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Bay State LCFS Could Prevent Secure, Canadian Energy from Getting to Mass.

Monday, June 14th, 2010

More than 2,100 miles separate the Canadian province of Alberta from the commonwealth of Massachusetts — and with no direct commercial flights connecting the two, it tends to feel even a whole lot further away than that.

But maybe the two are a lot closer connected than meets the eye. Consider that in March alone, Massachusetts imported 2.8 million barrels of petroleum products from Canada, including fuels derived from Alberta oil sands, the second largest known source of oil in the entire world. Resources developed, processed, refined and eventually delivered to the Boston Harbor – in the forms of gasoline, diesel fuel and home heating oil, upon which nearly one million Bay State residents depend to keep their homes warm during the winter.

Today, I have the privilege to be in Boston to participate in an energy summit with the environment minister of Alberta, on hand to discuss new ways that his province can partner with New England to achieve shared goals related to security, the economy and the environment. The one big challenge to that progress? The imposition of a Low-Carbon Fuel Standard (LCFS), a policy being developed right here in Boston that would greatly reduce your state’s access to Albertan energy, while greatly increasing your reliance on suppliers half-a-world away.

Last December, Gov. Patrick joined 10 other governors in signing an agreement on an LCFS. Proponents argue it will improve the environment by lowering the carbon content of your fuels, all without costing consumers and motorists a thing. The reality, though, is that this issue is a lot more complex than those proponents suggest – with consequences that will significantly Bay State access to secure, affordable Canadian energy.

Under the LCFS proposal being considered, transportation and home heating fuels would be given a carbon value based upon emissions produced over their lifetime. All fuels require energy for their production — but so-called heavier crudes (such as those found in Alberta) receive higher scores because they require marginally more energy to produce. Under an LCFS, these are the fuels targeted for elimination.

But as study after study has shown, the carbon intensity of oil derived from Alberta’s oil sands is very much in line with the intensity found in a host of other crude sources, including in the United States – which is why study after study has also shown that greenhouse gas emissions aren’t actually lowered by the LCFS.

The reality is, the oil sands’ environmental footprint continues to shrink each and every year. Carbon dioxide emissions from the production of oil sands has come down by an average of 39 percent per barrel since 1990. In some facilities, the reduction has been as high as 40-45 percent.

In 2007, the government of Alberta implemented greenhouse gas regulations requiring a 12 percent reduction in emissions per barrel. Emitters can meet the reduction target, acquire approved offsets, or pay $15 for every excess ton of emissions into a fund supporting research on improving the environment. As of 2009, over $186 million was paid into that fund, with many millions more expected to be deposited this year. Additionally, the Alberta and Canadian governments, along with industry, have invested over $10 billion in carbon capture and sequestration projects to reduce carbon emissions from energy production.

Alberta has taken significant strides to reduce the environmental footprint of oil sands production, and has the ability today to provide essential energy resources to the northeastern United States from a friendly, reliable trading partner. We’re hoping today’s energy forum brings some of those issues to light. For those in the area, we certainly hope you can find the time to stop by. For those who aren’t – we got you covered as well.

Tags: Consumer Energy Alliance, environment minister, LCFS, Low-Carbon Fuel Standards, Massachusetts, Michael Whatley
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Help Secure America’s Energy Future! The U.S. Department of State Needs to Hear from You!

Tuesday, June 8th, 2010

As issues related to energy and climate continue to be debated in the nation’s capital, policymakers would do well to keep top-of-mind the importance of reliable, affordable resources from Canada Given the 2.5 million barrels of petroleum that Canada sends our way each and every day, our neighbors to the north clearly play a unique role for the U.S. as our closest, strategic trading partner in the world. In fact, every barrel of crude oil the United States imports from Canada is one less barrel being purchased from people and places in the world whose interests don’t align with ours.

Since IHS Cambridge Energy Research Associates (CERA) recently released a report highlighting that Canadian oil sands production is expected to grow from 1.34 million barrels a day to between 3.1 million and 5.7 million barrels a day by 2030 (which could make up as much as 36 percent of United States oil imports by 2030), it is essential that we have the infrastructure in place to handle those volumes.

