Court rules on ‘social costs’ of drilling

CASPER — A federal court has struck a blow to conservationists with a ruling that constrains the use of emission metrics in deciding oil and gas leases, including 120,000 acres of pending leases in Wyoming.

The ruling marks the latest in a battle over the “social cost of greenhouse gases” — a concept that seeks to quantify, in dollars, the amount of harm caused by carbon dioxide emissions.

The decision settles for now the long-running debate over how greenhouse gases are addressed in federal land lease decisions and sets a new standard for a fledgling policy tool whose lack of clear application has vexed energy developers and environmentalists alike.

“It’s significant because, after several court cases and having to go back again and again to improve its greenhouse gas analysis, finally, with this ruling, the judge found very clearly that BLM… has done adequate climate change analysis,” said Kathleen Sgamma, president of the industry group Western Energy Alliance, which intervened in the case to support the BLM’s leases in Wyoming, adding that the ruling brings needed stability to the world of energy development.

Even as the court ruled against conservationists, it simultaneously validated the relevance and reality of emission-based social costs — which include things like harms to agricultural productivity and food security, detriments to human health as well as damage to property from the increase of natural disasters.

Despite that acknowledgement, the court declared the BLM “cannot render a determination… based on [greenhouse gas] emissions or climate impacts alone.”

The decision unearths core challenges in climate policy, where interwoven factors make targeted solutions seem both insufficient and arbitrary, which has led to a growing demand for data.

In some ways, current analysis is sharp and comprehensible.

For instance, data shows that the proposed lease sales in Wyoming could result in added annual emissions equivalent to “400,926 gas-fueled passenger vehicles being driven for one year, or the emissions that could be avoided by operating 384 wind turbines.”

Such information is useful for contextualizing decisions, but it falls short elsewhere and leaves decisionmakers with too much and too little at once.

For example, using a carbon equivalency tool developed by an interagency working group, the BLM estimates that the social cost of the proposed leases in Wyoming is between $300 million and $4 billion — a dramatically wide range that underscores the shortcomings of forecast instruments in the field of climate economics.

Yet even as social costs betray clear limits as a policy tool, they are nonetheless viewed by lawmakers as a vital policy compass for reaching net-zero emissions by 2050 — an internationally agreed on target — meaning the courts are likely to take up the social cost of greenhouse gases again.

This story was published on March 30, 2024.