Estimating the Emissions Impacts of Offshore Oil and Gas Leasing Provisions in The Energy Permitting Reform Act of 2024

Findings

Federally owned lands account a substantial amount US oil and gas production. Federally owned onshore land accounts for 12 percent of national oil production, and 11 percent of national natural gas production. Offshore, federally owned land accounts for 14 percent of oil production and 2 percent of natural gas production. Better understanding the impacts EPRA could have on these lands is critical to assessing the bill and contextualizing its ultimate impacts.

As EPRA does not exclusively address offshore oil and gas leasing, this analysis (put together by Third Way and a team of energy system modelers) should be understood within the context of broader reforms proposed in the bill. To better understand the “all-of-the-above” approach to energy EPRA takes, we recommend RMI’s new analysis on the transmission provisions, RFF’s new modeling on the onshore oil and gas provisions, and Jesse Jenkins work on the liquified natural gas provisions.

In sum, we estimate that the offshore leasing provisions of EPRA could increase cumulative emissions by 0.38 to 0.69 Gt CO₂e by 2050, with incremental annual emissions peaking in the 2040s. This is due to increased leasing of federal offshore land for oil and gas development, as mandated in §301 of the bill. For comparability purposes with the three studies listed above, the focus of this analysis is on cumulative emissions impacts to 2050.  

Three scenarios were developed that project the future of offshore leasing, explorations, drilling, and production. Assumptions for the amount of leased land that goes into production, production lag times, and production-per-well is based on historical data. Industry standard leakage and demand elasticity rates are used. The three scenarios are:

1. A business-as-usual scenario in which auctioning of federal land for oil and gas development continues at the level required by the Inflation Reduction Act;
2. An alternative business-as-usual scenario in which auctioning of federal land for oil and gas development is paused from 2025 to 2028, then resumed in 2029 at the level required by the Inflation Reduction Act; and
3. A policy scenario reflecting EPRA’s provisions in which additional permits for oil and gas development are auctioned from 2028 to 2032.

From there, scenario 3 (EPRA) is compared to scenario 1 (BAU) to estimate the ‘low’ range, whereas scenario 3 (EPRA) is compared to scenario (2) to estimate the ‘high’ range.

In both estimates, offshore oil and gas production increases moderately. However, by spurring additional production in the near-term, the high range induces additional emissions increases. These dynamics highlight broader trends in global oil and gas markets, as US domestic emissions rise with increased domestic output, global emissions rise in tandem thanks to an expanded US offshore footprint that in turn fuels demand worldwide.

Again, it is important to contextualize these findings within the broader modeling context of EPRA, as referenced above. While it is likely that provisions within EPRA §301 will spur a net increase in emissions, this directional impact is best understood as one part of a bipartisan bill that also includes provisions aimed at spurring clean energy and electric transmission, which will result in emissions reductions.