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State LCFS Profile: Massachusetts

Friday, February 26th, 2010

State of Play: LCFS in Massachusetts

On July 28, 2008, Massachusetts governor Deval Patrick signed the Clean Energy Biofuels Act, directing the state to develop and implement a Low-Carbon Fuel Standard (LCFS). Working hand-in-glove with the Boston-based Northeast States for Coordinated Air Use Management (NESCAUM) office, Gov. Patrick convinced other governors to sign onto the Dec. 2009 NESCAUM-drafted memorandum of understanding (MOU), thus committing their states down a path whose terminus is the ultimate adoption statewide of an LCFS.

In signing that memorandum, Gov. Patrick characterized the LCFS as a policy initiative that would make Massachusetts “more energy independent and environmentally sustainable.” Unfortunately, for reasons described below, an LCFS is likely to have a disproportionately severe impact on the Bay State relative to other state signers of the MOU – without doing a thing to reduce the global concentration of carbon dioxide in the atmosphere.

Production and Distribution: How/Where Does Massachusetts Get Its Energy?

Massachusetts has no homegrown petroleum reserves, and doesn’t refine any petroleum either. The state is thus almost completely reliant on fuel imports originating outside the state and nation, which arrive in Boston Harbor via barge and tanker. Additionally, refined product is exchanged between Massachusetts and its neighbors through the use of two small-capacity pipelines, which link up ports in Connecticut and Rhode Island to Springfield.

According to data collected by the Energy Information Administration (EIA), the vast majority of the state’s gasoline, diesel fuel, kerosene (jet fuel) and home heating oil is imported from refineries in Canada and the U.S. Virgin Islands, with smaller percentages barged in from the United Kingdom and Portugal. Unfortunately, under the LCFS, refined energy supplies from both Canada and the Virgin Islands would be targeted for gradual elimination – since both sources use oil that scores poorly under the bizarre accounting methodology of the LCFS.

LCFS Impact on Massachusetts

Plainly put, no state in America is more heavily reliant on heating oil than Massachusetts. In the Bay State alone, more than 963,000 homes — almost half – use it to keep warm during the winter. All told, Massachusetts consumes 2 billion gallons of the stuff every year, accounting for almost 20 percent of the nation’s heating oil demand.

What does the state’s dependence on heating oil have to do with the imposition of an LCFS? According to a statement in the MOU initiated by Massachusetts and signed by 11 governors in December, home heating oil will receive no special regulatory treatment under an LCFS – that is, any effort to prevent LCFS-targeted gasoline and diesel from entering the state will also be extended to home heating oil, which tends to come from the exact same places.

As a result, Gov. Patrick’s support for an LCFS could lead to higher energy prices for those who can least afford them – especially middle- and working-class families and retirees living on fixed-incomes.

In 2009, Massachusetts secured more than $213 million from the federal Low-Income Home Energy Assistance Program (LIHEAP) to help subsidize the purchase of these home heating resources for those in need. Unfortunately, under the LCFS, a large portion of this fuel oil may be targeted for elimination, adding additionally strain to an already over-extended LIHEAP budget.

Tags: Massachusetts
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State LCFS Profile: Maine

Friday, February 26th, 2010

What Is a Low-Carbon Fuel Standard (LCFS)?

Sold to the public as a way to lower the carbon content of fuel and reduce the amount of CO2 emitted from our tailpipes, in reality the Low-Carbon Fuel Standard (LCFS) isn’t about making the fuels in your vehicle any better, cleaner or more affordable than they already are – it simply seeks to render those fuels more difficult to find and even more expensive to purchase.

State of Play: LCFS in Maine

In 2009, Maine’s Dept. of Environmental Protection (DEP) cited the LCFS as one of 12 emerging issues as part of its annual Government Evaluation Act Report. By December of that year, Gov. Baldacci joined 10 other northeast and mid-Atlantic states in signing a Memorandum of Understanding (MOU) addressing an LCFS – a memo that initiates the process of implementing a statewide LCFS regime in Maine.

Following Gov. Baldacci’s announcement, James Brooks, director DEP’s Air Quality Bureau, told reporters that his department will likely conduct an independent analysis aimed at assessing how the imposition of an LCFS may ultimately impact Maine residents.

