Secure Our Fuels

Top DOE energy policy analyst Carmen Difiglio stuns conference crowd with presentation detailing how BAD an LCFS would be for America

As convention venues go, the annual transportation conference at the Asilomar resort in Pacific Grove, Calif. is about as good as they come. A round of golf at Pebble Beach in the morning, a stimulating discussion on CAFE standards in the afternoon, and a long walk down the shoreline of the famed Monterey Peninsula at night — convention-goers to this invitation-only event may know exactly what to expect when they come each year, but that doesn’t make the experience any less wonderful.

Good thing for him, Carmen Difiglio’s invitation wasn’t conditioned on pre-event approval of his presentation. Turns out Mr. Difiglio doesn’t think a nationwide Low-Carbon Fuel Standard (LCFS), as initially introduced in Waxman-Markey, is such a good idea. And at a conference like this, talk like that will relegate you to the back of the dining hall, where you’ll be forced to eat your Monterey salmon boudin noir on choucroute all by your lonesome.

But who cares what he thinks? His boss should: As the deputy assistant secretary at the Department of Energy, Mr. Difiglio is the Obama administration’s lead energy policy analyst. This is a man who helped develop the Clean Air Act amendments of 1990; headed up the energy technology division at the International Energy Agency; directed the U.S. Alternative Fuels Council; and supervised the creation (apparently not the unveiling!) of the National Energy Strategy before that. When he talks, smart people listen – and then advise their bosses on what to do, say and think next.

Mr. Difiglio gave a presentation at the Asilomar conference in July and although he’s careful to indicate that the conclusions he puts forth “do not reflect the views of the U.S. Department of Energy,” it’s worthwhile, nonetheless, to see what the Energy Department’s top policy analyst has to say about one of the most complicated, and potentially sweeping, policy proposals making its way around Congress today.

Here are some of the key conclusions, pulled verbatim, from his presentation:

A national LCFS* is not estimated to:

• significantly increase world-wide biofuel production.
• discourage production of petroleum feed stocks with higher [greenhouse gas] emissions.
• appreciably reduce world-wide carbon emissions

In case you’re scoring at home, those three things that Mr. Difiglio says an LCFS will not achieve – they’re the same things that LCFS proponents universally cite as reasons we need to immediately implement the policy, even if it results in higher prices at the pump, fewer jobs for American workers here at home, and a significant diminution in American security as our competitors in China claim energy resources previously earmarked for U.S. markets.

To his credit, Mr. Difiglio pulls no punches in rendering an honest assessment of how much secure, affordable energy U.S. consumers can expect to lose under an LCFS, and how much of that energy our friends in China and elsewhere in Asia will gobble up in our stead.

The chart below was taken directly from Mr. Difiglio’s presentation (slide 16), and shows that under an LCFS, nearly 2 million barrels of secure Canadian crude A DAY would be diverted to Asian markets by 2025 – energy that, under the “reference case” scenario, would have been sent to and used by grateful energy consumers in the United States:

The imposition of an LCFS won’t do a thing to impede Canada’s efforts to develop its homegrown oil sands, according to DOE’s top energy policy analyst – the only thing it will impede is Americans’ ability to access those resources as more and more of them are shipped away to China. Armed with this analysis, Mr. Difiglio then takes on another article of faith among the pro-LCFS crowd: the idea that global greenhouse gas emissions would significantly drop, even though more than 80 percent of transportation sector emissions come from the combustion (not the production) of refined fuel.

Mr. Difiglio makes short work of this canard as well (debunked in a recent study), laying out in clear detail what should be apparent to anyone with the capacity for honest observation. Would an LCFS limit the amount of energy available to Americans, and thus marginally reduce the amount of carbon we, as Americans, emit? It might. But every bit of that reduction would be swallowed up and spit out by our competitors around the world – countries like China, which will be more than happy to take this energy off our hands and emit significantly more carbon in the process of consuming it along the way. Mr. Difiglio’s chart makes this point plain:

Carmen Difiglio is not a maker of public policy; only an analyst thereof. Ultimately, it will be incumbent upon our policy-makers to take a close look at the work that Mr. Difiglio and other credible sources have done in this area, and decide whether the stated goals of an LCFS align with the actual benefits we as Americans, informed by these analyses, should expect to receive.

But if Mr. Difiglio’s research is any indication, the disconnect between these two phenomena are wide and growing wider. Still to be answered is whether the disconnect between Mr. Difiglio’s bosses and the American people is of similar expanse.