Consumer Energy Alliance’s (CEA) vice president and in-house oil sands expert Michael Whately and Shantel Beach, a Council on Hemispheric Affairs (COHA) fellow, discussed the dangerous consequences associated with Low-Carbon Fuel Standard (LCFS) proposals yesterday with the media. The pair highlighted the threats to the energy security, impacts on fuel and home-heating costs for consumers and U.S. economic competitiveness.
Whatley characterized LCFS as “a cap-and-trade system for transportation fuels.” He also discussed the states and regions across the nation that are working to pass LCFS proposals, particularly in the Mid-West, the Northeast and the Mid-Atlantic.
COHA’s Beach summarized her recent report entitled “The U.S. Targets Canada’s Oil Sands: Washington Should Tread Lightly with its Environmental Legislation, so that Carbon Cuts will not Come at the Expense of Canada’s Energy Sovereignty or U.S. Energy Security,” which finds:
Canada can and likely will push back, especially since China is more than happy to step in and purchase oil … if the U.S. chooses not to. That prospect is taking on enhanced credibility as planning proceeds for the Northern Gateway pipeline project to carry oil sands petroleum to Kitimat in northern B.C. for potential shipment to Asia.
In addition to COHA’s concerns about China moving forward to aggressively acquire affordable and secure Canadian energy reserves if the U.S. decides to turn its back on its closest and most strategic trading partner, Beach raised concerns with an LCFS:
Under a national LCFS program, all vehicles would be required to fill-up with a blended fuel. As the production of bio-fuel in the U.S. is not currently enough to satisfy a one-to-one ratio blend with gas coming from the oil sands, in the short-term the blend will likely favor conventionally extracted oil, at Canada’s expense. Due to Canada having less conventional oil reserves than oil sands reserves, a shift in U.S. demand toward conventional oil would redirect trade away from Canada. If the U.S. comes to depend less on Canada’s oil sands, it will surely come to depend more on conventional oil reserves from less dependable countries overseas.
In fact, this same theme was recently touched on by The Globe and Mail in their article, “Why the U.S. needs all the tar sands oil it can get,” which says:
Governor Arnold Schwarzenegger and his Midwestern colleagues had better think twice before banning carbon-dirty fuels such as the oil made from Canadian tar sands. If they don’t like the fuel Canada has to offer, their only other choice is to get off the road entirely. Like it or not, synthetic oil from Alberta’s tar sands is going to figure ever larger at American fuel pumps in the future (provided that it isn’t siphoned off to China by a pipeline to the west coast first).
Mr. Schwarzenegger and his fellow governors should realize one thing before they ban dirty fuels. The reason the United States will be so dependent on Canadian tar sands is that there ain’t a whole lot else left.
Despite the doubt that may exist about the likelihood of a pipeline being built to the West Coast to allow China access to the Canadian oil sands, that project is moving forward. In fact, this week Canada’s Environment Minister Jim Prentice and Mr. Gaétan Caron, chair and CEO of the National Energy Board, announced the establishment of a three-member joint review panel for the environmental and regulatory review of the proposed Northern Gateway Pipeline project.
While this is good news for China, since they are eager to secure as much of this energy as possible, the U.S. is at risk of losing almost one-fifth of our secure, affordable and reliable fuels from Canada.
This is why CEA continues to work to educate, inform and engage American consumers about the economic and national security threats that an LCFS poses. Stressed by Whatley and Beach in yesterday’s media call, an LCFS will threaten American jobs, increase greenhouse gas emissions, deepen our dependence on unstable regions of the world and drive prices at the pump even higher.