Production and Distribution: How/Where Maine Gets Its Energy

Maine has no fossil fuel reserves, and produces less than 35 percent of the energy it consumes. But thanks to the coastal ports of Portland, Searsport and Calais, Maine is able to receive petroleum products from a number of friendly foreign sources — with over 60 percent of those imports coming from Canada. Maine also reaches across its border for refining capability, receiving crude oil through its ports and sending product via the Portland Pipeline to refineries in Quebec and Ontario.

Like many northeastern states, Maine is also highly dependent on others for its essential supplies of home heating oil. In fact, Maine has the highest share of households in the nation that use fuel oil for space heating during winter months. Again, the state leans heavily on Canada for those supplies – and thus stands to be tremendously impacted by an LCFS policy that explicitly targets Canadian energy.

LCFS Impact on Maine

As mentioned, Maine’s reliance on Canadian energy imports both for the purposes of fueling vehicles and warming houses renders the state among the most vulnerable to price and supply disruption under an LCFS regime.

As they often do, these impacts are likely to fall disproportionately upon those who can least afford them. Earlier this year, President Obama issued a budget blueprint that proposes a $1.8 billion cut in the federal Low-Income Home Energy Assistance Program (LIHEAP) – a fund that’s used to defray some of the costs associated with the purchase of heating oil for those in need. Under the LCFS, that heating oil is likely to see a dramatic increase in cost – and that, coupled with the reality of less money available pursuant to the LIHEAP program, may mean even tougher winters ahead for the residents of Maine.

Tags: home heating oil, Maine
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Fmr. NHL Goalie Takes Slap Shot Directly at U.S. Energy Security

Thursday, February 25th, 2010

Remember the 1994 Stanley Cup finals? As you may recall, Mike Richter – the goalie then for the New York Rangers – played a significant role in securing Lord Stanley that year, bringing a close to the fabled “Curse of 1940.” In fact, in an action-packed, edge-of-your-seat Game 4 shoot-out, Richter famously shut down Pavel Bure – the Vancouver Canucks sharp-shooting, fast-flying forward.

And while Richter effectively handled the “Russian Rocket” in ’94, raining on the parade of Canadian hockey fans, the U.S. Hockey Hall of Famer is now working to undercut our nation’s energy security.

Taking to the pages of Minnesota’s largest newspaper, Richter – the outreach chair on the Sierra Club’s National Advancement Council – writes this in a recent Star Tribune column under the headline “Of Canada, the Olympics and dirty oil”:

If we allow Canada’s oil sands project to creep across our border, it will lock our nation into dependence on yet another foreign source of oil, just as our local clean-energy industry is beginning to thrive.

However, Canada currently helps meet nearly 17 percent of the total fuel demands that keeps the American economy running each day. In fact, Canada – not Middle Eastern oil, or oil derived from other unstable, unfriendly regions of the world – is our nation’s top oil provider. So how much of Minnesota’s oil comes from Canada’s sands? 83 percent. And why does Mr. Richter support denying Minnesota consumers, manufacturers, families and seniors living on fixed-incomes access to these affordable North American energy reserves? You should ask him.

Richter adds this in his column:

Right now, we are poised to become a leader in the global clean-energy economy. By taking the steps to ensure that we are the leader of the next industrial revolution, we can reignite our economy, bolster national security and improve the health of our people.

One of the most important things we can do to demonstrate that leadership is to say no to Canada’s oil sands. For now, the decision rests with the Obama administration. By denying permits for pipelines and refineries in the United States, President Obama can signal to the world that we are serious about fighting climate change and helping American clean-energy technologies thrive.

Everyone – including Mr. Richter – is entitled to their own opinion. However, no one is entitled to their own set of facts.

Consider this: If the federal government, or individual states, were to ban Canadian oil from reaching American consumers – as a Low-Carbon Fuel Standard (LCFS) seeks to achieve – where would the fuel come from to meet our nation’s growing energy needs and to help drive economic activity and growth?

Lighter forms of crude are generally found and produced in some of the most hostile regions of the world. Understanding that the Energy Information Administration (EIA) – the U.S. Energy Department’s statistical and analytical agency – has determined that our nation will continue to rely on oil until at least 2035, is it responsible or commonsense policy to turn our backs on Canadian oil to meet these rising demands, and to favor oil from faraway, hostile regimes?

But assuming that the U.S. adopts the misguided policies that Richter is advocating for, what are the ultimate consequences? Who are the winners and losers?