To build this needed expansion, Consumer Energy Alliance supports the proposed TransCanada Keystone XL pipeline project and the recently released U.S. State Department’s Draft Environmental Impact Statement (DEIS) – a statement that confirms the delivery of secure, affordable supplies of Canadian energy to American consumers can be done without bringing harm to our environment. But wait: Don’t tell us you missed your chance to weigh-in on the proposed Keystone pipeline with Secretary Clinton? The deadline, after all, was June 1. Or at least it was. Good news is, this week it was announced the deadline will be extended to June 16, 2010 – and CEA is asking for your help to communicate your support for the project to the U.S. State Department.

Securing stable and affordable energy from our North Aerican allies through projects such as the Keystone Pipeline is in our national interest. While a final decision by the State Department has not been made on the Keystone Pipeline, what we’ve seen so far portends positive news for American consumers. And here’s why:

The project will consist of three new pipelines – one from Morgan, Montana to Steele City, Nebraska; another from Cushing, Oklahoma to Nederland, Texas; and the final one, from Liberty County, Texas to Moore Junction, Texas. The Keystone will initially carry 700,000 barrels of crude per day, eventually increasing to 900,000 barrels — significantly strengthening America’s energy and economic security, as well as creating thousands of family supporting jobs along the way. In fact, it is projected that during construction, Keystone XL will create more than 13,000 jobs funded with private investment, as well as additional revenue for local governments from the economic activity associated with construction and from pipeline property taxes.

Considering the economic and energy security benefits of Canada’s vital resources, policymakers should continue to expand America’s access to safe, affordable energy supplies to help ensure improved energy security and stable prices for consumers.

However, as CEA’s Michael Whatley recently mentioned at the Center for North American Energy Security’s energy summit, under a Low-Carbon Fuel Standard (LCFS), Canada would intentionally be singled out for exclusion. As a result, a nationwide LCFS would shut down projects like the Keystone XL and Alberta Clipper altogether – jeopardizing thousands of jobs and billions in economic activity.

Despite the State Department’s positive draft decision on the proposed Keystone XL pipeline, CEA’s grassroots supporters and affiliates will continue to be active contributors to the ongoing debate about commonsense energy legislation can create jobs and help drive down prices at the pump, and how misguided LCFS proposals threaten our nation’s energy security.

Tags: Alberta Clipper, Canadian crude, CEA, Center for North American Energy Security, Consumer Energy Alliance, IHS Cambridge Energy Research Associates, LCFS, Low-Carbon Fuel Standards, Michael Whatley
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Forecast for the Canadian Oil Sands: America’s Top Source of Imported Oil

Friday, May 21st, 2010

This week, IHS Cambridge Energy Research Associates (CERA) released a report highlighting the what-should-be-welcome reality that Canadian oil sands are expected to become America’s top source of imported oil this year, surpassing conventional Canadian oil imports and almost equaling the volume of crude received each day from Saudi Arabia and Kuwait combined.

The United States currently produces about five million barrels of oil a day and imports 10 million more—Canada accounts for about 1.9 million barrels of the daily imports and about half of it is from the oil sands. However, IHS CERA projects oil sands production growing from 1.34 million barrels a day to between 3.1 million and 5.7 million barrels a day by 2030 – which could make up as much as 36 percent of United States oil imports by 2030.

The New York Times highlights this remarkable report in a story entitled “Reliance on Oil Sands Grows Despite Environmental Risks:”

In a new report, it projects that “The uncertainty and the slowdown in drilling permits in the gulf really underscores the growing importance of Canadian oil sands, which over the last decade have gone from being a fringe energy source to being one of strategic importance,” said Daniel Yergin, an oil historian and chairman of IHS CERA. “Looking ahead, its importance is only going to get bigger.”

In a world in which so many oil-producing nations are far away, unstable or hostile to the United States, Canadian oil sands hold great political appeal.

