WASHINGTON – This week, the National Low Carbon Fuel Standard (LCFS) Project is holding a series of public briefings to release findings from two reports which they claim will provide evidence that LCFS programs can be successfully implemented across the US. Several previously released reports, however, have shown that LCFS programs will have devastating impacts on fuel prices and local economies without providing the intended benefits. LCFS programs modeled on the California standard may also be subject to legal challenges. Earlier this year, an LCFS program in California was ruled unconstitutional by U.S. District Judge Lawrence O’Neill for violating the commerce clause of the United States Constitution and is currently awaiting action by the 9th Circuit Court of Appeals.
In response to the briefings, Michael Whatley, Executive Vice President of the Consumer Energy Alliance (CEA), made the following statement:
“A national low carbon fuel standard would be an economic disaster for the United States. Study after study has shown that low carbon fuel standards will dramatically increase the price of gasoline and home heating oil, kill thousands of American jobs and stall our economy, all while actually increasing global greenhouse gas emissions. In fact, according to a report by Charles River Associates, an LCFS program will:
- Increase gas prices by up to 170 percent over 10 years,
- Drive down household annual purchasing power by between $1,400 and $2,400 by 2025, and
- Cause the US Gross Domestic Product to decline by two to three percent by 2025—a total loss of between $410 and $750 billion for our economy.
“Americans spend a significant part of their family budget to cool and heat their homes and fuel their cars. A national LCFS, which would add significantly to this burden, is the wrong choice for energy consumers.”
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A copy of the Charles River Associates study, which delineates the economic effects of a national LCFS, can be found here. According to the study, an LCFS would result in:
- The loss of between 2.3 and 4.5 million American jobs,
- An increase in the price of gasoline and diesel fuel by up to 170 percent over 10 years,
- And a decrease in our GDP by between two and three percent — a total loss of between $410 and $750 billion for our economy.
A recent study conducted by the Boston Consulting Group on the California LCFS can be found here. The study found that an LCFS will have detrimental impacts on California that include:
- The loss of 25-35 percent of the state’s refining capacity, closing 5-7 of the state’s refineries, potentially compromising California’s fuel security and killing thousands of jobs,
- The loss of 28,000-51,000 jobs by 2020,
- And up to $3.1-3.4 billion per year in net lost tax revenues by 2020.
A copy of IHS-CERA’s critique of NESCAUM’s economic analysis of an LCFS on the Northeast region can be found here. The accredited think tank found NESCAUM’s report “flawed” and “unrealistic.” According to IHS-CERA, the report:
- Exceeded EIA’s forecast of cellulosic ethanol availability in the Northeast region and exceeded EIA’s forecast of cellulosic ethanol use for the entire country,
- Contradicted a recent National Academy of Sciences report, which asserts that the capacity for producing cellulosic biofuels to meet the federal Renewable Fuel Standard (RFS2) to 2022 will not be available,
- And conflicted with EPA’s latest “on the ground” assessments, which reveal that there is hardly any cellulosic biofuel production capacity available despite two years of aggressive federal RFS2 mandates.
A copy of CEA’s study on the negative economic impacts of an LCFS in the Northeast region, with modeling conducted by SAIC, can be found here. The study found an LCFS in the Northeast/Mid-Atlantic region would result in:
- The loss of 147,000 jobs,
- A doubling of gasoline prices,
- A $27 billion decline in GDP,
- And a decrease in disposable personal income of $28.8 billion for families in the Northeast.
A Barr Engineering study, which highlights the significant carbon emissions increases that can arise from fuel switching under an LCFS program, can be found here. According to the study, a nationwide LCFS would increase global GHG emissions by 19 million metric tons annually.
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Consumer Energy Alliance (CEA) is a nonprofit, nonpartisan organization, comprised of more than 180 affiliate members, including energy consumers and producers, and tens of thousands of consumer advocates, that supports the thoughtful utilization of energy resources to help ensure improved domestic and global energy security, stable prices for consumers and balanced energy policy for America. For more information on Consumer Energy Alliance, visit www.consumerenergyalliance.org