American consumers – who will be forced to pay even higher prices at the pump – are the ultimate losers.

And if the U.S. banned Canadian energy, does that mean global greenhouse gas (GHS) emissions will decrease? Absolutely not. China – our chief competitor in the global economy – is working aggressively to secure access to Canada’s oil sands. Some independent experts – and even a top advisor to President Obama – have determined that GHGs would actually increase under such a unilateral ban on these resources from the U.S.

The winners? Well, those who have an economic and financial interest in ensuring that our most affordable, reliable and secure forms of energy become prohibitively expensive. Say, for example, a venture capital firm that invests in alternative forms of energy that simply cannot compete with more affordable forms, such as Canada’s oil sands. That’s funny, because Mr. Richter is the founding partner of Environmental Capital Partners (ECP) — a firm that does just that. Coincidence? We’ll let the American consumers decide.

As U.S. consumers continue to weather these terribly difficult and challenging economic times and hardships, and more and more jobs continue to be lost, leaders in Washington and in state capitols must focus on advancing energy policies that aim to keep prices stable and affordable by promoting more energy of all forms, and using what we have more wisely at the same time. Regrettably, banning Canada’s oil – the core of a LCFS – would only deepen our dangerous dependence on oil from unfriendly regions of world, and severely hit struggling consumers in their pocketbooks at a time when they can afford it least.

Tags: Consumer Energy Alliance, Environmental Capital Partners, Low Carbon Fuel Standard, Mike Richter, oil sands, Secure Our Fuels
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JUST THE FACTS: Efforts to Block Canadian Energy Bad News for US Consumers, Christmas Early for China

Tuesday, February 23rd, 2010

Last week, following the announcement that Whole Foods and Bed Bath & Beyond intend to turn their corporate backs on secure, affordable, North American energy derived from Canada’s oil sands for their transportation fleets, a host of stories from both Canadian and U.S. news outlets quickly surfaced. However, Bed Bath & Beyond is beginning to hedge its position, understanding full-well how critical the U.S.-Canadian trading partnership is, especially as it relates to affordable energy. BNET reports this:

Turns out, though, that boycotting oil sands also puts your brand at risk. Just one day after the big announcement BB&B distanced itself from the boycott, Alberta consumers and businesses called for a boycott of BB&B stores in the province in response to the attack on oil sands, the Globe and Mail reported.

Consumer Energy Alliance’s (CEA) fired off a statement shortly have last week’s misguided Whole Foods announcement, which was highlighted in a Calgary Herald article:

CEA flooded the media with an e-mailed statement by its vice-president, Michael Whatley, saying the Whole Foods boycott is “hypocritical in the best case and downright disingenuous in the worst.” As Whatley said of the Whole Foods situation: “We recognize this may be an opportunity to work with these companies to educate them on what the oil sands are really about, and how they can be used to create jobs here at home and strengthen America’s energy security, all while protecting and preserving our environment.”

Globally, the thirst for affordable energy continues to swell, especially in developing and emerging nations, such as China. Whole Foods’ objective – to ban Canadian oil sands, which would be achieved under a federal, one-size-fits-all Low-Carbon Fuel Standard (LCFS) – will result in higher prices at the pump for U.S. consumers, and a deeper, more dangerous dependence on some of the most unstable and unfriendly regions of the world to keep our economy fueled.

As it relates to China’s strategic positioning to secure Canada’s job-creating energy reserves, BNET reports:

The industry is already preparing for the possibility of a real threat from U.S. businesses and government policies that would reduce use of oil sands: They’re looking east to China. PetroChina recently acquired a majority share in two oil sands projects — an investment that required Canadian government approval. “There will definitely be more,” Prime Minister Stephen Harper told the Guardian.”

And under the headline “China eyes tar sands as Western firms back off,” Greenwire reports:

As U.S. and European companies scale back investment in oil sands due to environmental and cost concerns, Chinese oil companies are making their largest investments to date. “Expect more Chinese investment in the resource and energy sectors,” Canadian Prime Minister Stephen Harper said.

“There will definitely be more.” Peter Tertzakian, chief energy economist at ARC Financial Corp. in Calgary, said China’s investments currently appear to be a “token toehold” in the market. He said the Canadian government appears to have become more willing to accept Chinese investment in the oil sands. “From a continental energy security perspective, of course there is a little more hesitation when emerging powers come here, but the Canadian government has over the last year indicated more willingness to do business with China,” Tertzakian said.