Echoing The New York Times, Consumer Energy Alliance’s (CEA) Michael Whatley recently characterized the situation this way at the North American Energy Security Summit hosted at the Canadian Embassy in Washington, D.C.:

“Canada is our closest trading partner in the world and our most important strategic ally in the hemisphere. Energy isn’t merely incidental to that relationship; it’s fundamental to it. No nation in the world sends more energy to the United States each day than Canada. And if we expect to have even a fighting chance at reducing our nation’s dangerous dependence on far-away, unstable energy in the future, Canadian energy will have to play an even more active role in helping us get there.”

Interestingly, The New York Times reported on this same event, stating “a phalanx of Canadian diplomats took advantage of a previously planned trip to Washington to promote oil sands” and an opportunity for Alberta’s premier, Ed Stelmach to highlight “what we have to offer, which is security of supply” and “a safe stable government.”

Reporting on the CERA predictions under the headline “Tar sands will become top source of U.S. imported oil this year,” Nathanial Gronewold with E&E News adds:

While future output will depend on the investment climate and government policies, but analysts see the tar sands’ development continuing to grow as the region becomes the United States’ most important foreign source. In their high-growth scenario, researchers say oil sands could constitute 47 percent of total U.S. crude imports and become the source of fully 26 percent of all crude oil and refined products.

Gronewold continues with an overview of how innovation is improving the environmental footprint of the oil sands:

“Innovation in oil sands has been a constant theme,” the report says. “Since its inception, the industry has made and continues to make major technological strides in optimizing resources, innovating new processes, reducing costs, increasing efficiency, reducing greenhouse gas emissions, and reducing its environmental impact.” Technological progress should further lighten the burden of water pollution and other environmental concerns, the report adds.

However, despite the fact that newer and more efficient technologies have been deployed to develop the oil sands in an environmentally sensitive way, it seems that environmental groups bent on the sands’ destruction have agreed upon a strategy of releasing report after report filled with the same old tired criticisms of the oil sands. Fortunately, this broken record won’t change the truth – namely, that innovations in technology have helped reduce the sands’ carbon emissions per barrel by more than 30 percent since 1990.

Irrespective of this progress, these same groups would like to see a dangerous Low-Carbon Fuel Standard (LCFS) scheme passed in the United States – a policy that would severely restrict American access to secure and affordable sources of energy, and through that, result in higher prices at the pump for U.S. consumers, and a deeper, more dangerous dependence on some of the most unstable and unfriendly regions of the world to keep our economy running.

Given that more than 20 states across the country are currently considering LCFS policies, the Canadians don’t appear all that interested in waiting around to see what happens next. In fact, plans are already under way for pipelines to be built from Alberta to Canada’s west coast for shipments to Asia and Ed Stelmach, Alberta’s premier, recently flew to China with a trade mission to Shanghai, Beijing and Harbin.

According to the Montreal Gazette’s recent story on Stelmach’s visit, titled “Alberta welcomes more Chinese investment in oilsands”:

When Premier Ed Stelmach said in Shanghai this week, “our doors are open,” it was a clear invitation for more Chinese investment in Alberta’s oilsands. In an interview Tuesday, the premier said that the world financial crisis means Alberta oil companies are looking for new investors and China is clearly on their radar.

Like many American consumers, CEA is concerned that China’s and India’s insatiable appetite for stable energy resources to continue to aggressively grow their economies, coupled with the consideration of job-killing LCFS proposals in the U.S., could send a troubling message to our strongest and most important trading partner to the north.

So as China continues to secure steady streams of affordable energy, like those produced from Canada’s sands, state and federal policymakers should reject dangerous LCFS schemes and remember America’s top source of imported oil this year and the unique role that Canada plays both as America’s largest fuel supplier and its closest friend.

