Secure Our Fuels

Letter from 24 Senators Says ‘No LCFS Quid Pro Quo’

Washington, D.C. – Today, twenty-four Republican Senators, led by Senators John Barrasso (R-WY) and John Hoeven (R-ND), sent a letter to President Obama asking him not to tie the approval of the Keystone XL pipeline to costly energy mandates such as a Low Carbon Fuel Standard (LCFS).  As the letter states, “Americans cannot afford the environmentalist wish list of carbon reduction policies as a quid pro quo for Keystone XL pipeline project approval […] We simply cannot withstand the soaring energy prices and further job losses that would result from a new carbon tax, regulation of greenhouse gas emissions from power plants, or a low-carbon fuel standard.”

Michael Whatley, Vice President of the Consumer Energy Alliance (CEA) said, “CEA applauds the 24 Senators who today firmly stated their opposition to tying approval of the Keystone XL pipeline to a Low Carbon Fuel Standard – a cap-and-trade mandate that will make drivers pay a lot more at the pump and significantly weaken America’s energy security.  As their letter rightly states, American families simply can’t afford the high gas prices and job losses that a national LCFS would bring.  Approving the Keystone XL pipeline should not come with strings attached and I appreciate these Senators’ efforts to prevent this from happening.

“Of course, President Obama’s nominee for EPA Administrator Gina McCarthy recently said that ‘EPA is not considering nor does it have any plans to seek to establish a federal LCFS.’  Instead of tying regressive polices to Keystone XL approval, President Obama should hold EPA to its word.”

Tags: Keystone XL, LCFS, Senator John Barrasso, Senator John Hoeven
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Consumer Energy Alliance Calls News Good for Consumers; Praises Senate Oversight 

Washington D.C. – Following media reports today that the Environmental Protection Agency (EPA) has no intention of implementing a federal Low Carbon Fuel Standard (LCFS), Michael Whatley, Vice President of the Consumer Energy Alliance (CEA) issued a statement welcoming the news but also warned that EPA may still use “sue-and-settle” tactics to implement this unpopular agenda in the future. As PoliticoPro reported this morning, Obama EPA Administrator nominee, Gina McCarthy, in response to questions for the record from the Senate Environment and Public Works Committee, said “EPA is not considering nor does it have any plans to seek to establish a federal LCFS.”

“Consumers received unexpected good news today that the Obama administration says it has no intention of moving forward with another EPA regulation that will drive up costs on consumers at the pump. Numerous independent studies have shown that a cap-and-trade program on transportation fuels would impose significant pain at the pump, and that is the last thing American families need right now.

“While EPA claims to have no intention of imposing an LCFS at this time, there is still reason to be vigilant, as EPA has established a track record of using ‘sue-and-settle’ as a means of implementing unpopular policies behind closed doors. An activist group has previously announced that it intends to sue EPA to force the agency to impose cap-and-trade fuel regulations that would ultimately amount to a de facto gasoline tax.  When that happens, we will find out if EPA will keep its word.

“CEA would like to thank Senators Vitter, Inhofe, Wicker and Fischer for holding EPA nominee Gina McCarthy accountable. Thanks to their oversight efforts, consumers now have the assurance that – for the time being, anyway – they won’t be facing the economic hardship of this cap-and-trade program in the form of EPA regulation.”

Background:

In March, after the Institute for Policy Integrity (IPI) at the New York University School of Law announced its intention to sue EPA to force a cap-and-trade system on the transportation fuels sector, U.S. Senator David Vitter (R-La.), Ranking Member of the Senate Committee on Environment and Public Works, together with Committee Members Senators Jim Inhofe (R-Okla.), Deb Fischer (R-Neb.), and Roger Wicker (R-Miss.) asked Gina McCarthy, nominee to head the Environmental Protection Agency (EPA), whether NYU’s lawsuit would lead to yet another EPA “sue and settle” rulemaking.

Sue and settle typically plays out this way: An opposition group threatens a lawsuit over EPA’s alleged failure to meet a statutory obligation through rulemaking.  The issue in question is usually controversial, and, as in IPI’s case, is unpopular with consumers because they ultimately have to pay for it.  A sympathetic EPA then convenes closed-door negotiations with the group, culminating in the announcement of a legal “settlement,” in which the agency agrees to move forward with the very rulemaking it otherwise refused to embrace.  When outrage ensues, EPA disingenuously claims its hands were tied; that they were, in fact, legally bound to impose higher costs on consumers.