Like many American consumers, CEA is concerned that China’s insatiable appetite for energy resources to continue to aggressively grow its economy, coupled with the consideration of job-killing LCFS proposals across the U.S. and in Washington, could send a troubling message to our strongest and most important trading partner to the north.

Interestingly, this important topic will likely be discussed later this week in Washington when the nation’s governors and seven of Canada’s premiers meet at the National Governor’s Association (NGA) conference. The Canadian Free Press’ Lee-Ann Goodman reports this under the headline “Premiers, governors talk tough topics; Energy, trade, environment lead agenda”:

The premiers of Ontario, Quebec, Saskatchewan, Manitoba, Nova Brunswick, Nova Scotia and Prince Edward Island were scheduled to meet U.S. governors for an hourlong session entitled Common Border, Common Ground at the winter meeting of the National Governors Association, an influential get-together that often influences policy for both the White House and Congress. The premiers aren’t exactly on the same page on environmental issues. Charest has criticized Ottawa for insisting that Canadian greenhouse gas policy must be in lockstep with the Americans, while Wall and other oil-producing provinces are in agreement with the feds that the U.S. and Canada must be in synch.

With the threat of an LCFS being adopted in a host of states and regions throughout the U.S., including the Mid-West, the Northeast and the Mid-Atlantic, policymakers must engage in a strong dialogue about the critical role that Canada continues to play in ensuring that energy prices remain stable and affordable for consumers, families, seniors and small businesses – especially during this time of generational economic downturn.

Hopefully, and for the sake of struggling consumers across the nation who cannot afford higher prices at the pump, this week’s meeting in Washington will shed like on and underscore the dangerous economic and security realities associated with an LCFS.

Tags: Bed Bath & Beyond, Canadian oil sands, Consumer Energy Alliance, LCFS, Low Carbon Fuel Standard, Michael Whatley, National Governor's Association, oil sands, PetroChina, Secure Our Fuels, Whole Foods Market Inc.
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State LCFS Profile: Delaware

Wednesday, February 17th, 2010

What Is a Low-Carbon Fuel Standard (LCFS)?

State of Play: LCFS in Delaware

On December 30, 2009, Delaware joined 10 other Northeast and mid-Atlantic states in endorsing a plan that calls for the eventual region-wide adoption of a blanket LCFS policy. On the day that he signed the memorandum, Gov. Jack Markell lauded the LCFS as a way to “improve our environment and create jobs” by “join[ing] other states in addressing carbon emissions.”

Unfortunately, what Gov. Markell failed to mention is that an LCFS doesn’t actually seek to impact the amount of carbon emitted from our tailpipes – and can’t. According to EPA, the carbon content of gasoline is constant – 19.4 pounds of carbon dioxide emitted for every gallon of fuel combusted.

Production and Distribution: How/Where Delaware Gets Its Energy

Delaware produces none of its own oil or natural gas, and just recently experienced the closure of its only refinery (although news last week indicates that it may re-open in the future). Because of that, the First State is almost completely dependent on others for the energy it needs to run – with most of the state’s petroleum resources piped in from the Gulf Coast, and imported via tanker from foreign suppliers in Canada, Russia, Angola and Azerbaijan.

Nearly 300,000 barrels of oil received at the Port of Wilmington each month is considered “heavy” under the byzantine accounting methodology of the LCFS – and would thus be targeted for eventual elimination.

LCFS State Graph: Delaware

LCFS Impact on Delaware

Currently, more than 20 percent of households in the state of Delaware use fuel oil as their primary energy source for home heating – not as high a percentage as one would find in New England, but still considered a major source of energy for more than 200,000 Delaware residents. Regrettably, under an LCFS, those who rely on this heating oil are likely to see those resources grow increasingly expensive, as shipments of refined product derived from LCFS-targeted oil become more scarce.

Tags: Delaware, Governor Markell
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CEA Comes Out Swinging in Debate Over Secure, Canadian Energy

Tuesday, February 16th, 2010

Last week, Whole Foods Market Inc. and Bed, Bath and Beyond Inc. announced plans to eliminate Canadian oil sands from its supply chain companies — in partnership with the environmental pressure group ForestEthics. The Globe and Mail reports that this action by Whole Foods is “part of its ecostrategy to cut energy costs, appeal to its environmentally aware customers, and raise the pressure on oil companies operating in northern Alberta to find cleaner ways of producing fuel.”