Tags: Canada, CEA, China, Consumer Energy Alliance, IHS Cambridge Energy Research Associates, LCFS, Low-Carbon Fuel Standards, Michael Whatley
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As California Goes, So Goes the Rest of the Country (for Worse)

Wednesday, May 19th, 2010

Following the recent introduction of climate legislation in the U.S. Senate that did not contain provisions to enact a Low-Carbon Fuel Standard (LCFS), former U.S. Rep. and President of the Center for North American Energy Security (CNAES), Thomas Corcoran, penned a column in The Daily Caller titled, “Low-carbon fuel standards may be closer than you think” about the numerous state efforts that are under way to pass harmful LCFS policies across the U.S. Here are key excerpts:

While they may not know it yet, the decision to leave the LCFS on the cutting room floor is a rare spot of good news for a broke and broken American public. After all, ever since the governor of California signed an executive order in 2007 setting his state down the LCFS path, those of us who have seen this movie before began to brace for the inevitable national standard from Washington—part of the less-than-implicit pact we have with the world’s eighth largest economy to bail it out anytime it bites off a mandate too big for it to chew.

But given a second glance at the legislative movement taking place throughout the country, perhaps we’ve been duped. True, it’s unlikely that an LCFS will be resurrected as part of the Kerry-Lieberman bill. But that doesn’t mean it’s prepared to stay in the grave forever. Right now, in more than 20 states across the country, efforts are under way to copy the California model and paste it into statute—with or without the consent of the legislature. And while you may think you’d be safe if you happen to live in one of the remaining 30 states, it’s time to think again.

Corcoran continues with a summary of current state LCFS efforts:

The rest of the West Coast has caught on as well. In Washington, final recommendations on the provisions of the state’s LCFS are due to the Department of Ecology by November. And in Oregon, proposed changes to House Bill 2186, which would enact an LCFS there, are due by year’s end. So if all goes as planned, the entire western coast could be under an LCFS regime before the ball drops on 2011.

One state, however, has recently bucked the trend. In reviewing the Clean Energy Jobs Act brought before the state legislature, Wisconsin lawmakers moved to drop the LCFS provisions originally included in the bill, citing concerns over costs, particularly to the manufacturing sector that is essential to the state’s economic livelihood.

In the case of an LCFS, which effectively bans stable and reliable forms of North American energy, American consumers can only hope that these states don’t continue to take their cues from the Golden State. In fact, before moving any further in their LCFS process, states may want to pay attention to a recent article from Environment and Energy News, titled “Calif. will suffer if it acts alone on GHGs — state auditor.”

In this article, E&E Reporter, Colin Sullivan, reports that California’s legislative auditor recently found in an analysis that “if California proceeds on greenhouse gas curbs without regional involvement, the state’s economy is likely to suffer short-term harm as electricity prices rise and business flees to neighboring states.”

Sullivan also reports:

“These adverse effects will occur in large part through economic leakage, as certain economic activity locates or relocates outside of California where regulatory-related costs are lower,” analyst Mac Taylor wrote in a letter to a California lawmaker dated May 13.

The nonpartisan legislative auditor specifically examined the effects of A.B. 32 if the Western Climate Initiative, or WCI, fails to coalesce when California launches its cap-and-trade program in 2012. WCI had been on track to move forward with California but lately has suffered defections. Recent reports indicate only New Mexico and a few Canadian provinces will be prepared to implement the law’s far-reaching emissions cuts.

Nonetheless, Taylor in his letter to Logue said the climate law would cause the price of goods and services to rise; lower business profits; and reduce production, income and jobs. Taylor said A.B. 32 would likely create green jobs but not enough to offset the economic losses.

After seeing the potential economic harm that California may suffer through if they continue on their path implementing A.B. 32 and the law’s LCFS provisions, states would clearly be wiser to say no to the prescription laid out by an LCFS—higher fuel costs and increased imports from unstable regions of the world.

States should instead follow the lead of the Badger State by rejecting harmful LCFS schemes due to concerns about the extreme economic hardship that such policies could bring upon its citizens. With the economy still rebounding and national unemployment stuck around almost 10%, now may not be the best time for states to follow California’s lead off of an economic cliff.

