Earlier this year, Democratic lawmakers in Colorado proposed two pieces of legislation aimed at introducing a statewide ban on oil and gas wells, which would be the first of its kind in the U.S. One of the bills aimed to introduce a ban on new oil and gas drilling permits by bringing an end to new oil and gas licenses starting in 2028. The second proposal would require oil and gas companies to pause production for five months each year.
The proposal of such strict limitations on oil and gas operations had not previously been seen and the proposal of such far-reaching laws could encourage other states to follow suit. Environmentalists are calling for lawmakers to bring an end to oil and gas production, with a particular focus on fracking, a technique that is widely used in Colorado. In 2019, both Oregon and Washington banned fracking, and climate activists are looking to do the same in Colorado. However, passing laws restricting oil and gas production is no easy task, with several other states with Democratic majorities, such as New Mexico, having failed to change the regulation and oversight of oil and gas production in recent years.
Colorado is well-known for its oil and gas production. Its crude output has increased sharply in recent decades, from nearly 2.7 million bpd in 2010 to almost 13.5 million bpd in June this year. Colorado is the fourth-biggest oil-producing state in the U.S., accounting for around 4 percent of the U.S. total crude oil output. The use of horizontal drilling and hydraulic fracturing technologies has helped Colorado to massively increase its oil production in recent years.
In 2019, the Colorado state government passed new rules that provided greater power to local governments to regulate the expansion of the oil and gas industry within their jurisdictions. The new law also obligated the oil and gas regulator, the Colorado Energy & Carbon Management Commission (ECMC), to work with the Colorado Department of Public Health and Environment to address the “cumulative impact” of oil and gas development. This introduction of the rules responded to the rise in public pressure as the oil and gas industry expanded to more urban areas, leading to poorer air quality and widespread health issues.
However, in August, lawmakers complained that Colorado regulators had watered down the new rules on oil and gas oversight, making 17 revisions to the document. In a letter to the ECMC, 24 legislators said, “The current draft deviates significantly from the intent of the laws we worked to pass, jeopardising the protection of disproportionately impacted communities and allowing operators broad leeway to exceed pollution thresholds.” Rep. Elizabeth Velasco stated, “The agency has prioritised industry over public health and safety.”
Other states are also addressing concerns about the longevity of oil and gas, as the public is increasingly putting pressure on legislators to support a green transition. In New York, legislators are exploring a potential ban on the use of carbon dioxide for oil and gas recovery. Meanwhile, in 2022, California passed a law banning drilling for oil and gas within 3,200 feet of certain structures, such as homes, schools and hospitals. This drove down the number of new well licenses, although the law has not yet gone into effect.
Vermont is leading the way on oil and gas legislation and intends to go even further this year. In 2012, it became the first U.S. state to ban the practice of fracking. The state now aims to pass a new measure to force oil and gas companies to pay for damages caused by the climate crisis. This echoes the aims of the Environmental Protection Agency’s Superfund programme, which requires companies to pay for the clean-up of toxic waste. If passed, the new measures would charge oil and gas firms operating in Vermont billions of dollars for their past emissions.
Elena Mihaly, the vice-president of the Conservation Law Foundation’s Vermont chapter stated, “If you contributed to a mess, you should play a role in cleaning it up.” The passing of the bill will not be straightforward, and it is likely to be in the court for a long time before we hear a verdict. However, if passed, it could provide a framework for other states to follow.
Many legislators in states across the U.S. are heeding the calls of the public and introducing ambitious new rules to impose stricter regulations on the oil and gas industry. This reflects the aims of the Biden administration’s Inflation Reduction Act and other national policies that aim to accelerate a green transition. However, while there is widespread support for such policies, getting far-reaching state climate laws passed will be an uphill battle that could take several years and incite strong opposition from the industry.
By Felicity Bradstock for Oilprice.com
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