However, the Toronto Star reports on the reality of Whole Foods’ commitment:

The policy change is more easily said than done, given the complexities of the fuel supply chain. Whole Foods officials told the Toronto Star the company will continue to use fuels derived from Alberta tar sands “in the Rocky Mountain region because as of now there is no alternative source.

According to the Canadian Press, Whole Foods’ master plan to purge its transportation fleet of energy derived from the oil-sands appears to be focused on a single refinery in a single state – begging the question of how the company intends to apply this new policy to its remaining 288 locations spread across three countries. Also left unaddressed is how Whole Foods locations in states such as Montana, Wisconsin, Minnesota, Michigan and Illinois can possibly expect to comply with this structure – given that more than 50 percent of petroleum supplies available in these states come from Canada.

On the heels of this announcement, Michael Whatley, vice-president of Consumer Energy Alliance and a leading American expert on the oil-sands, released this statement:

“The anti-oil sands position taken by these companies fails to take into account that GHG emissions from oil sands are comparable to other U.S. crude oil imports – and continue to go lower every year,” said Whatley. “More than that, it fails to recognize that turning our backs on this secure, affordable, North American energy resource will simply allow our competitors in China and elsewhere to claim energy that would’ve otherwise come to us — rendering our country even more dependent on the Middle East for its energy.”

“These announcements send a troubling message to our closest strategic and trading ally,” Whatley added, citing our nation’s long-time partnership with Canada. “One can only assume these companies will also boycott heavy oil produced in places like California, Mexico and Venezuela – as well as crude produced in the Middle East, and then shipped over 10,000 miles to get here. Otherwise, this exercise seems fairly hypocritical in the best case, and downright disingenuous in the worst.”

Don Martin with the National Post captured the relevance of this announcement in regards to Low-Carbon Fuel Standard (LCFS) in the U.S. through his article “Alberta’s economy doesn’t fit Whole Foods ‘values,’ ” where he writes:

Now, this is not going to raise any risk to oilsand exports bound for a nation with an insatiable thirst for fossil fuels, particularly with new pipelines snaking south from northern Alberta to underutilized American refineries. South of the border, a dozen states are in the process of drafting bitumen blockades called LCFSs, low-carbon fuel standards which Gary Mar, Alberta’s man in Washington, says actually means ‘Less Competition for Saudi’ if they block the Fort McMurray motherlode.

As this announcement was made, the Wisconsin state senate conducted a hearing on Governor Doyle’s climate change legislation, where two key committee members spoke out against the inclusion of an LCFS provision in the bill. According to Wisconsin Public Radio (WPR), both Senators Jeff Plale of South Milwaukee and Bob Jauch of Poplar say they’re concerned about how an LCFS would determine what kind of oil gets used in Wisconsin.

The WPR segment reports the following:

Sen. Plale says that bothers him because it would mean the state would have to buy more oil from places like Venezuela and Saudi Arabia. And he says it would cost his district jobs. If the state goes with oil sands, the $40 million shovels that help process the sand are built in his district at either Bucyrus or Harnischfeger.

Sen. Jauch’s concerns are also local. His district includes Murphy Oil, which refines and sells the crude it buys from across the border in Canada. Jauch told members of Gov. Jim Doyle’s administration that they need to drop this plan to focus on the rest of the renewable energy bill.

Senators Jauch and Plale have been paying attention to their constituents and listening to small businesses across Wisconsin, such as the Wisconsin Manufacturers and Commerce, who recently wrote a column on the negative consequences of an LCFS.

While the fight in Wisconsin is far from over, it is clear that the threat of an LCFS still exists in the Badger State, as well as in many other states and regions, including the Mid-West, the Northeast and the Mid-Atlantic. Hopefully more state and national policymakers will take notice of Wisconsin’s debate and follow Sens. Jauch and Plale’s lead by exposing the dangerous reality of adopting LCFS proposals.