Tags: California LCFS, Center for North American Energy Security, LCFS, Low Carbon Fuel Standard
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CEA at North American Energy Security Summit: Energy Not “Incidental” to U.S.-Canadian Partnership, But “Fundamental”

Tuesday, May 11th, 2010

Last week Consumer Energy Alliance (CEA) vice president Michael Whatley joined the U.S. State Department, Alberta’s premier, and top U.S. and Canadian energy experts for a North American Energy Security Summit hosted at the Canadian Embassy in Washington, DC.

Alberta premier Ed Stelmach reinforced the fact that Canada stands ready, willing and eager to build upon the unique and valuable relationship that exists with the United States to leverage energy resources into jobs, security and opportunity on both sides of the border. And following his remarks, David Goldwyn – a senior State Dept. advisor – weighed in regarding America’s historic partnership with Canada on issues related to energy security, affordability, and reliability, describing this strong and strategic relationship as a “model” for others to follow.

ClimateWire highlights Mr. Goldwyn’s remarks in story entitled “With offshore oil spilling, Alberta pushes its inland”:

“Having technically recoverable petroleum reserves that are on our border, and they’re delivered by pipelines that are controlled by a stable democracy and an ally and a friend in an open and transparent regulatory regime enhances … global energy security today and into the future,” David Goldwyn, who oversees international energy issues at the U.S. State Department, told an audience at the Canadian Embassy yesterday.

Following remarks from Stelmach and Goldwyn, CEA’s Michael Whatley added this about the importance of North American energy security:

Canada is our closest trading partner in the world and our most important strategic ally in the hemisphere. Energy isn’t merely incidental to that relationship; it’s fundamental to it. No nation in the world sends more energy to the United States each day than Canada. And if we expect to have even a fighting chance at reducing our nation’s dangerous dependence on far-away, unstable energy in the future, Canadian energy will have to play an even more active role in helping us get there.

Nick Snow of the Oil & Gas Journal reports this under the headline “Forum showcases benefits of Alberta oil sands development”:

The US Environmental Protection Agency’s effort to limit GHG emissions under the Clean Air Act poses the biggest threat, added Michael Whatley, vice-president of the Consumer Energy Alliance. “Demand has rebounded since the economy hit bottom in 2008 and 2009. China and India are trying to get more supplies than ever out of world markets,” Whatley observed. North America has sufficient energy supplies to meet growing demand, but US policies restricting access and mandating low-carbon fuels restrict their development, he said. “Let’s be clear: Demand is going to increase,” Whatley said. “Taking North American energy resources off the table will affect consumer prices and hurt the economy.”

Hosted by the Center for North American Energy Security (CNAES), the day’s event drew broad participation, including a number of U.S. and Canadian energy, economic and environmental experts. The discussion and debate throughout the day ranged from the capacity and permitting of local pipelines, to federal procurement rules for accessing oil sands-derived energy, all the way through to the political debate surrounding Low-Carbon Fuel Standard (LCFS) proposals, a policy that would severely restrict American access to secure and affordable sources of energy from Canada.

Canwest News Service’s Sheldon Alberts captured the possible threat of an LCFS in an article under the headline “Gulf spill makes oilsands more appealing”:

Still, oil sands supporters remain suspicious of the Obama administration and fear it will seek a low carbon fuel standard (LCFS) targeted at carbon-intensive energy sources like the oil sands. Michael Whatley, vice-president of … Consumer Energy Alliance, said it was ‘no coincidence’ that an early version of U.S. climate change legislation from the House of Representatives included plans for a low carbon fuel standard. Whatley said there’s also concern the Obama administration could target the oilsands through the Environmental Protection Agency … ‘The LCFS is a high priority for this administration,’ Whatley said at the Canadian Embassy. ‘They can move down that road. We are very concerned that they will.’

