily decreasing as the fossil fuel industry doubles down on expansion and production, said the report. “The Biden administration has professed a desire to address the environmental injustices of Cancer Alley, but despite advocates repeatedly raising the alarm to President Biden and his officials, progress has been minimal and has not kept pace with the industry’s expansion driven by the IRA and other White House policies.” The report also said expansion of oil and gas production and exports drives detrimental trends in public health. It said evidence from hundreds of studies demonstrates that drilling, fracking, storing, transporting, and disposing of oil and gas cause serious harm to human health, including respiratory illnesses, cardiovascular disease, and impairments to infant and maternal health. “LNG export terminals release not only planet-heating emissions but also harmful pollutants such as volatile organic compounds, nitrogen oxides, sulfur dioxide, carbon monoxide, and particulate matter.” The report said that the majority of planned and existing LNG terminals are in communities with higher minority populations and/or low-income populations that already experience high cancer risks and respiratory hazards due to exposure to pollutants. “Research and over a century of lived experience have made clear that fossil fuel production depends on and drives racism.” The report said that each stage of the oil and gas supply chain results in toxic water and air emissions, harmful local environmental pollution, and other impacts that fall disproportionately on Black, brown, Indigenous, people of colour, and low-income communities. “Even in communities of colour, white workers are often hired at disproportionate rates – in Louisiana’s St. John the Baptist parish, home to the third-largest oil refinery in the nation, people of colour represent nearly 70% of the working-age population but only 28% of the manufacturing workforce.” Communities outside extraction and processing zones will also be negatively impacted by expanded oil and gas production and export. Fossil fuel dependency drives harmful boom-and-bust economic cycles while also driving conflict around the world, said the report. The report concluded that the IRA and the Biden administration’s actions continue a long and damaging pattern of federal policy that supports oil and gas extraction, production, and export, exacerbating environmental injustice in overburdened communities also beset by the impacts of racism, poverty, and systemic disinvestment. It said that far from representing a change in course, President Biden and the IRA are doubling down on this harmful legacy by off-shoring pollution through exports and doing little to shift the on-ground reality for millions of people across the fossil fuel supply chain.+
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