Tags: Bath and Beyond, Bed, Canadian crude, Canadian oil sands, CEA, Consumer Energy Alliance, LCFS, Low Carbon Fuel Standard, Michael Whatley, oil sands, Whole Foods Market Inc., Wisconsin Manufacturers & Commerce
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N-O Canada! Whole Foods Bows to Pressure Groups on Canadian Oil-Sands, Provides China with New Opening to Claim U.S-bound Energy

Thursday, February 11th, 2010

WASHINGTON, D.C. – It may be true that energy resources derived from Canada’s oil-sands today are 33 percent less carbon-intensive than they were a decade ago. It may be true that emissions from the oil-sands are lower than heavy oil production in many U.S. states. And it also may be true that diverting millions of barrels a day of secure, oil-sands energy to far-away China may actually increase global GHG emissions – all while costing Americans their jobs, and expanding our already dangerous dependence on energy from the Middle East.

Unfortunately, for executives at Whole Foods and Bed Bath & Beyond, none of that seems to matter.

Following the announcement yesterday that these two companies — in partnership with the environmental pressure group ForestEthics — will attempt to purge oil sands-derived energy from their transportation fleets, Michael Whatley, vice-president of Consumer Energy Alliance and a leading American expert on the oil-sands, released the following statement:

“The anti-oil sands position taken by these companies fails to take into account that GHG emissions from oil sands are comparable to other U.S. crude oil imports – and continue to go lower every year,” said Whatley. “More than that, it fails to recognize that turning our backs on this secure, affordable, North American energy resource will simply allow our competitors in China and elsewhere to claim energy that would’ve otherwise come to us — rendering our country even more dependent on the Middle East for its energy.”

According to a story posted yesterday by the Canadian Press, Whole Foods’ master plan to purge its transportation fleet of energy derived from the oil-sands appears to be focused on a single refinery in a single state – begging the question of how the company intends to apply this new policy to its remaining 288 locations spread across three countries. Also left unaddressed is how Whole Foods locations in states such as Montana, Wisconsin, Minnesota, Michigan and Illinois can possibly expect to comply with this stricture – given that more than 50 percent of petroleum supplies available in these states come from Canada.

“These announcements send a troubling message to our closest strategic and trading ally,” Whatley added, citing our nation’s long-time partnership with Canada. “One can only assume these companies will also boycott heavy oil produced in places like California, Mexico and Venezuela – as well as crude produced in the Middle East, and then shipped over 10,000 miles to get here. Otherwise, this exercise seems fairly hypocritical in the best case, and downright disingenuous in the worst.”

The announcements will certainly be welcome news to our competitors in China, who would like nothing more than to claim for themselves the secure, affordable, North American energy resources that would have otherwise be sent to consumers here in the U.S. In particular, Whatley pointed to the recent investment by the Chinese government of nearly $2 billion to purchase oil-sands concessions in Alberta – the clearest indication yet that the Chinese are actively working to secure these resources for themselves.

Independent analyses have also confirmed this plan. According to a report compiled by President Obama’s top energy analyst at the U.S. Department of Energy, closing off U.S. markets to oil-sands energy would simply open up new opportunities for China to send that energy thousands of miles abroad, potentially increasing global greenhouse gas emissions while rendering the United States even more dependent on unstable Middle East oil to run its economy.

“While CEA stands four-square against the decision made by these firms this week, we also recognize this may be an opportunity to work with these companies – and others that might be considering a similar course of action – to educate them on what the oil-sands are really about, and how they can be used to create jobs here at home and strengthen America’s energy security, all while protecting and preserving our environment,” Whatley concluded.

READ MORE

Study: LCFS would do nothing to lower global GHG emissions; it may even increase them
PowerPoint: Carmen Difiglio presentation on LCFS
Interactive Map: See which states stand to lose the most under an LCFS
Fact Sheets: What is an LCFS? How will it result in the loss of good-paying U.S. jobs?
CEA Column: Why Are We Conceding Canadian Oil to China?
Issue Alert: Happy Birthday, China

Tags: Bed Bath & Beyond, Consumer Energy Alliance, oil sands, Secure Our Fuels, Whole Foods
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State LCFS Profile: New York

Thursday, February 11th, 2010

What Is a Low-Carbon Fuel Standard (LCFS)?