And under the headline “After spill, Stelmach touts oil,” the Globe and Mail reports this:

Mr. Stelmach said he’s only trying to ensure the oil sands gets fair treatment in the face of a wave of federal and state efforts that threaten to penalize Alberta’s heavy crude and other high-carbon fuels. Pending regulations from the U.S. Environmental Protection Agency – which is poised to cap greenhouse gases since Congress won’t – threaten to cut off the sale of oil sands crude from Alberta to refineries south of the border. And dozens of states are moving ahead with regulations that would penalize carbon-intensive fuels and spur use of greener alternatives. Major U.S. energy consumers, meanwhile, worry that a low-carbon fuel standard may be inevitable in the United States. “We’re very concerned,” said Michael Whatley, vice-president of the Consumer Energy Alliance, a broad coalition of major U.S. energy consumers.

Given the recent announcement that climate change legislation may be introduced very soon in the U.S. Senate, CEA will continue to remind policymakers about the dangerous consequences of imposing an LCFS in the U.S., as well as the importance of our closest trading partner and the barrels of secure and reliable fuel Canada sends the United States each day.

Tags: CEA, Center for North American Energy Security, Consumer Energy Alliance, LCFS, Low Carbon Fuel Standard, Michael Whatley
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State LCFS Profile: Michigan

Wednesday, April 21st, 2010

State of Play: LCFS in Michigan

Few states stand to lose out more under the imposition of an LCFS scheme than Michigan – but that reality didn’t stop state Rep. Lee Gonzales (D-Flint) from introducing LCFS legislation in the Michigan House last September. If passed, the bill would mandate the state Departments of Agriculture, Energy, Natural Resources, and Environmental Quality to come up with an LCFS plan in consultation with activists from the “land conservation,” “wildlife conservation,” and “environmental” organizations – all part of a strategy that somehow equates to “more jobs for our workers,” Gonzales said in a press statement announcing the bill.

Although that legislation has yet to see significant action in the House, Michigan remains an active member of the Midwestern Governors Association (MGA), which is currently engaged in promoting the LCFS. Over the next three months, the MGA is expected to first release comments on the draft LCFS framework it is presently working to construct, releasing its final draft recommendations by June, and rendering its final recommendations to MGA member states by the end of 2010.

Production and Distribution: How/Where Does Michigan Get Its Energy?

Thanks to recent innovations in horizontal drilling and hydraulic fracturing technology, Michigan has recently become a significant producer of natural gas from the Antrim Shale – but it remains a state with relatively few petroleum resources on hand.

Because of that, Michigan has come to depend on its neighbors in Canada for the fuel it needs to run its commercial sector; today, more than 63 percent of the oil consumed in the state comes from Canada. In fact, these imports come from nowhere else — a full 100 percent of Michigan’s “foreign” energy is supplied each day by Canada, taking the form of crude oil, as well as refined products such as propane, gasoline, diesel fuel, kerosene, and waxes and lubricants.

In large part a function of its close relationship with Canada, and consistent with its position at the “front of the line” in receiving Canadian imports, energy prices in Michigan tend to be lower than the national average in several key categories. The chart below, derived from data supplied by the Energy Information Administration (EIA), tells that story in greater detail:

LCFS Impact on Michigan

As mentioned, more than 63 percent of Michigan oil’s comes from Canada – sources that an LCFS is engineered to disadvantage relative to other imports (and even many U.S. sources). But whereas it may be possible for other states, most notably on the West Coast and throughout the mid-Atlantic, to substitute out Canadian energy imports for energy supplies from other countries, that option is simply not available to Michigan. Again, because of the geography of the state, 100 percent of Michigan’s imports come from Canada.

Tags: LCFS, Low Carbon Fuel Standard, Michigan, Midwestern Governors Association
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CEA Statement on Wisconsin’s Commonsense Decision to Abandon an LCFS

Wednesday, April 14th, 2010

CEA president: Dismissal of the LCFS provision is a “key victory” for Wisconsin consumers

WASHINGTON, D.C. – Earlier today, Wisconsin media reported that Low-Carbon Fuel Standard (LCFS) provisions were dropped from the state’s Clean Energy Jobs Act currently being considered in the legislature. David Holt, president of Consumer Energy Alliance (CEA), issued this statement in response:

“The removal of the economy-killing LCFS is good news for consumers in the Badger State and we are pleased that Wisconsin’s legislators have woken up to the harsh realities associated with this dangerous proposal. By discriminating against Canadian fuels, an LCFS would restrict Wisconsin fuel supplies, raise gas and diesel prices at the pump and expand our dependence on energy from some of the most unfriendly regions of the world. The decision to drop the LCFS provisions from this bill is an important signal regarding the viability of low carbon fuel standards nationwide – and is particularly important to Wisconsin, which gets nearly half of its oil from our neighbors to the north.