Read more here.

Tags: EPA, Gina McCarthy, LCFS, Low Carbon Fuel Standard, Secure Our Fuels, sue-and-settle
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PORTLAND – Today, the Oregon Department of Environmental Quality adopted the Oregon clean fuels program.  The first phase of the program will force fuel producers and importers to register, keep records and report to DEQ the volumes and carbon intensities of the fuels they provide in Oregon.  The second phase beginning in 2015 would require regulated parties to reduce the average carbon intensity of fuels they provide in Oregon each year. In reaction to the news, Consumer Energy Alliance Executive Vice President Michael Whatley made the following statement:

“Today’s decision by the Oregon DEQ is disappointing and bad news for West Coast consumers and fuel providers.  If fully implemented, an Oregon low carbon fuel standard will dramatically increase costs for Oregon consumers, place the state’s businesses and industries at a disadvantage, and hammer an already weak economy in the Beaver State. With the state’s unemployment rate just points away from 9 percent, this is clearly not the right choice for Oregon’s economy or its drivers.”

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Tags: CEA, Clean Fuels Program, LCFS, Low Carbon Fuel Standard, Oregon, Secure Our Fuels
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WASHINGTON – A study released today by Consumer Energy Alliance (CEA) reconfirms the damaging impacts a national low carbon fuel standard (LCFS) would have on the American consumer and our economy.  With economic analysis conducted by National Economic Research Associates, Inc (NERA), today’s report “Critique of the UC Davis National Low Carbon Fuel Standard Study” outlines the false assumptions, selective analysis, and unsupported conclusions used by UC Davis to determine a national LCFS would benefit consumers.

Upon the release of the report, CEA’s Michael Whatley made the following statement:

“NERA’s economic analysis of UC Davis’ LCFS study underscores the catastrophic economic impact a low carbon fuel standard would have on consumers.  The UC Davis report is riddled in with dubious assumptions not facts. As NERA’s analysis highlights, the reality of a LCFS is troubling for American drivers, consumers, and homeowners who are already struggling to make ends meet.

“Given our nation’s record high prices and listless economic growth, a national low carbon fuel standard is the wrong choice for consumers.  The central conclusion that gasoline prices will fall due to the LCFS demonstrates a fundamental lack of understanding of the economics of fuel supply and demand.  A LCFS is more likely to increase gas prices, cost jobs, threaten reliable fuel supplies—shuffling resources, increasing transportation distances and augmenting total greenhouse gas emissions—and cost taxpayers millions than it is to provide any tangible economic or environmental benefits.”

As the NERA report analyzes, UC Davis made countless assumptions throughout its report to support the implementation of a LCFS. A few of the highlights from the report include:

• UC Davis study assumption: A LCFS will automatically lead innovators to develop greater quantities of low carbon fuels and any infrastructure needs for their deployment will materialize – ignoring many of the critical obstacles to adoption of lower carbon fuels.

• Reality: The federal renewable fuel standard (RFS) has failed to stimulate the development of advanced biofuels. Congress established the RFS seven years ago yet only a few thousand barrels of cellulosic ethanol have been produced commercially, despite the program’s initial mandate that hundreds of millions of gallons be produced by this year. There’s no evidence a LCFS will better stimulate development of advanced biofuels than the RFS.  Technological or commercial breakthroughs cannot be mandated by the government.

• UC Davis study assumption: The whole world will develop complementary policies to overcome the standard’s shortcomings including its call for large quantities of limited ethanol supplies and its impact on fuel prices.

• Reality: This assumption ignores history and current global politics. A LCFS has never been on the global agenda.  Furthermore, other countries will likely increase deforestation and crop production  to account for greater quantities of food that will be diverted as fuel, increasing global GHG emissions.

• UC Davis study assumption: Lower gasoline imports will lead to lower gasoline costs for consumers.

• Reality: The study misconstrues the true drivers of fuel costs and therefore incorrectly assumes a LCFS will put downward pressure on global oil prices. UC Davis’ exaggerated view on how U.S. gasoline imports affect domestic prices erroneously predicts that gasoline prices will decrease.

