January 25, 2021

Biden Administration Takes Immediate Steps To Roll Back Oil And Gas Drilling

As one of his first acts in office, President Joe Biden issued executive actions to rejoin the Paris Climate Agreement and to cancel the permit that would allow expansion of the Keystone XL pipeline.

As a reminder, the Trump administration had officially withdrawn from the Paris agreement in late 2020 and had approved a permit for the Keystone pipeline that the Obama administration had rejected several years ago. The international climate agreement would require the United States to reduce greenhouse gas emissions by 26 percent by 2025, compared to 2005 levels – a goal clearly in line with President Biden’s own agenda. The new commander in chief has described reentering the climate agreement as a “down payment” on his future plans to address climate change, which call for achieving net-zero emissions by 2050.

According to The Hill, the U.S. Chamber of Commerce (USCC) praised President Biden’s decision to re-enter the pact, arguing that “it is critical that the United States restore its leadership role in international efforts to address the climate challenge.”

The USCC and others criticized President Biden’s Keystone decision, however.

Even before the Biden administration made its announcement, the Canadian government said it opposed the policy. Canadian Ambassador to the U.S. Kirsten Hillman said, “The Government of Canada continues to support the Keystone XL project and the benefits that it will bring to both Canada and the United States.” Hillman also noted, “Not only has the project itself changed significantly since it was first proposed, but Canada’s oilsands production has also changed significantly. Per-barrel oilsands GHG emissions have dropped 31 per cent since 2000, and innovation will continue to drive progress.”

According to The Associated Press, Alberta Premier Jason Kenney pledged to pursue legal damages against the U.S. federal government.

In the United States, Toby Mack, president of the Energy Equipment and Infrastructure Alliance, which MSCI is a member of, noted President Biden’s decision:

  • Sent 10,000 union construction workers home without jobs (indeed, according to The Hill, the firm that owns the pipeline cut 1,000 jobs the day after President Biden’s announcement);
  • Denied employment to 30,000 additional employees throughout the country at a time of historic job insecurity due to COVID-19;
  • Badly damaged U.S.-Canada political and commercial relationships;
  • Denied much-needed economic opportunity to thousands of Native Americans;
  • Stranded billions of dollars of investments by companies supplying equipment, materials, and services to the project; and
  • Guaranteed that the Canadian crude oil not shipped via Keystone XL will nevertheless travel by rail to U.S destinations in a far less safe, less environmentally sound and less economical way.

The Canadian Manufacturers and Exporters (CME) also released a statement opposing cancellation of the Keystone permit. In related news: on January 21, the U.S. Department of the Interior issued an order that bars the department from pushing ahead with any new oil and gas leasing or drilling permits for federal lands, and that blocks any new major mining actions.