Supply-Side Reforms to Oil and Gas Production on Federal Lands: Modeling the Implications for Climate Emissions, Revenues, and Production Shifts An examination of three proposed policies to reform the federal oil and gas leasing program: increased royalty rates, carbon adders, and a ban on new leases on federal lands. Download Date Sept. 16, 2020 (Updated March 15, 2021) Authors Brian Prest Publication Working Paper Reading time 1 minute Abstract Policy reforms targeting federal oil and gas production are increasingly considered as approaches to reduce CO2 emissions. Yet such policies are controversial, in part due to leakage concerns. I model the effects of three such policies, including carbon adders and a leasing ban. Accounting for leakage, a leasing ban reduces emissions by about one-quarter of the amount originally projected for the Clean Power Plan but reduces royalty revenues by $5-6 billion annually. Carbon adders reduce emissions less but raise billions of dollars annually. Charging the same carbon adder for both oil and gas is not revenue-maximizing because gas production is more sensitive to the adder. I estimate revenue-maximizing adders of $50/ton for oil and $5/ton for gas, but higher revenues come at the cost of higher emissions than achieved by charging adders equal to the social cost of carbon. These results highlight important policy trade-offs in federal leasing reforms. This paper was revised in March 2021. For the original paper, please click here. Key Findings: Infographic This infographic shows the effects of the three policies studied on government revenues and emissions associated with oil and gas production on federal lands. Topics Industry and Fuels Oil Natural Gas Public and Private Lands Policy Design and Evaluation Authors Brian C. Prest Related Content PRESS RELEASE — SEP 16, 2020 Finding the “Sweet Spot” for Federal Oil & Gas Leasing Reform Finding the “Sweet Spot” for Federal Oil & Gas Leasing Reform MEDIA HIGHLIGHT — NOV 26, 2021 Oil and Gas Companies Should Pay More to Drill on Public Lands and Waters, Interior Department Says Oil and Gas Companies Should Pay More to Drill on Public Lands and Waters, Interior Department Says MEDIA HIGHLIGHT — NOV 25, 2021 Will An Extra 50 Million Barrels of Crude Lower US Gasoline Prices? Will An Extra 50 Million Barrels of Crude Lower US Gasoline Prices? 1616 P ST NW, SUITE 600 WASHINGTON DC, 20036 202.328.5000 Topics All Topics Electric Power Climate Risks and Impacts Adaptation and Resilience Industry and Fuels Land Use, Forestry, and Agriculture Comprehensive Climate Strategies Transportation Events All Events Conferences Policy Leadership Series RFF Live Webinars Workshops Publications All Publications Books Data Tools Explainers Issue Briefs Journal Articles Reports Testimony and Public Comments Working Papers About About Us People Donate Our Supporters Ways of Giving Careers Subscribe Newsroom Contact Resources Magazine Resources Magazine Resources Radio Common Resources Subscribe Search © 2021 RESOURCES FOR THE FUTURE PRIVACY POLICY SITE BY TORCHBOX