“A Low Carbon Fuel Standards (LCFS) Program will cost New Jersey’s consumers”

“NESCAUM’s (Northeast States Coordinated Air Use Management) economic analysis of LCFS, now referred to as Clean Fuel Standard (CFS), attempts to show that this program will actually create a net benefit for the economy. Yet the report is weighed down in assumption, making lofty claims that ignore the real costs of implementing these standards on American consumers.”

“These are real costs and real burdens that will be placed on the American consumer under an LCFS program. Until LCFS is supported by real numbers and real facts New Jersey should say no to increased costs, no to lost jobs, and no LCFS.”

You can read the entire article here.

“A preliminary reading of NESCAUM’s analysis shows some breathtaking assumptions.”

“NESCAUM assumes that soy diesel will be widely available and cheaper than diesel. NESCAUM assumes that all advanced low carbon fuels will be available in the quantities necessary and at prices lower than gasoline and diesel. NESCAUM assumes that natural gas and electric vehicles will cost the same as traditional gasoline/diesel vehicles.”

“It seems a real stretch to make assumptions like those and then put out an analysis that concludes that an LCFS program will have a small cost and net benefit for the economy.  Although we need to meet with NESCAUM and go over the methodologies used in this analysis in order to completely understand their conclusions, it appears that the flaws in this analysis are big enough to drive an electric truck through.”

Note: The full NESCAUM economic analysis can be accessed here.

 “An LCFS program will mandate the replacement of traditional fuels such as gasoline and diesel with alternative “low carbon” fuels such as ethanol.”

 “Forcing providers to ration their traditional fuels to supply these scarce fuel alternatives will drastically increase the cost of gasoline, diesel, and home heating oil for the consumer. Despite efforts, an LCFS does not accomplish its goal of reducing greenhouse gas emissions (GHGs).  In fact, the implementation of LCFS will generate increased emissions as a result of “crude shifting,” a product of forcing increased transportation of crudes to and from far away markets.”

“As a leader and pioneer in America’s energy sector, Pennsylvania should act now to secure its prominent position in American energy production…A regional LCFS will increase the cost of fuel and hurt jobs at a time when Americans can least afford it.”

“Consumers should read {NESCAUM’s} economic analysis with caution because it is based on flawed assumptions such as the lower cost of biodiesel or the availability of electric and natural gas vehicles.

“NESCAUM’s analysis assumes in all cases that alternative fuel technologies and advanced renewable fuels will be commercially viable and cheaper than traditional vehicles and fuels for a program that begins in two years. I don’t know how they can make that claim.  The real world facts are that biodiesel is significantly more expensive than diesel due to high soy crop prices and biodiesel shortages, that we do not have a single commercially viable cellulosic ethanol plant operating today anywhere in the country, and that both natural gas and electric vehicles are substantially more expensive than their traditionally-fueled counterparts.”

“These standards would negatively impact Pennsylvania consumers and businesses.”

EXCERPT:

“Whatley, vice president of the Consumer Energy Alliance, said the NESCAUM document showed that the Northeast program could meet the same resistance. Whatley, whose group represents sectors from oil to chemicals to fuel users such as grocers, said “the program could lead to a rise in gas and diesel prices without a viable alternative.”

“If you set up a reduction program that is going to try to get you a 10 percent [carbon intensity] reduction over 10 years, that’s not achievable without a dramatic shift in fuel use,” said Whatley, whose group has argued against similar programs. “Even NESCAUM says you would need to have several million natural gas vehicles to get that reduction in 10 years. That’s just not feasible. The same goes for electric cars.”’

“These standards will require fuel providers to ration traditional fuels such as gasoline and diesel and replace them with “low carbon” fuels like ethanol from switchgrass (a type of cellulosic biofuel) that are more expensive and require technology that is not readily available.  Since low-carbon fuel alternatives are not currently available at the quantities needed to support our economy, consumers will have to pay substantially higher fuel costs as the supply of traditional fuels will become rationed.  These higher priced fuels will put a burden on business and put American jobs at risk.”

“Unfortunately not only are these policies extremely harmful to consumers, they are inherently ineffective…New Jersey voters should be educated on the harm enacting an LCFS would have so that the policy doesn’t become a reality.”

