Republican oil and gas policy is currently “drill, baby, drill,” climate be damned. Democrats are committed to meeting the Paris Agreement climate goals, which imply a full decarbonization—and eventual phase out—of the oil and gas industry globally.
While these energy and climate platforms might present on the surface as mutually exclusive, the policies needed to achieve the goals of each camp aren’t inherently in conflict with each other for the coming decades.
In theory, the US could reorient its oil and gas industry around exports, aiming to supply (some of) the last barrels in an economy transitioning to non-fossil alternatives through midcentury.
Source: IPCC says that fossil fuel demand is expected to shrink, but not approach zero by 2050 even in aggressive decarbonization scenarios.
If coupled with incentives, regulations, and trade policies to encourage domestic and global decarbonization, continued US oil and gas production—and potentially even similar levels of oil and gas industry profits—could align with Paris Agreement targets.
Source: Our World In Data. The US is the world’s largest oil and gas producer, but it still supplies less than 20% of total global output—and could credible maintain production and profits through 2050 even if global demand fell by 50+% in that timeframe.
This might sound too good/ridiculous to be true, so I’ll offer as a thought experiment a hypothetical “Paris-aligned” US oil and gas policy platform:
Pillar 1: adopt an “all of the above” approach to fast and fair energy infrastructure regulatory and permitting. The federal government would commit to permitting all types of energy infrastructure (i.e. both fossil and clean alternatives) expediently and equally. It would open up leases on federal land and in federal waters for all types of energy production. If consumers want to buy our energy––regardless of how clean it is––the government would commit to enabling US businesses to supply that demand.
Pillar 2: make US oil and gas production the cleanest globally. Upstream and midstream, this would involve methane and CO2 emissions fees, coupled with subsidies for methane control and carbon capture and storage technology. Regulators could impose strict end-of-life regulations for abandoning production wells, and fund the remediation of old wells whose liability has passed to states/federal custodians. Federal incentives for anthropogenic CO2 flood enhanced oil (and gas) recovery could further decarbonize production. This pillar would ensure that any remaining fossil production has the lowest carbon intensity possible, aiming to match or beat any other producer around the world.
Pillar 3: require domestic industrial fossil fuel consumers to adopt 90%+ carbon capture and storage technology. Such a mandate would force adoption of pollution control technology, while leading to faster adoption of clean alternatives (by making these alternatives more economically attractive than fossil incumbents as I have written in the past). By subsidizing CO2 transport and storage infrastructure, and by reforming permitting and building federal administrative capacity to issue permits robustly, the federal government could enable fossil-fueled industry to meet regulatory mandates cost-effectively in line with EPA’s definition of Best System of Emissions Reductions. And the government can encourage early adoption of carbon capture and protect consumers from price increases with tax credits that phase out over time. This pillar would further decarbonize US oil and gas production, while accelerating the shift to clean alternatives domestically.
Pillar 4: protect and advantage US industry via trade policy. A carbon border adjustment mechanism (CBAM) would ensure that any regulatory mandates in pillars 2 and 3 don’t harm US economic competitiveness. And it would incentivize others to purchase low-carbon oil and gas products, advantaging US producers that can deliver low-carbon oil and gas more competitively than they can deliver undifferentiated products today. Using revenues from a CBAM to support economic development plans in fossil-extractive communities today could further support US economic competitiveness and prosperity over the long run.
Pillar 5: subsidize deployment of innovative clean power, transportation, and heavy industry alternatives. By supporting technologies with the potential to cost less than fossil alternatives, tax credits and innovation programs (like loan guarantees, demand-side subsidies, and direct capex support) can protect US consumers from price increases and decarbonize the economy over the long run. This pillar would also enable the US to export more of its oil and gas production over time.
The goal of laying out these pillars isn’t to show that such a framework is optimal or even desirable, just that it is possible. If Republicans and Democrats did want to negotiate a durable compromise between “drill, baby, drill” and “Paris Agreement-aligned” energy and climate policy, they could do so in a way where both sides win on (what I think are) their core objectives.
Which gets to the real point of this thought experiment: the policy framework outlined above is only possible if each political camp disavows a few sacred tenets. Republicans would need to acknowledge that climate presents real and present dangers; Democrats would need to accept continued, albeit decarbonized, oil and gas production. Compromise might be bad politics, as Democrats and Republicans alike might find that their current platforms energize their base of voters and donors, while the median voter/donor only really cares about energy or climate in an acute crisis. But if there comes a time when politics align on finding common ground on energy and climate policy in the future, a space for constructive negotiation exists even with the vast distance between today’s polarized messaging across parties on energy and climate today.