Read the complete NERA report here and CEA’s one page summary of the report here. For more information on the costly impact of a LCFS visit the Secure Our Fuels website or visit one of these reports:

• A copy of a June 2010 Charles River Associates study that delineates the economic effects of a national LCFS can be found here.

• A recent study conducted by the Boston Consulting Group on the California LCFS can be found here.

• A copy of IHS-CERA’s critique of NESCAUM’s economic analysis of a LCFS on the Northeast region can be found here.

• A copy of CEA’s study on the negative economic impacts of a LCFS in the Northeast region, with modeling conducted by SAIC, can be found here.

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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

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June 21, 2012 NEW HAMPSHIRE– Today, House Bill 1487, a bill to halt the state from participating in any low carbon fuel standard (LCFS) programs without authorization from the legislature, became New Hampshire law.   

In response to the news, Consumer Energy Alliance Executive Vice President Michael Whatley made the following statement:

“CEA applauds New Hampshire’s state leadership for enacting HB 1487.  From        summertime gas prices, to winter home heating oil costs, access to reliable, affordable supplies of fuel is an integral component of the economic health and security of New Hampshire consumers.

“Time and again, studies have shown the detrimental effects that a low carbon fuel standard would have on consumers and businesses across the nation while providing minimal benefits to the environment.  Now, the people of the Granite State can be assured that their families and pocketbooks will be protected from the harmful impacts of a costly, economically harmful LCFS program.

“As the first state to stand up against an LCFS regime, New Hampshire is paving the road for other states to protect their citizens from the damaging effects of these costly and ineffective programs. This important legislation is the right step for New Hampshire and an example of the right policy choice for the nation.”

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June 8, 2012 WASHINGTON – This week the New Hampshire legislature passed House Bill 1487, which would prohibit New Hampshire from participating in any low carbon fuel standards (LCFS) program requiring quotas, caps, or mandates on fuels used for transportation, industrial purposes, or home heating without authorization from the legislature.  Studies show that LCFS programs like the one proposed for New Hampshire will have devastating impacts on fuel prices and local economies.   A similar program in California was recently ruled unconstitutional by U.S. District Judge Lawrence O’Neill for violating the U.S. Constitution’s commerce clause.

Michael Whatley, Executive Vice President of the Consumer Energy Alliance, made the following statement:

“Today’s action by the New Hampshire legislature is an encouraging development for the consumers of New Hampshire.  LCFS programs discriminate against traditional fuels like gasoline and diesel in order to prop up alternative and renewable fuels which have limited commercial availability, pose reliability and infrastructure problems and are more costly for consumers, small business and working families.  By effectively rationing the use of gasoline and diesel, an LCFS will raise fuel costs, kill jobs and hurt the overall economy.

“Additionally, studies clearly demonstrate that LCFS programs will prove ineffective in actually reducing carbon emissions.  The last thing that New Hampshire consumers need is a program that will cost jobs and double their gasoline prices, all without helping the environment.”

Upon passage of the bill House Speaker William O’Brien stated:

“In 2009, Governor Lynch began the process of raising the price of gas and heating fuel by implementing this absurd scheme known as low carbon fuel standards.  Now is certainly not the time to be raising the price at the gas pump. We should be looking for ways to increase production of gas and heating oil, not trying to find ways to restrict it.”

House Majority Leader Pete Silva stated:

“It’s time to stop adding to the burden on the backs of our working families and to start helping our citizens.  The Governor and his Democratic colleagues continue forward on this reckless proposal to increase fuel costs on our citizens.  The last thing we need is a ‘liquid RGGI’ for New Hampshire.”

A copy of the Speaker O’Brien’s press statement can be found here.

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May 10, 2012- WASHINGTON – At Governor Kitzhaber’s direction, the Oregon Department of Environmental Quality has issued a draft rule for beginning implementation of a state low carbon fuel standard (LCFS) program, calling it a “Clean Fuels Program.” The program closely mirrors other LCFS proposals that have been studied at length and have been found to be devastating to local economies while also being ineffective in curbing emissions.   A similar program in California was recently ruled unconstitutional by U.S. District Judge Lawrence O’Neill for violating the commerce clause.

