“Drill, Baby, Drill” became a popular campaign mantra back in the 2008 election cycle. But now we’re hearing the opposite call: “Leave It in the Ground.”
These calls come from environmentalists who see the end of drilling and mining as the way to avoid disruptive climate change. They direct these calls toward the federal government because it is estimated that about half of the carbon in technologically recoverable fossil fuels in the United States is on public lands.
Is there a middle ground that can supply the energy we need without causing significant climate damages? Yes. And it doesn’t involve exploiting all available resources, nor banning their use.
What if we continued to lease the rights to access fossil fuels on federal land but required the leases and royalty payments to reflect the full climate damages from these fuels? Doing so would put the market to work by unlocking fossil fuels that have the highest value in relation to their impact on the climate. The bonus: It provides money to pay for some of the damage of climate change.
We’ve seen the benefits of using our domestic resources over the last decade as the amount of our energy coming from domestic oil and gas resources increased 54 percent. Chiefly, we have lower fuel prices. We now pay 74 percent less for natural gas and 25 percent less for petroleum, compared with 2005. Further, net imports will account for just 23 percent of American liquid fuel supplies this year — down from 60 percent in 2005 — with important energy security benefits. Our carbon emissions are also below 2005 levels, with cheap natural gas having taken significant market share from coal, which is more carbon intensive.
At the same time, the combustion of fossil fuels causes climate change that is projected to impose myriad costs around the world. But in this regard, not all fossil fuels are created equal. The value per unit of energy, measured by the market price, is greater for some (like petroleum) than others (like coal). Further, some contain more carbon or result in the release of more emissions because of other factors like the extraction and transportation process, and inflict greater climate damages. Knowing the monetary value of climate damages associated with a ton of carbon emissions is therefore the key to this whole problem…