Secure Our Fuels

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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WASHINGTON – Today, the Consumer Energy Alliance (CEA) sent a letter to the attorney generals in all eleven NESCAUM states (Maine, Vermont, New Hampshire, Massachusetts, Rhode Island, Connecticut, New York, New Jersey, Pennsylvania, Delaware and Maryland), highlighting the recent federal district court  decision  that held California’s low carbon fuel standard (LCFS) program unconstitutional.  CEA urged the attorney generals of  these states to reject the economically harmful regional LCFS proposal that is unlikely to survive judicial scrutiny. In the letter, CEA notes the potential harm an LCFS will impose on the consumers of the Northeast:

“Consumer Energy Alliance and its members remain deeply concerned that the Northeast/Mid-Atlantic states will move forward with a regional low carbon fuel standard modeled on the framework adopted by California and declared unconstitutional by the federal district court for the eastern district of California. We also believe that if adopted and challenged in court, such a program would also be declared unconstitutional.”

Recent studies by CEA, IHS-CERA, Barr Engineering, and Charles River Associates have all found that the implementation of a regional LCFS will cost the northeast region thousands of jobs, reduce state revenue, and double regional gas prices over 10 years.  These studies have also indicated that the desired carbon reduction goals of an LCFS are not achievable under realistic market scenarios. 

Letters were sent to all 11 NESCAUM states.  See a sample letter to Pennsylvania Attorney General Linda Kelly HERE.

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A study released today by the Consumer Energy Alliance (CEA) confirms the damaging impacts a low carbon fuel standard (LCFS) would have on the economy and consumers in Northeast and Mid-Atlantic states.  With modeling conducted by SAIC, using input assumptions provided by CEA, the study, “Analysis of the Economic Impact of a Regional Low Carbon Fuel Standard on Northeast/Mid-Atlantic States,” highlights the impact an LCFS would have on the region over the next ten years:

• Doubling gasoline prices in the Northeast and Mid-Atlantic,
• Loss of 147,000 jobs,
• $28.8 billion decrease in disposable personal income,
• Overall negative economic impact of $306 billion.

Furthermore, the study found that despite the imposition of these huge costs on consumers and the economy, the LCFS program would fail to meet its goal of a 10-percent reduction in the carbon intensity of fuels. This is the direct result of the practical supply and demand constraints represented by the modeling, and the need to satisfy the region’s energy demand.

Based on this study, CEA believes that the NESCAUM analysis of the proposed LCFS was lacking in depth, methodology and analysis, and failed to account for the region’s energy needs.  

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

“While families and businesses in the Northeast and Mid-Atlantic are facing record high fuel prices and refineries in the region are shutting down, NESCAUM is proposing an alternative fuels forcing regulation that would double the price of gasoline.  At a time of high prices and looming regional fuel shortages, a low carbon fuel standard is the wrong choice for consumers.  Implementing a regional LCFS would kill 147,000 jobs, reduce GDP by $27 billion, and double today’s already soaring gas prices—all while failing to meet NESCAUM’s own target for carbon intensity reduction in fuels.

      “At a time when many Americans can barely afford to drive themselves to work, how can an ineffective, costly and duplicative standard like an LCFS be the right choice for any state? NESCAUM’s regional LCFS program is simply an unfeasible option for American consumers.”

The CEA study found that NESCAUM relied on flawed assumptions about the market’s ability to secure an adequate supply of biofuels, the infrastructure needed to support that demand, and the projected replacement of existing vehicles. These findings further support an analysis conducted by IHS-CERA in October 2011 that found NESCAUM’s economic analysis to be deeply flawed and riddled with unrealistic assumptions regarding the availability and price of advanced biofuels, electric and natural gas powered vehicles during the timeframe of the potential LCFS mandate.

A copy of the CEA study can be found HERE.

A copy of the IHS CERA report can be found HERE.

A copy of EIA’s report “Potential Impacts of Reductions in Refinery Activity on Northeast Petroleum Product Markets” can be found HERE.

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Fresno, California – After the U.S. District for the Eastern District of California rejected a request to lift a stay on low carbon fuel standards (LCFS) in California, the California Air Resources Board (CARB) has shifted to a new court in the 9^th Circuit in hopes of a new decision.  Last month, Judge Lawrence O’Neil ruled the standard unconstitutional and in violation of the commerce clause. On Monday January 23rd, CARB’s attempt to win a stay of a decision halting its LCFS program was again denied.

In response to the development, Consumer Energy Alliance (CEA) Executive Vice President Michael Whatley stated:

“The decision by CARB to appeal the decision by the District Court is disappointing, but unfortunately not surprising. We look forward to a decision by the Ninth Circuit upholding the District Court and confirming the unconstitutional nature of California’s low carbon fuel standard.”   

