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Archive for February, 2010

State LCFS Profile: Maryland

Tuesday, February 9th, 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 Maryland

In December 2009, Maryland joined 10 other Northeast and Mid-Atlantic states in signing a Memorandum of Understanding (MOU) on LCFS – one that demands that Maryland follow the lead of Massachusetts and implement virtually whatever policy initiative comes from the NESCAUM drafting process, based in Boston. In a statement following the signing, Gov. O’Malley suggested that the imposition of an LCFS “presents another opportunity to reduce carbon emissions and create green jobs.”

Unlike other states, Maryland does not appear to be engaging in any independent research examining whether an LCFS would actually work as advertised in the state.

Production and Distribution: How/Where Maryland Gets Its Energy

According to the Energy Information Administration (EIA), Maryland produces only 17 percent of the energy it consumes. To make up the difference, it relies heavily on refined petroleum imports originating in the Gulf Region that travel along the Colonial Pipeline, as well as shipments from Canada and the UK that dock at the Port of Baltimore.

LCFS Impact on Maryland

Despite the fact that temperatures average around 40 degrees in the middle of winter, Maryland consistently ranks among the top five in the category of most expensive home heating oil states in the country. Under the proposed LCFS, it’s quite possible that petroleum imports from the Gulf and Canada will no longer be accepted as fuel options – since these sources receive failing grades under the bizarre accounting methodology of the LCFS.

Since Maryland looks to these regions to provide more than 80 percent of its required energy supply, the state will be forced to look elsewhere to supplement the loss, with the most-likely candidates being volatile producers from the Middle East. The result of this decision will be even higher home heating prices, expanded dependence on foreign, unstable sources, and the loss of jobs due to the added financial strain on Maryland’s economy.

Tags: Govenor O'Malley, Maryland
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CEA: California LCFS Bad for Consumers, Bad for Producers, and Violates Federal Law

Tuesday, February 2nd, 2010

Consumer Energy Alliance files complaint with District Court in Fresno asking for immediate injunction on Low-Carbon Fuel Standard

FRESNO – California’s recently implemented Low-Carbon Fuel Standard (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.” Such is the formal complaint filed by Consumer Energy Alliance (CEA) in the U.S. District Court for the Eastern District of California today, asking the court to suspend the imposition of a statewide LCFS until a number of substantive legal concerns can be addressed.

“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,” said Michael Whatley, vice-president of CEA and former chief counsel for the U.S. Senate subcommittee on clean air and climate change. “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.”

Formally adopted last month after the state’s Office of Administrative Law (OAL) issued its final approval, the California LCFS, according to its authors, seeks to reduce the carbon-intensity of fuels included in the state’s transportation mix “while stimulat[ing] the production and use of alternative, low-carbon fuels.” But under the bizarre accounting methodology of the plan, energy sources with physically identical chemical properties and carbon contents can – and, in fact, must be – treated differently under the law, with in-state sources significantly advantaged over resources that are found and produced outside California.

“Perhaps it wasn’t the state’s intent, but as written, the California LCFS is an example of parochial protectionism run amok,” added Whatley. “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 support of that statement, Whatley pointed to a recent analysis of the proposed state LCFS completed by California-based Sierra Research. In that study, analysts from Sierra found that an LCFS will increase the cost of fuel in California by $3.7 billion over the next decade – all while producing “no detectable change in climate.”

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 been an active contributor to the national debate on LCFS – including the proceedings in California – for the better part of the last two years.

Last August, the Washington, D.C.-based Center for North American Energy Security, a CEA member, sent a letter to the California Air Resources Board (CARB) detailing the myriad short-comings with the LCFS, and several CEA members (including the National Petrochemical & Refiners Association and the American Trucking Associations – which joined CEA in filing the complaint today) have lodged formal comments with CARB objecting to the plan as well. In addition, CEA wrote directly to U.S. Sen. Barbara Boxer (D-Calif.) in October identifying several significant consequences that consumers should expect to encounter under the initiative.

What follows are several key excerpts taken from the CEA complaint filed in Fresno this morning:

42. Because “carbon intensity” is designed to account not only for a fuel’s physical characteristics, but also the energy necessary to bring the transportation fuel to market in California, chemically identical fuels are assigned different carbon intensities under the LCFS. LCFS § 95486(b), Tables 6–7.