Earlier this week, an Ann Arbor-based environmental group known as the Ecology Center released a 52-page position paper detailing the ways in which the imposition of a Low-Carbon Fuel Standard (LCFS) would, from its perspective, “substantially benefit” Michigan’s ailing economy – currently saddled with an unemployment rate of 15 percent, easily the nation’s highest.

The plan the Center puts forth is simple: Adopt an LCFS policy that bans secure Canadian energy from crossing the border and forces local fuel producers to either “purchase credits” to stay in business or start selling something called “low-carbon hydrogen” instead – all while requiring the government to do more to artificially “stimulate demand” for next-generation energy.

Do this, the report says, and we can “move Michigan beyond oil.” Missing from the report, however, is any indication of how this will move Michigan toward a future in which jobs are created, energy is kept affordable and available, and the state is able to reclaim its rightful place among the nation’s economic and industrial leadership. The report also fails to mention that 63 percent of Michigan’s oil comes from Canada. The question of how that vacuum would be filled appears to have fallen beyond the scope of the Center’s examination.

As is typical with papers of this type, details on how an LCFS policy would be implemented or what effects it might have on state employment and revenue are scarce — while desperate statements insisting that Michigan “has little time to lose” in imposing an LCFS on its citizens predominate.

Still, what follows is a brief enumeration of some of the key assertions found in the report, along with relevant, fact-based responses:

Claim: “By setting a 10 percent reduction goal for global warming emissions from transportation fuels by 2020, Michigan would rely on a market-driven approach … without picking winners and losers.”

Response: There is nothing “market-driven” about a government-directed system that dictates the places from which energy can be purchased; identifies the favored sources that would receive direct subsidy; and sets out a course whereby the only way to reduce the emission of carbon is to reduce the level of economic activity and job growth. An LCFS doesn’t merely pick winners and losers; it mandates them. Unfortunately, under an LCFS, Michigan energy consumers would find themselves on the wrong side of this ledger.

Claim: “Michiganders send over $14 billion per year to other countries and states to import petroleum. … Michigan imports 97 percent of its petroleum.” (emphasis added)

Response: According to the Energy Information Administration (EIA), 100 percent of Michigan’s “foreign energy” imports come from nearby Canada, entering the state via ports in Detroit, Port Huron, and Sault Ste. Marie on the Upper Peninsula. That’s an inconvenient fact for the report’s authors, who take great care to imply throughout the document that Michigan is dangerously and near-completely dependent on far-away dictators for the balance of its energy needs. Although that is not the case right now in Michigan, under an LCFS, it absolutely would be.

Claim: “At the current rate of worldwide annual petroleum consumption … all proved reserves would be consumed in the next 38 years. Nearly 75 percent of these reserves are concentrated in just seven nations: Saudi Arabia, Iran, Iraq, Russia, Venezuela, Kuwait, and United Arab Emirates.”

Response: Here we see the commonly employed tactic of defending an LCFS on the grounds that the world’s oil is about to run out anyway, contrary to every piece of credible geological evidence available. What’s interesting is that the report’s authors chose not to include in that world energy estimate the very energy sources they seek to destroy – Canada’s oil sands. The Canadian oil sands are one of the world’s largest known hydrocarbon deposits, second in size only to those found in Saudi Arabia. For some scale, consider that Canada’s proven oil reserves currently stand at 179 billion barrels of oil. Oil sands represent 97 percent of that figure.

Ignore that monumental resource, and the report is correct: most of the world’s proven oil resides in countries whose strategic interests don’t often align with our own. This is Exhibit A for why an LCFS would be so costly to America’s security. By cutting off American access to Canadian crude, foreign producers of light, sweet oil – many of them from the countries identified above – would claim an even larger share of the U.S. fuel market, increasing America’s dependence on unstable regimes abroad.

Claim: “This report finds that an LCFS is Michigan’s best option for growing its economy while also reducing oil dependence and lowering greenhouse gas pollution from transportation fuels.”

Response: As we’ve seen, an LCFS seeks to reduce the public’s “oil dependence” by making that energy prohibitively expensive and incrementally scarce. But what of the claim that an LCFS will lead to significant reductions in greenhouse gas emissions? According to one recent report published in the American Economic Journal, an LCFS might have the effect of “possibly increasing net carbon emissions” – not lowering them.