State of Play: LCFS in New York

On December 30, 2009, New York joined 10 other Northeast and Mid-Atlantic states in signing a Memorandum of Understanding (MOU) on LCFS – a memo that lays the groundwork for the eventual implementation of a statewide LCFS regime in New York. In a statement issued the day of the agreement, New York Gov. David Paterson characterized the LCFS as a means for “creating the next generation of fuels that will address climate change.”

Unfortunately, according to several recent studies on the topic, an LCFS not only won’t do a thing to reduce the amount of carbon emitted into the atmosphere – it may actually contribute to an overall increase in global greenhouse gas emissions.

Production and Distribution: How/Where New York Gets Its Energy

Unlike many states in the Northeast, New York does produce small quantities of oil, and a respectable amount of natural gas — mostly in the western part of the state. Unfortunately, that production contributes only marginally to total energy demand of New York, with most of the state’s petroleum products supplied from the outside — by refineries in New Jersey and Pennsylvania, the Colonial Pipeline from the Gulf Coast, and foreign imports from Canada, Norway, Russia, Portugal and India.

But while energy may arrive in New York from no fewer than 15 separate states and foreign entities, the vast majority of the state’s foreign imports come from Canada – energy that stands to be severely restricted under the LCFS regime currently in the works. The graph below details the disparity:

LCFS Impact on New York State

Like many Northeastern states, New York relies heavily upon home heating oil to keep warm during the typically cold and volatile winters (see: 2009-2010). All told, roughly a third of households in the state use fuel oil as their primary energy source for space heating – supplies that a regional LCFS program will make more expensive to purchase in the short-term, and much more difficult to access beyond that.

Last year, the state of New York secured $537 million from the federal Low-Income Home Energy Assistance Program (LIHEAP) to help subsidize the purchase of these fuel resources for those in need. Unfortunately, under the LCFS, a large portion of this fuel oil may be targeted for elimination under a regime that’s fundamentally set up to disadvantage Canadian reserves, adding additionally strain to an already over-extended LIHEAP budget.

Tags: Colonial Pipeline, foreign imports, Governor Paterson, LIHEAP, New York
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CEA Continues LCFS Battle by Taking California’s LCFS to Court

Tuesday, February 9th, 2010

Consumer Energy Alliance (CEA) filed legal action last week in Fresno, California’s federal district court, requesting an immediate injunction on the state’s Low-Carbon Fuel Standard (LCFS) until a number of substantive legal concerns can be addressed. In its complaint, CEA states that the LCFS violates federal law by attempting to regulate “commerce and conduct” outside of the state, while imposing a mandate that even regulators admit will result in “little or no net change” to the carbon intensity of fuels on “a global-scale.”

Michael Whatley, vice president of CEA and former chief counsel for the U.S. Senate subcommittee on clean air and climate change, says this in a release regarding the suit:

“The practical outcomes of the California LCFS are higher fuel costs for consumers, dramatic reductions in the availability of those fuels, and a rapid expansion of the state’s already unacceptable level of dependence on foreign, unstable regimes for its energy. More relevant to today’s filing, the California LCFS also actually violates federal law – and stands in direct contravention of key consumer protections and safeguards enshrined in the U.S. Constitution.

“Perhaps it wasn’t the state’s intent, but as written, the California LCFS is an example of parochial protectionism run amok. But make no mistake: This isn’t the type of protectionism that will benefit California consumers; it’s the type that will ensure sources of essential energy are harder to find in the future, and much more expensive to purchase.”

In fact, in a recent analysis by the California-based Sierra Research, analysts determine that an LCFS would increase the cost of fuel in Golden State by $3.7 billion over the next decade – all while producing “no detectable change in climate.”

Newspapers from coast to coast took notice of CEA’s commonsense efforts to help thwart higher prices at the pump, including the Los Angeles Times, Associated Press, Energy Daily, ClimateWire and the San Francisco Chronicle. The Sacramento Bee’s Dale Kasler reports this under the headline “Oil and trucking industries challenge state’s fuel standard”:

The oil and trucking industries went to court today to challenge California’s low-carbon fuel standard, a massive set of regulations aimed at combating global warming. The standard will mean “higher fuel costs for consumers, dramatic reductions in the availability of those fuels, and a rapid expansion of the state’s already unacceptable level of dependence on foreign, unstable regimes for its energy,” said Michael Whatley of the Consumer Energy Alliance, one of the groups filing suit. The group said the standard will cost Californians billions while doing little to actually fight climate change.