44. By regulating the “fuel pathway” of transportation fuels – i.e., the manner in which transportation fuels are produced and ultimately reach the California market – the LCFS directly regulates interstate commerce and conduct occurring outside of California.

47. CARB has admitted that, because no other states have adopted a similar standard, “fuel producers are free to ship lower-carbon-intensity fuels to areas with such standards, while shipping higher-carbon-intensity fuels elsewhere.” CARB, California’s Low Carbon Fuel Standard: An Update on the California Air Resources Board’s Low Carbon Fuel Standard Program (Oct. 2009) at 1.

48. According to CARB, “[t]he end result of this fuel ‘shuffling’ process is little or no net change in fuel carbon-intensity on a global scale.” Id.

49. In fact, the “fuel shuffling” promoted by the LCFS likely will lead to an overall increase in GHG emissions, because it will mean redirecting fuels and feedstocks destined for California to other states through less efficient and redundant supply lines. Id.; see also CARB, Final Statement of Reasons (Dec. 2009) at 234–35.

50. The burdens imposed by the LCFS on the interstate market for transportation fuels and fuel feedstocks in California are clearly excessive when measured against the putative local benefits of the LCFS in California.

Tags: American Trucking Association, Center for North American Energy Security, Consumer Energy Alliance, Low Carbon Fuel Standard, National Petrochemical & Refiners Association
Posted in Action Alerts | 2 Comments »

State LCFS Profile: Washington State

Monday, February 1st, 2010

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

Sold to the public as a way to clean up our transportation fuels while cutting down on the amount of carbon dioxide emitted into the atmosphere, in reality the Low-Carbon Fuel Standard (LCFS) isn’t about making the fuels in your car any better, cleaner or more affordable than it already is – it simply seeks to render those fuels more difficult to find and even more expensive to purchase.

State of Play: LCFS in Washington State

Late last year, the Washington Policy Center made public the contents of a classified memo from Gov. Chris Gregoire’s chief of staff laying out a sophisticated plan for implementing the California LCFS model in Washington. The memo reveals that the ultimate objective of the Washington LCFS is to force regulators in Washington, D.C. to impose a similarly destructive mandate nationwide.

Two weeks after receiving that document, Gov. Gregoire issued Executive Order 09-05 – directing her cabinet to “assess whether the California low-carbon fuel standards … would best meet Washington’s greenhouse gas emissions reduction targets.” Consultants were hired and public workshops were scheduled. And even though serious questions remained unanswered (“Is the policy ahead of the science?” asks one agency PowerPoint), Washington regulators commenced with their work. The governor is expected to announce what comes next in July.

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

Washington has few fossil fuel resources, but with five refineries, the state is a principal refining hub for the Pacific Northwest. In fact, according to the Energy Information Administration, the refining capacity in Washington is about 627,850 barrels/day. While these refineries receive most of their oil each day via tanker from Alaska, declining production there means that Washington’s refineries will soon become increasingly dependent on crude imports from Canada and elsewhere. Additionally, the Trans Mountain Pipeline from Alberta supplies more than one-tenth of Washington’s crude oil.

Washington gets some of its oil from Saudi Arabia, Angola and Argentina as well, but more than 25 percent of its total haul comes from Canada – supplies that would be targeted for elimination under an LCFS. The chart below captures the relevant percentages.

LCFS Impact on Washington State

Since Washington receives more than 25 percent of its crude from Canada, a quarter of the state’s secure, affordable oil supply would be threatened under an LCFS. Also, about 10 percent of the state’s gasoline – refined in Montana, but derived from Canada’s oil sands – would also be prevented from crossing the eastern border.

How would Washingtonians make up the difference? Increasing imports from the Middle East, currently residing at nine percent of the state’s energy consumption or relying on the use of hydrogen and electric plug-in cars that will not be commercially viable for decades.

And what about jobs? Refiners in Washington directly employed 2,003 workers in 2007 (latest numbers), and indirectly supported another 20,000. They paid out more than $400 million in wages. And they sent nearly that same amount to Olympia in the form of sales, excise, occupation and sundry other taxes.