How can that be? For starters, the existence of an LCFS doesn’t magically eliminate the existence of Canadian energy — it simply denies Americans access to it. In our place, countries like China and India will be happy to claim the resources we’ve decided to leave on the table. Energy previously earmarked for America will instead be shipped half-a-world away to markets in Asia, and once it gets there, the carbon emissions involved in processing that oil abroad will dwarf the levels needed to do the same work in the United States. Recent news of China’s $1.7 billion investment in the Canadian oil sands is proof positive that if Americans don’t use that energy, the Chinese will.

Claim: “An LCFS is thus a necessary complement to the [Renewable Fuel Standard] because it advances other technologies—such as plug-in hybrids, natural gas, or hydrogen from natural gas—and, moreover, it discourages high carbon fuels like [oil] sands, oil shale, and coal-to-liquids.”

Response: Michigan’s proposed LCFS, as sketched out in this report, is nearly identical to the plan put forth by California, and as such, would do absolutely nothing to complement a Renewable Fuel Standard (RFS) that favors corn-based ethanol. Indeed, under Michigan’s LCFS, conventional ethanol would be deemed to have “greater life-cycle global warming emissions than gasoline,” according to Ecology Center paper.

This, we think, should put to rest any suggestion that an LCFS would be good news for Michigan’s farmers and agricultural community. Quite the contrary. Under an LCFS, producers of ethanol would be targeted for elimination, not subsidization. And the story is scarcely any better for producers of natural gas vehicles, biodiesel, and even hydrogen. None of these, it turns out, were deemed good enough to receive a “green light” score from the Ecology Center’s analysts. All were granted a yellow – for caution.

More from SecureOurFuels.org:

• Interactive Map: See which states stand to lose the most under an LCFS
• Study: LCFS would result in fuel price increases of at least $0.60 a gallon
• CEA on TV: Watch CEA’s latest television ads, listen to our recent radio hits
• The Blog: Join the discussion on CEA’s Secure Our Fuels web log

WASHINGTON, D.C. – Consumer Energy Alliance (CEA), a nonprofit, nonpartisan coalition comprised of 120 affiliates and more than 180,000 grassroots supporters, today launched a multi-state campaign to educate American consumers on economic and national security impacts associated with a national Low-Carbon Fuel Standard (LCFS).  If enacted, an LCFS would threaten American jobs, increase prices at the pump, and expand U.S. dependence on energy imports from unstable foreign regimes.

“In any form, a Low-Carbon Fuel Standard would represent a major blow to America’s economic health and strategic position,” said CEA’s Michael Whatley, a leading expert on LCFS proposals. “That’s because the energy we import daily from friends like Canada would essentially be prohibited from crossing our border. If these abundant resources are cut off, our dependence on unstable regions of the world would skyrocket, and so would the price American consumers pay at the pump.”

Added Whatley: “This campaign seeks to alert the American public of the implications of this policy, and enlist its support in ensuring it does not come to pass.”

Known as CEA’s “Secure Our Fuels” campaign, the work of enlisting the American people in support of affordable energy begins nationwide today, with radio and television ads running in several key states to engage those who stand to be most impacted under an LCFS. Efforts aimed at those initial states – Tennessee, Montana, North and South Dakota – will eventually broaden out to include many more, from the Intermountain West to the Atlantic coastline.

As part of the national launch, CEA also unveiled a new website to serve as a networking tool and information repository for its coalition: SecureOurFuels.org.

Most Americans might not know what an LCFS is, what it stands for, or even that its stated goal – reducing the carbon content of fuel – isn’t the true intent of the policy. Unfortunately, that’s precisely how advocates of a nationwide fuels mandate want it to remain, hoping to use the pending climate bill to advance a policy that will kill American jobs, expand our foreign energy dependence, and discriminate against secure supplies of energy available in our hemisphere.

Throughout this campaign, CEA will work with and engage its regional affiliates to ensure that working families, small businesses, organized labor, and everyday American consumers understand the threat posed by an LCFS.
Visit SecureOurFuels.org to view our latest television and radio ads, and learn more about how an LCFS will increase energy costs for American consumers while expanding our dependence on foreign, unstable regions of the world to fuel our economy.

NOTE: To view these television and radio advertisements, click HERE.

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Consumer Energy Alliance (CEA) is a nonprofit, nonpartisan organization that supports the thoughtful utilization of energy resources to help ensure improved domestic and global energy security and stable prices for consumers.