President Biden’s proposed program for offshore drilling leases, released this month, was immediately met with heated criticism. Industry groups suggested it would further drive up oil prices, which increased sharply after Russia’s invasion of Ukraine. Environmentalists characterized it as a setback to climate action, contrasting it with Mr. Biden’s campaign pledge to end fossil fuel leasing on federal lands for good.
In reality, neither argument is convincing. The Biden administration’s proposal — which opens the door to up to 11 potential lease sales, 10 in the Gulf of Mexico and one off the coast of Alaska — would have little impact on current energy prices. It would take between five and 10 years to produce oil after a new offshore lease issuance, according to the Interior Department, while more than three-quarters of already-leased offshore federal waters are not in production.
At the same time, environmental groups claiming the proposal undermines Mr. Biden’s climate commitments overstate the degree to which this poses a threat to U.S. and global climate goals. It scales back the Trump administration’s draft plan to open 47 lease sales across every coastal area in the country and bans exploration on the Atlantic and Pacific coasts. Moreover, offshore drilling in federal waters makes up a fraction of fossil-fuel production.
The proposed program, which will now open to public comment for 90 days, leaves open the possibility of holding no lease sales at all. This would be unwise. The world must urgently transition away from fossil fuels, or it risks the increasingly catastrophic impacts of climate change. But as that transition is underway, people will still need to consume some oil and gas. Ending new leases today would not slash U.S. consumption of fossil fuels; it would, however, transfer the risk of producing them to other countries, including those that have fewer regulations in place to protect oceans, wildlife and people.
A better approach would be to target the demand for dirty energy by placing a price on polluting fuels that reflects their social and environmental costs. For offshore drilling, this could start with increasing royalty rates, which have been set at 18.75 percent for most leases since the George W. Bush administration. An analysis by Brian C. Prest of Resources for the Future, an independent research nonprofit, suggests that raising this rate to 25 percent for all federal leases would not result in a major increase in oil prices but would raise billions of dollars in federal revenue.
While Mr. Biden’s offshore drilling proposal is a convenient target for ire, there are far more consequential policies to reduce greenhouse-gas emissions and transition to a greener economy. We have long advocated for a carbon tax, which offers the most efficient way to drastically cut emissions. Beyond that, the administration should focus on making cleaner fuel and greener products more affordable and available, investing in research and innovation and boosting efficiency programs. A deal with some of these elements is still on the table, as Mr. Biden and congressional Democrats continue negotiations.
Ultimately, those policies are what will make or break Mr. Biden’s climate agenda.