CEA president: LCFS will not reduce greenhouse gas emissions, but may lead to severe economic and security consequences for citizens of Washington
HOUSTON – As Washington governor Christine Gregoire continues to weigh the prospect of imposing a Low-Carbon Fuel Standard (LCFS) on her state, Consumer Energy Alliance (CEA) president David Holt sent a letter to the governor yesterday laying out several specific facts and figures related to the potential impact of an LCFS on Washington – facts the governor should consider before taking another step forward on the initiative.
Holt’s letter is in response to the governor’s May 2009 executive order instructing her administration to assess the merits of enacting California’s LCFS or a similar proposal to help meet the state’s greenhouse gas emission reduction targets.
The full text of the letter below:
April 5, 2010
Dear Gov. Gregoire,
With your administration’s July deadline quickly approaching for assessing the relative merit of implementing a Low-Carbon Fuel Standard (LCFS), I write today in my capacity as president of Consumer Energy Alliance (CEA) to ask that you carefully weigh the unintended economic, security and environmental consequences this action would have for the state of Washington.
Although proponents of an LCFS believe its adoption would reduce transportation-related greenhouse gas (GHG) emissions, it will actually lead to increased fuel prices and greater dependence on foreign, unstable nations without reducing GHG emissions from your state’s vehicles. Some studies have even suggested that an LCFS may actually increase the concentration of carbon dioxide in the atmosphere.
According to the U.S. Environmental Protection Agency, every gallon of gasoline combusted in our vehicles emits a chemically consistent 19.4 pounds of carbon dioxide (CO2), regardless of octane or vehicle type. Given that the agency charged with promulgating standards to protect America’s air quality openly shares this fact about fuel emissions, moving forward with an LCFS is simply not logical if the intended goal is to reduce a state’s GHG emissions.
CEA is a non-partisan, not-for-profit organization actively working to reduce America’s reliance on foreign energy imports, maintain affordable energy prices for consumers and covert our nation’s abundant energy resources into jobs, revenue and opportunity for all Americans. While CEA generally supports the goals typically associated with proposals to enact an LCFS – such as lowering GHG emissions from the transportation sector, increasing the use of natural gas and commercially developing the production of cellulosic ethanol – we are strongly opposed to the implementation of an LCFS that fundamentally discriminates against fuels derived from unconventional sources of energy, including Canada’s oil sands.
Adopting a California-style LCFS, aimed at restricting the state’s use of Canadian oil, makes no sense for the state of Washington. Unlike California, Washington receives more than 25 percent of its crude from Canada. An LCFS would not only inhibit the state from obtaining and using that crude, but it would also restrict your state’s access to more than 10 percent of its current gasoline supply, which is refined in Montana and derived from Canada’s oil sands.
Indeed, to replace the supply lost under an LCFS, Washington will likely need to increase crude shipments from the Middle East, leading to additional energy security concerns. And as mentioned, as it relates to the imperative of reducing GHGs, several prominent studies have found that an LCFS may actually generate greater net emissions compared to the reference case (no LCFS) by requiring imports from distant, unstable countries instead of relying on crude from our North American neighbors such as Canada and Mexico. Under this scenario, not only would an LCFS increase our nation’s dependence on foreign energy sources, but it would also add significantly to global GHG concentrations.
The repercussions of an LCFS go beyond unrealized environmental benefits and diminished energy security. With five refineries, your state serves as a principal refining hub for the Pacific Northwest. According to the Energy Information Administration, the refining capacity in Washington is about 627,850 barrels/day. Currently, these refineries receive most of their oil from Alaska, but declining production there means that Washington’s refineries will become increasingly dependent on crude imports from Canada and elsewhere in the near future.
Without additional sources of oil, the more than 2,000 direct and 20,000 indirect workers supported by Washington’s refiners would find themselves at risk of losing their jobs. According to a report from the Washington Resource Council, these refiners paid more than $400 million in wages and almost paid the same amount to the state through sales, excise, occupation and various other taxes in 2007. Without these facilities and their associated jobs, your state would lose a significant revenue source, leaving a large budget gap to be filled by increased taxes or cuts in taxpayers’ services.
During this time of economic uncertainty, Washington cannot afford to lose more jobs or turn its back on more state revenue. Given the substantial economic and energy security costs of this proposal, and the absence of any quantifiable GHG reductions, CEA asks you to consider rejecting the adoption of an LCFS policy in Washington.
Thank you in advance for your consideration. I look forward to hearing from you soon.
Sincerely,
David Holt
President
Consumer Energy Alliance
[...] the threat of an LCFS still exists in many other parts of the country, including those states that comprise the Midwestern Governors Association (MGA), of which [...]