Tags: Canadian crude, Consumer Energy Alliance, LCFS, Low Carbon Fuel Standard, SecureOurFuels.org
Posted in Action Alerts | 3 Comments »

CEA Continues to Educate Consumers about Negative Impacts of an LCFS Across the Nation

Monday, February 1st, 2010

Last week various newspapers reported about the special election in Massachusetts and how it could affect the success of President Obama’s policy agenda, including climate change. In fact, The Winnipeg Free Press reports the following in their article, “Obama’s loss is our gain”:

The political setback will stop Obama’s cap-and-trade bill on greenhouse gas emissions dead in its tracks. This is excellent news for Canada. The so-called Waxman-Markey Bill, which was passed by the House by a very narrow margin, would dole out green energy subsidies that various states and municipalities are planning to use to discriminate against Canadian energy imports. It would also designate Canada’s oilsands as “dirty fuel” and prohibit the U.S. federal government from using it. Even if Canada set up a similar system of cap-and-trade, the chances that American lobbies would start trade action is huge. With good sense and prudence, Ottawa is trying to make Canadian rules as similar as possible to the American regime.

While the status of climate legislation in Washington, D.C. may now be questionable, the threat of Low-Carbon Fuel Standards (LCFS) still exists. Indeed, many states and regions across the nation are working to pass LCFS proposals, particularly in the Mid-West, the Northeast and the Mid-Atlantic.

This is why Consumer Energy Alliance (CEA) continues to work to educate, inform and engage American consumers about the economic and national security threats that an LCFS poses. Oilprice.com reports these points in their story, “Canada’s Alluring Energy Supply Regaining it’s Lustre Despite Continued Criticism”:

Some American government officials, including a group of Northeastern governors, are beckoning for a low-carbon fuel standard that would stem Canadian crude oil from spilling into the United States, said Travis Windle, spokesman for the Washington-based Consumer Energy Alliance. The non-partisan group, which advocates wise energy use, is pushing a national advertising campaign about the low-carbon fuel standard.

On the whole, the United States is bent on beefing up its oil ties, Windle noted, adding the reserves account for 20 percent of American energy. Last August, the State Department gave the go-ahead for a pipeline called the Alberta Clipper to carry crude from Canada to U.S. refineries in Wisconsin.

Despite the fact that the Alberta Clipper pipeline is being developed to carry crude from Canada to U.S. refineries in Wisconsin, the Badger State is currently working to pass an LCFS proposal that would actually block these fuel supplies from entering the state.

Fortunately for Wisconsinites, Scott Manley with Wisconsin Manufacturers and Commerce has been leading the charge on this issue in Wisconsin and educating consumers about the negative consequences of this proposal. In fact, he shares his concerns with Wisconsin’s global warming legislation in the following Green Bay Press Gazette op-ed:

The so-called Low Carbon Fuel Standard would cost Wisconsin motorists more than $3.2 billion in higher gas prices according to the WPRI study. This global warming gas tax could cost consumers as much as 61 cents per gallon according to a study by the Marshall Institute. All told, these expensive policies are projected to cost each Wisconsin family more than $1,000 each year by the time they are fully implemented. Worse yet, the supporters of this misguided bill have not identified any meaningful benefit that would be achieved relative to global temperatures or climate.

Last month Manley took to the pages of the Milwaukee Journal Sentinel to highlight the devastating economic effects associated the LCFS legislation that was recently introduced. In a column entitled “Global warming bill kills state jobs,” Manley writes:

Wisconsin families cannot afford these tremendously expensive policies given our current recession and fragile economy. Wisconsin has the single-most manufacturing-intensive economy in the country. Our family-supporting manufacturing jobs pay an average wage of $62,959 – more than 35% higher than the state average. Unfortunately, we already have lost 160,000 manufacturing jobs in the past decade, including 60,000 jobs lost since 2008 alone.

In light of the critical effects that an LCFS could have on jobs and the economy in the U.S., the governors in the Mid-West, Northeast and Mid-Atlantic that are currently considering an LCFS – as well as leaders in Washington – should consider these facts and stop these policies while they still can.

Tags: Alberta Clipper, Consumer Energy Alliance, Economy, LCFS, Low Carbon Fuel Standard, Wisconsin Manufacturers & Commerce
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