Upon issuance of the draft rule, Michael Whatley, Executive Vice President of the Consumer Energy Alliance, made the following statement:

“Today’s action by the Department of Environmental Quality is a troubling development. Low carbon fuel standard programs like this one, which seek to ration the use of gasoline and diesel, are economic growth killers.  These programs mandate the use of biofuels which have limited commercial availability and are more costly for consumers, small business and working families.

“Additionally, studies clearly demonstrate that LCFS programs will prove ineffective in actually reducing carbon emissions.  The last thing that drivers in Oregon need is a program that will double their gasoline prices and won’t help the environment.”

A study by Charles River Associates found that an LCFS could create a price shock of about a 30 to 80% increase in the cost of transportation fuels within 5 years of the time the program was implemented and up to a 170% in 10 years.  The shock would be caused by the large increase in production of low carbon fuels required to achieve the reductions in emissions required by the standard.

Like the program recently proposed in California, Oregon’s would also be creating a non-competitive situation due to the fact that the state receives the bulk of its fuel from Washington state and California.  Fuel providers will have to accept whether they will pay cost of compliance with Oregon or abandon the market altogether.  Even those spearheading similar programs have recognized the legal uncertainty surrounding LCFS.  Recently, executive director of the Northeast States for Coordinated Air Use Management (NESCAUM) Arthur Marin expressed concern in a recent interview about the constitutionality of California’s LCFS program, pushing NESCAUM to examine alternative models for a low carbon fuel standard.

A copy of the proposed program can be found here.

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Bill will prohibit funding for costly low carbon fuel standards without legislative due process 

WASHINGTON – Earlier today, the New Hampshire Senate passed HB 1487, an act that will prohibit the State from funding participation in any national, state or regional low carbon fuel standard (LCFS) without legislative approval.
Upon the announcement, Michael Whatley, Executive Vice President of the Consumer Energy Alliance, made the following statement:

“Today’s vote by the New Hampshire Senate is a victory for energy consumers in the Granite State. With recent studies indicating that a regional LCFS would more than double gasoline prices in New Hampshire, reduce disposable income, hammer the State’s GPD and threaten thousands of jobs, passage of this legislation is a win for New Hampshire drivers and home heating oil users.

“On the heels of a winter with record home heating oil costs, and in the midst of record spring gasoline prices, consumers should not be asked to pay more to take care of their families, heat their homes, and drive to work.  We hope that the Legislature will be able to work out the differences between the House and Senate versions of the bill quickly and send it to Governor Lynch shortly.

A recent report by Consumer Energy Alliance, with modeling conducted by SAIC, found that a Northeast/Mid-Atlantic LCFS would have a costly impact on all eleven states within the region including a cumulative loss of 147,000 jobs, an overall 10-year economic impact of $306 billion, and a doubling of gasoline prices—all while failing to reach standard’s intended carbon reduction goal.

A copy of the bill can be found here.

A copy of the report from CEA can be found here.

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SAN FRANSISCO  – On Monday, the U.S. 9th Circuit Court of Appeals issued a stay of a federal judge’s injunction blocking California’s low-carbon fuel standard.  The action will allow for the continued implementation of a low carbon fuel standard program in California during the appeals process.

In December, U.S. District Judge Lawrence O’Neill ruled that the program is unconstitutional because it violates the commerce clause.  In response to the 9^th Circuit’s ruling, CEA Executive Vice President Michael Whatley stated:

“We are disappointed that the 9^th Circuit Court of Appeals has chosen to allow, pending resolution of the appeal, a costly and  destructive program to continue while placing countless American jobs and consumers at risk. Even those supporting California’s LCFS have acknowledged its legal risk.  CARB’s claims that ‘the Low Carbon Fuel Standard drives investment and innovation, creates new jobs and provides the next generation of clean fuels to all Californians,’ have been debunked by study after study.  At the end of the day the LCFS will fail to reduce CO2 emissions, double gas prices, place thousands of jobs at risk, and will cost our economy billions of dollars.”

“As the Court moves forward with the appeals process, CEA will continue to pursue our challenge to this unconstitutional and costly state program that will have little to no impact on global carbon emissions.”

Even those spearheading the program’s development have recognized the legal uncertainty surrounding the LCFS. In the Northeast, NESCAUM executive director Arthur Marin expressed concern this week in an interview about the constitutionality of California’s LCFS program, pushing NESCAUM to examine alternative models for a low carbon fuel standard.

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