“In addition to discriminating against out of state fuels, the California LCFS would have driven gasoline and diesel prices for consumers through the roof while providing no real benefits for the environment.  Rather than appealing Judge O’Neill’s sound decision, CARB should scrap this faulty program.”

On January 5, CARB appealed the ruling and followed up Friday with a filing to lift the stay on the potential program.  On Monday, Judge O’Neill rejected that petition. Today, CARB filed its appeal with the 9th Circuit in San Francisco. Details surrounding the timing of the injunction are still being developed.

A copy of Monday’s amended decision can be found here.

A copy of the court’s original decision can be found here.

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Fresno, California – Monday night, U.S. District Judge O’Neill rejected a request to lift a stay on low carbon fuel standards (LCFS) in California.  Judge O’Neill stated that he would not reverse his original ruling that an LCFS in California is unconstitutional as it would violate the commerce clause. 

In response to the development, Consumer Energy Alliance (CEA) Executive Vice President Michael Whatley stated:

“We commend Judge O’Neill for standing firm on his initial decision against this harmful and unlawful policy.  Not only is an LCFS unconstitutional, but it would also hurt the California economy, farmers, consumers and truckers by raising fuel prices sharply and burdening consumers. 

“As proposed, the LCFS favors oil from unfriendly regimes and blocks the use of oil from friendly nations like Canada.  And ironically, the policy will have the opposite of its intended effect by creating more greenhouse gases in the long run.”

The federal district court finding on December 29th found an LCFS in California to be unconstitutional.  Specifically the court found that “LCFS discriminates against out-of-state and foreign crude oil while giving an economic advantage to in-state crude oil.” It also found that “the LCFS discriminates against out-of-state corn ethanol and impermissibly controls extraterritorial conduct.” Because the state had failed “to establish that no alternative means exist to address their legitimate concerns of combating global warming,” the LCFS is invalid. The court stayed enforcement of the LCFS pending further judicial review. 

On January 5, CARB appealed the ruling and followed up Friday with a filing to lift the stay on the potential program.  Last night, Judge O’Neill rejected that petition.

A copy of yesterday’s amended decision can be found here.

A copy of the court’s original decision can be found here.

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WASHINGTON, DC – The Consumer Energy Alliance sent open letters to the Governors of eleven states considering participation in a regional Low Carbon Fuel Standard being developed by NESCAUM (Northeast States Coordinated Air Use Management). The letters encourage the Governors to take a critical view of  NESCAUM’s economic analysis of the controversial LCFS.  Although NESCAUM’s modeling concludes that adoption of a regional LCFS would not harm the regions’ economies, an analysis conducted by IHS-CERA has found the NESCAUM findings to be deeply flawed. Among the conclusions reached by the IHS-CERA study are findings that NESCAUM made unrealistically optimistic assumptions regarding the availability and price of advanced biofuels and electric vehicles, as well as the availability of natural gas vehicles during the timeframe of the potential LCFS regulations.

Open letters were sent to Connecticut Gov. Dannel Malloy, Delaware Gov. Jack Markell, Maine Gov. Paul LePage, Maryland Gov. Martin O’Malley, Massachusetts Gov. Deval Patrick, New Hampshire Gov. John Lynch, New Jersey Gov. Chris Christie, New York Gov. Andrew Cuomo, Pennsylvania Gov. Tom Corbett, Rhode Island Gov. Lincoln Chafee, and Vermont Gov. Peter Shumlin.

Michael Whatley, Executive Vice President of the Consumer Energy Alliance said, “A regional Low Carbon Fuel Standards will dramatically increase gasoline, diesel and home heating oil prices throughout the Northeast and the Mid-Atlantic and it is important that the Governors of these states understand the true economic impacts of any LCFS proposal on consumers. NESCAUM’s reliance on wildly optimistic assumptions regarding the availability and prices of alternative and renewable fuels and technologies necessarily places their economic impact conclusions into question.”

The letters outline multiple assumptions made by NESCAUM in its economic analysis of the LCFS that make the proposed regulations seems less costly than they will be in reality.  These assumptions include:

• Assumptions about the availability of next generation biofuels
• Price Assumptions regarding advanced biofuels
• Price Assumptions regarding Plug?in Hybrid Electric Vehicles (PHEVs)
• Price Assumptions regarding Battery Electric Vehicles (BEVs)
• Assumptions about the availability of PHEVs
• Assumptions about the availability of BEVs
• Assumptions about the availability of Natural Gas Vehicles (NGVs)
• Assumptions about the fueling infrastructure for NGVs

You can read NESCAUM’s economic analysis here

You can read IHS-CERA peer assesment here.

Copies of the letters can be found here and here.

