HOUSTON — Oil and gas industry leaders say they’ve seen a big shift in tone from the Biden administration over the past year, helping to smooth over one of the president’s rockiest relationships.
He then set a pace that infuriated many in the industry, using his first weeks in office to block the Keystone XL pipeline and suspend federal oil and gas leasing, among other moves targeting fossil fuels.
But in the past year, the Biden administration has resumed oil leasing under terms of the major climate-and-energy-spending law Biden signed last year. The president has backed up his previous support for more new laws to speed up infrastructure permitting, including for natural-gas pipelines. And, to avoid instability emanating from Russia’s attack on Ukraine, the Biden administration promised to help grow U.S. natural gas exports and spearheaded efforts to get more gas to European allies.
The president’s more cautious approach toward phasing out fossil fuels culminated last month at his State of the Union address.
“We’re going to need oil for at least another decade … and beyond that,” Biden said, recalling what he has told industry leaders. “We’re going to need it.”
For industry executives, it is evidence that pragmatism is winning out over more aggressive environmental policies. Shaken at times by rising energy prices and Russia’s influence as a giant oil and gas exporter, the administration has more consistently accepted and supported fossil fuels’ having a place in the world’s energy mix, at least for now.
“Everyone is moving to the middle,” said François Poirier, chief executive of TC Energy, the Canadian developer once behind Keystone XL. “Because pragmatism has shown you can’t ignore reliability and affordability in the quest for sustainability.”
For their part, White House officials say the president remains as committed as ever to the energy transition, noting that Biden rolled out a budget this week that includes significant investments in clean energy.
But environmentalists have also noticed a shift. They fear more pragmatic short-term policies could slow the long-term adoption of cleaner fuels to address climate change. Many are watching for a decision expected from the Biden administration within days on permits for the largest proposed oil development in the country, ConocoPhillips’s Willow project in Alaska.
“They’re highly cross-pressured. And the president has not been able to keep all his promises,” said Abigail Dillen, president of the environmental law firm Earthjustice. “This is without a doubt the most ambitious administration on climate in our history. And I know the commitment is real. But I am very concerned.”
At a yearly energy conference here in Houston known as CERAWeek, executives from some of the world’s largest oil and gas companies have called for world leaders to foster a more “orderly” — probably slower — transition to cleaner energy. And many have lauded Biden for, they say, moving in that direction, helping to calm investor fears about oil’s place in the world and to restore the industry’s status on Wall Street.
Biden’s relationship with the oil and gas industry has long been testy. He has accused it of polluting and price-gouging, criticizing executives for spending massive profits last year to help shareholders rather than reinvesting more in supply growth to help consumers. Executives have called his energy policy incoherent, and in turn blamed his environmental priorities for the severe price spikes of last year.
At CERAWeek a year ago — less than two weeks after Russia’s attack sent commodity prices soaring — Biden officials said the attack showed Washington “should double down and triple down on the transition.”
Industry leaders punched back. Oil’s top advocate in Washington, the American Petroleum Institute’s Mike Sommers, said Biden was exacerbating problems by castigating U.S. oil companies from the White House rather than hosting their executives for in-person meetings there.
While differences remain, company executives who felt the administration launched “a cold war” against them in its first year feel it works more constructively with them now, Sommers said in an interview Monday. The administration’s softening rhetoric alone has helped.
“The president’s statement at the State of the Union … shouldn’t be underestimated,” said Sommers, the API’s president. “It’s not like, you know, open doors. But there’s a regular dialogue.”
Sommers’s statement this week contrasts with a tweet he sent following Biden’s State of the Union address, when the API leader criticized Biden for divisive attacks on fossil fuel industries “that employ millions of Americans, pay taxes and provide energy for the world.”
U.S. officials say they have long backed a balanced and nuanced energy strategy and only recently has the industry given them credit for it. Even from the debate, Biden had said the transition would happen “over time.” And it was still in his first year when Biden, with help from the president’s energy envoy, Amos Hochstein, and Energy Secretary Jennifer Granholm, began pushing, often very publicly, for more oil and gas production.
Granholm, during a keynote lunch speech Wednesday, echoed language common among oil and gas company executives in pushing for “a managed transition,” in which government and business work together methodically to ensure they can still meet consumer energy demand while new, cleaner fuels are developing.
She reiterated Biden’s comments that the country will still use fossil fuels in the middle of the century, but implored people in the room to develop the technology that allows people to burn it without releasing greenhouse-gas emissions.
John D. Podesta, a top White House climate adviser, spoke on the first day of the conference to tout White House efforts to speed up permitting of projects. But he focused almost exclusively on expediting electric transmission projects for clean energy.
Russia’s war in Ukraine has heightened the urgency on all fronts, said Jose W. Fernandez, State Department undersecretary for economic growth, energy and the environment. U.S. officials are emphasizing the need to quickly build more clean-energy capacity for the long term, while recognizing that key allies in Europe face potential energy shortfalls now. They see natural gas imports, especially from U.S. suppliers, as the best way to fill the immediate gap, Fernandez and others said.
“It has highlighted the need to really accelerate the energy transition,” he said in an interview Tuesday. “At the same time, in the short term, we’ve got some challenges to deal with, and that’s what we’ve also focused on.”
The Biden administration and its allies have made tough choices to ensure people can still get affordable energy, and it’s a delicate balancing act, said Mark Brownstein, senior vice president, energy transition at Environmental Defense Fund. The trend could threaten the climate if these new fossil fuel investments that are now relatively short-term — with returns over five years or fewer — become longer-term investments that seriously delay the transition to cleaner fuels, he added.
“That’s when we become really concerned,” he said.
Industry executives and other gas advocates often promote gas as a climate solution, a “bridge fuel” between dirtier fossil fuels and still-developing renewables. Administration officials over the past year have shown more willingness to support its use as a way to replace more coal.
Toby Rice, chief executive of the largest U.S. natural gas producer, EQT, credits the administration for supporting money in last year’s Inflation Reduction Act for carbon capture, a technology he says is an imperative for eliminating the oil and gas industry’s emissions. And he says the administration has helped support efforts to get more gas exports to Europe and has been an ally in pushing Congress to pass new laws that can speed up permitting for energy infrastructure projects.
“I think the messaging from the White House has been extremely favorable,” Rice said, adding later that energy-security concerns have driven their change. “There’s a lot more focus now.”
Many executives also said their own industry is changing, too. Several here said the Inflation Reduction Act’s climate and energy programs are creating new opportunities for their businesses in clean-energy technology. That has them embracing — or at least accepting — a new era in which government is intervening deeply into the economy and partnering with the private sector.
At TC Energy (formerly known as TransCanada), Biden’s decision on Keystone XL came as company executives were realizing they had to adapt their business to the heavy influence of policymakers. Keystone was once an $8 billion project, but with climate change now so heavily dictating energy policy — and consumer demand — none of the company’s current $34 billion capital-expenditure, or “capex,” program is tied to oil.
As demand rises for natural gas, the company is focusing more on that fuel to replace coal, and on electricity, where they feel they have more support from Washington and other North American governments. The Keystone XL experience shows that companies risk big failures if they buck the priorities of governments, said the chief executive, Poirier.
“We tried butting heads and we didn’t get anywhere,” he added. “You can’t prosecute a $34 billion capex program if you can’t get along with who’s in charge.”