Washington to Charge Oil Companies More for Concessions to Drill on Federal Lands and Waters | Economy

Four days after President Joe Biden confirmed the release of 50 million barrels of oil from the US emergency reserves to try to reduce energy prices, the Department of the Interior announced Friday that it will charge more to the fossil fuel companies in exchange for prospecting and drilling concessions for federal lands and waters. The increase in the payment of royaltis the oil companies is due to an attempt to obtain more income from the activity – this is the first increase in royalties since 1920 – but also to the objective of safeguarding and preserving the environment.

The 18-page report from the Department of the Interior describes an “outdated” federal oil and gas field lease program that “does not provide a fair return to taxpayers, and takes even less into account the resulting climate-related costs.” Specifically, the long-awaited document recommends a review of the rents and royalty fees charged for drilling both onshore and offshore, based on the estimate that the government lost up to $ 12.4 billion in revenue from drilling on land. from 2010 to 2019 because royalties have been frozen for a century.

The decision involves increasing the government’s rate – currently 12.5% ​​of the profits that fossil fuel prospectors must pay to the federal government in exchange for drilling on public lands – to bring the rate in line with the higher rates charged by the majority of private owners and gas producing states. He also defends the increase in the amounts that companies must dedicate to cleaning and regenerating the environment before starting to build new wells.

Although the report focuses on the fiscal revenue to update the leasing program, Interior notes that they will also consider how to incorporate the real cost of climate change into the price of permits for the extraction of new fossil fuels. The Biden Administration this year set its “social cost of carbon” at $ 51 per tonne of emissions, but suggested that the amount could rise as researchers reevaluate new estimates of the damage caused by wildfires, persistent heat waves. , droughts and catastrophic floods. Recurrent phenomena in recent years, with an increasingly pronounced incidence, especially in the west of the country.

“The direct and indirect impacts associated with oil and gas development on our nation’s land, water, wildlife, and the health and safety of communities, particularly communities of color, who bear a disproportionate burden of pollution, deserve a fundamental rebalancing of the federal oil and gas program, “the report explains.

The United States Geological Survey estimates that drilling on public land and in federal waters is responsible for nearly a quarter of the greenhouse gases generated by the United States. Shortly after arriving at the White House, President Joe Biden launched the initiative América the beautiful, with the objective of preserving 30% of the lands and waters of the United States by 2030. The campaign aims to reinforce the protection and safeguarding of habitat by both local and federal administrations. During the election campaign, Biden had promised to stop granting new concessions to drill on public lands, so the Interior Department’s decision has not been welcomed by activists and environmental groups.