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Ads urge residents to call their lawmakers, oppose effort to attach job-killing Low-Carbon Fuel Standard (LCFS) to Senate energy and climate bill

WASHINGTON — As efforts continue behind closed-doors in Washington to attach a job-killing Low-Carbon Fuel Standard (LCFS) to upcoming energy legislation in the Senate, Consumer Energy Alliance (CEA) announced today the purchase of television and radio time all across the Midwest with an eye on educating residents about how an LCFS could lead to fewer jobs, less security and more expensive fuel for them and their families.

“At at time of record unemployment and great economic uncertainty, the only way to advance a policy such as the LCFS that kills Midwest jobs and drives gas and diesel prices through the roof is to hope and pray your constituents don’t do their homework on it,” said CEA president David Holt.

“Unfortunately, LCFS supporters aren’t all that interested in telling the whole story – like what will happen if an LCFS is used to prevent sources of secure Canadian energy from getting to consumers who need it,” added Holt. “The effort we’re announcing today represents an attempt to paint a more complete picture on the consequences of an LCFS, and hopefully inspire folks to take a closer look at how the policy will impact them and their families.”

According to a recent study by Charles River Associates, a nationwide LCFS could result in the loss of as many as 4.5 million jobs by 2025, with as many as 1.1 million jobs lost throughout the Midwest. The study also finds an LCFS may result in a decline in average household purchasing power for the region of as much as $2,000 a year – all while spiking the cost of gasoline and diesel fuel by as much as 170 percent.

At its core, an LCFS would discriminate against certain sources of reliable, affordable petroleum used to make gasoline, diesel fuel, kerosene and heating oil. The theory justifying the LCFS says that if the supply of these resources is cut, enough alternatives will arrive on the market to replace them – even if sufficient amounts are currently considered decades away from commercial realization.

The CEA television and radio ads are available here: http://www.secureourfuels.org/multimedia/

Tags: David Holt, energy bill, Indiana, LCFS, Michigan, Minnesota, Ohio
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CEA’s Whatley on hand to participate in forum, submit comments in support of expanded Canada-to-USA pipeline

WASHINGTON – Is the U.S. government ready to take meaningful steps toward reducing America’s reliance on far-away, unstable energy while leveraging secure, proximate energy sources to create jobs and opportunity here at home? That’s the conversation that took place today at the U.S. State Department, as the agency held another in a series of public forums on whether to grant a final permit in support of the Keystone XL pipeline project, which, upon completion, is slated to deliver 900,000 barrels of affordable Canadian energy a day to consumers in the U.S. who need it.

“Some might consider the State Department an unlikely setting for a discussion on energy in the United States,” said Michael Whatley, vice president of Consumer Energy Alliance (CEA) and on hand today to provide comments in support of the Keystone project for CEA. “But actually, the Keystone pipeline project is right up State’s alley – especially since the project has the potential to advance key national imperatives related to energy security, affordability and access for millions of Americans. The best part is: It has the potential to do all that without bringing harm to the environment. That’s why CEA supports the project, and that’s why we will continue to work with all stakeholders involved to ensure it happens swiftly and responsibly.”

Once completed, the Keystone XL project will consist of three new pipelines spanning roughly 1,380 miles across the United States from Canada, with the capacity to deliver roughly 900,000 barrels of secure, affordable Canadian energy to American consumers over the long-term. Despite that reach, the actual environmental footprint involved in executing the project is minimal – with the total disturbed area for the project only expected to be 150 square miles. Because the pipeline originates in Canada and crosses into the United States, State Department approval is required.

In addition to CEA, a number of organizations representing consumers, organized labor, and state and local governments appeared at today’s forum to lend their unique perspectives on why the Keystone project is so important to them and their constituents.

“We came here today to show our strong support for the TransCanada Keystone XL pipeline,” said Russ Breckenridge, a legislative representative of the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada. “Right now the construction industry is currently facing on average 20 percent unemployment, and in some areas our members are facing 40 percent. The TransCanada pipeline will begin to put our members back to work with high-quality jobs, with full benefits and worker protection.”

Added Breckenridge: “Our organization wouldn’t be supporting this project if safety was any concern. … As President Obama has told our organization many times, his number one priority is creating jobs and turning the economy around. The Keystone project will achieve these two goals.”

Richard Moskowitz, vice president and regulatory affairs counsel for the American Trucking Associations – a CEA member – told the forum that the trucking industry supports the use of renewable and alternative fuels in the transportation sector, but “for the foreseeable future we will be dependent on diesel fuel to deliver virtually 100 percent of the consumer products in the United States.”

Moskowitz also addressed concerns related to the carbon output of fuels expected to be delivered by the pipeline: “The carbon required to transport that oil from Alberta down to Houston is going to be less than the amount of carbon required to transport that oil across Canada, load it on super-tankers, and bring it to China – which is what will happen if we don’t use that oil here in the United States.”

Tags: American Trucking Association, Center for North American Energy Security, Consumer Energy Alliance, Michael Whatley, TransCanada Keystone XL
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