“Unfortunately, the threat of an LCFS still exists in many other parts of the country, including those states that comprise the Midwestern Governors Association (MGA), of which Wisconsin’s governor is a member. CEA encourages the members of the MGA to understand that discriminating against Canadian fuel supplies is bad energy policy. As CEA continues to educate the public about the dangerous realities of adopting LCFS schemes, we trust that more state and national policymakers will take notice and follow Wisconsin’s lead by rejecting these misguided proposals.”

Tags: Clean Energy Jobs Act, LCFS, Midwestern Governors Association, Wisconsin
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Message from US Consumers to Wash., Mich., NY: Consider the Impacts an LCFS Could Have on Energy Costs, Security

Monday, April 12th, 2010

In a letter last week Washington governor Christine Gregoire, Consumer Energy Alliance (CEA) urges her to fully consider the harmful effects that a Low-Carbon Fuel Standard (LCFS) could potentially have on the state. Signed by president David Holt, CEA’s letter comes almost one year after Governor Gregoire issued an executive order to begin the process of determining whether Washington should implement a California-style LCFS, or a similar proposal.

This from Holt’s letter to the governor:

Adopting a California-style LCFS, aimed at restricting the state’s use of Canadian oil, makes no sense for the state of Washington. Unlike California, Washington receives more than 25 percent of its crude from Canada. An LCFS would not only inhibit the state from obtaining and using that crude, but it would also restrict your state’s access to more than 10 percent of its current gasoline supply, which is refined in Montana and derived from Canada’s oil sands.

Indeed, to replace the supply lost under an LCFS, Washington will likely need to increase crude shipments from the Middle East, leading to additional energy security concerns. And as mentioned, as it relates to the imperative of reducing GHGs, several prominent studies have found that an LCFS may actually generate greater net emissions compared to the reference case (no LCFS) by requiring imports from distant, unstable countries instead of relying on crude from our North American neighbors such as Canada and Mexico. Under this scenario, not only would an LCFS increase our nation’s dependence on foreign energy sources, but it would also add significantly to global GHG concentrations.

As Holt notes, Washingtonians – including the governor and elected state leaders – should understand that an LCFS will not reduce greenhouse gas emissions. In fact, such a misguided policy could lead to severe economic and security consequences for consumers across the state.

Unfortunately, Washington isn’t the only state that is currently considering adopting an LCFS. There’s even efforts underway in Washington to pass a national, one-size-fits-all LCFS.

The Michigan Manufacturers Association (MMA) has been a dogged advocate for policies that aim to reduce and stabilize energy costs for consumers and small businesses across the state. Randy Gross – director of environmental and regulatory affairs at MMA – recently penned a column entitled “LCFS targets U.S. economy” in the Traverse City Record-Eagle. He also recently wrote a Muskegon Chronicle letter to the editor under the headline “Canadian crude oil, Michigan economy in the crosshairs”. Here are key excerpts:

Most folks may not know how critical our Canadian neighbors are in fueling the Michigan economy. Indeed, more than 63 percent of our state’s gasoline and diesel fuel begins its life as unrefined oil in Canada. Unfortunately, efforts under way in the capital right now threaten that critical relationship — and the millions of people on this side of the border whose jobs and livelihoods depend on continued access to this secure, affordable and reliable energy.

For example, in Detroit the Marathon refinery produces almost 100,000 barrels of a day of gasoline and diesel fuel derived from Canadian energy — energy that provides thousands of good-paying jobs to Michigan families, as well as pensions and health care. In this troubled economy, why would any lawmaker in Michigan even consider putting those jobs on the line?