Interestingly, President Obama’s cabinet also recently announced an initiative to increase the use of biofuels across the nation, which some say may lead the administration to eventually develop a federal LCFS. James Tankserly of the Los Angeles Times reports this:

The Obama administration today will unveil a revamped strategy to ramp up the nation’s use of biofuel in hopes of fixing a government effort that officials admit has fallen short in its attempts to wean cars and trucks away from fossil fuels and move toward ethanol, biodiesel and other crop-based fuels. Under the new approach, federal agencies will start from the 2022 goal and work backward, setting milestones for progress to ensure the effort is on track. The White House plans to pitch the effort as a job-creator in rural communities. But biofuels are not without their controversies.

Critics say increased fuel production could push food prices higher, and the administration is mulling a so-called “low-carbon fuel standard” that could penalize some forms of ethanol production for resulting in relatively high amounts of greenhouse gas emissions.

Despite the fact that an LCFS proposal was not mentioned during the Obama Administration press conference, Biodiesel Magazine quotes officials from the National Resources Defense Council:

Director of the National Resources Defense Council Nathanael Greene said, “The final rule confirms that some biofuels reduce global warming and some pollute more than gasoline and diesel. This proves how important it is to put policies in place to make sure public dollars go to support real renewable energy instead of going after options that do not work and could actually do more harm than good.” He added that a reform to the bio tax credits and a low carbon fuel standard like California’s are “best next steps.”

While the fight in California is far from over, it is clear that the threat still exists with many states and regions across the nation that are working to pass LCFS proposals, including policymakers in Washington, D.C., the Mid-West, the Northeast and the Mid-Atlantic.

With more than 260,000 grassroots supporters and 130 affiliates representing both the major consuming and producing segments of the U.S. energy sector, CEA has many battles ahead and will continue to be an active contributor to the national debate on LCFS.

Tags: Consumer Energy Alliance, LCFS, Low Carbon Fuel Standard, oil sands, Secure Our Fuels, Sierra Research
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State LCFS Profile: Connecticut

Tuesday, February 9th, 2010

What Is A Low-Carbon Fuel Standard (LCFS)?

State of Play: LCFS in Connecticut

On December 13, 2009, Consumer Energy Alliance vice president Michael Whatley sent Gov. Jodi Rell a detailed letter laying out the precise consequences that the imposition of a statewide LCFS could have on Connecticut residents. Nevertheless, two weeks later, Gov. Rell signed a Memorandum of Understanding with 10 other Northeast and mid-Atlantic states that sets the stage for an LCFS regime to be implemented by the end of next year.

Connecticut, unlike several of its regional neighbors, has yet to announce whether it will study how the adoption of a regional LCFS might impact local fuel supply markets.

Production and Distribution: How/Where Connecticut Gets Its Energy

While Connecticut may rank No. 2 in the nation in the production of oysters, the state unfortunately does not produce any significant energy resources – instead, relying on fuel imports from outside the state and the country that arrive in Connecticut via the port of New Haven.

According to the Energy Information Administration (EIA), imports of refined diesel fuel and home heating oil arrive each day from the Netherlands, the Virgin Islands, France, Mexico and Canada. Under the LCFS, fuel resources from both Mexico and Canada would be targeted for eventual elimination – exacerbating the state’s already dangerous status as a “fuel island,” and contributing to a significant and likely immediate increase in price.

But while an LCFS is sure to impact Connecticut residents, the vast majority of LCFS-targeted distillate fuel is consumed by the state’s industrial sector. With higher costs for fuel and dramatically reduced availability of it, the ultimate effect of an LCFS could be significant job loss in the state.

LCFS Impact on Connecticut

Like many Northeastern states, Connecticut relies heavily upon home heating oil to keep warm during the winter. All told, roughly half the households in the state use fuel oil as their primary energy source for space heating – consuming 545,000,000 gallons of the stuff each year.

Last year, Connecticut secured $126 million from the federal Low-Income Home Energy Assistance Program (LIHEAP) to help subsidize the purchase of these fuel resources for those in need. Unfortunately, under the LCFS, a large portion of this fuel oil may be targeted for elimination under a regime that’s fundamentally set up to disadvantage Canadian and Mexican reserves, resulting in higher prices and less access for residents.

Tags: Connecticut, Governor Jodi Rell, home heating oil, LIHEAP
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