Our leaders in both Lansing and Washington, D.C., need to say “no” to an LCFS. The people of Michigan cannot afford to adopt a policy that will lead to higher prices at the pump, fewer American and Michigan jobs and threatened energy security. We need legislation that will improve Michigan’s competitiveness, nationwide and worldwide.

And in New York, former Illinois congressman Thomas Corcoran of the Center for North American Energy Security recently took to the pages of the Buffalo News to highlight the devastating effects that an LCFS could have on the Empire State. In a column entitled, “Low-carbon fuel standard would hurt New Yorkers,” Corcoran writes:

Under the standard, secure sources of oil from Canada and even our own Gulf Coast score much worse than sources of crude from Saudi Arabia and Nigeria. Just about every bit of New York’s 75 million- barrel reserve would be targeted for elimination under the low-carbon fuel standard. The Northeast would have to import more light crude from unstable and unfriendly regimes found in the Middle East, Africa and Libya.

The standards could also impact heating oil from New York refineries. Since about one-third of New York households use fuel oil as their primary energy source for home heating and the Empire State required more than $537 million last year in federal funding from the Low Income Heating Energy Assistance Program, restricting New York’s availability and use of home heating fuel just doesn’t make sense.

CEA will continue to lead the drumbeat of support for commonsense energy policies that encourage more energy production of all forms – especially stable and secure North American supplies derived from Canada. At the same time, we will continue to fight for smart conservation measure that will help drive down our demand and overall energy use. We must continue to use what we have more wisely, while working to balance our needs with the energy that we have here at home and in North America.

Tags: CEA, Center for North American Energy Security, Consumer Energy Alliance, Gov. Gregoire, LCFS, Low-Carbon Fuel Standards, Michigan Manufacturers Association
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LCFS in KGL: Prescription for Higher Fuel Costs and Increased Imports from Unstable Regions of the World

Wednesday, April 7th, 2010

With the recent news that Senators Kerry, Graham and Lieberman are aiming to release their draft climate change legislation sometime in the next month, many policymakers and key stakeholders in Washington, D.C. are speculating about what that bill will actually look like, and what its potential effects may be. While it’s still too early to tell if a national, one-size-fits-all Low-Carbon Fuel Standard (LCFS) will be included in the legislation, Consumer Energy Alliance (CEA) is working tirelessly to educate the public and lawmakers about the harmful economic and national security implications associated with this job-killing proposal.

Thomas Pyle, president of the Institute for Energy Research (IER), writes this in a recent Daily Caller column entitled ”Energy and climate, March Madness-style” about pending Senate legislation, including LCFS provisions:

H.R. 1787 (Inslee LCFS bill): Perhaps not as well known to a broader national audience, the Low-Carbon Fuel Standard (LCFS) bill authored by Rep. Jay Inslee (D-Wash.) is seen by many as a dark horse candidate for advancement—assuming early upsets of stiffer competition. Having toiled this past year in the obscurity that comes with being a mid-major, the Inslee LCFS bill has nonetheless pulled together an impressive resume of support, with more than 20 states currently considering a version of the Inslee plan that seeks to creatively (if not entirely effectively) achieve its emissions reductions by putting the kibosh on energy derived from Canada’s oil sands.

States often serve as indicators – or incubators – for federal policy. In the case of an LCFS, American consumers can only hope that Congress doesn’t take their cues from California – the first state to implement such a mandate. This from a recent Climatewire article about efforts underway in the Golden State to move forward with an LCFS:

Gov. Arnold Schwarzenegger (R) sent a letter to California Air Resources Board (CARB) Chairman Mary Nichols on Wednesday arguing that the state should give most allowances away in the early years of a cap-and-trade program and allow generous use of offsets…”As we have discussed many times, California’s goal is to implement A.B. 32 in such a way as to mesh our program as seamlessly as possible into a comprehensive national strategy,” [Schwarzenegger said.]…CARB spokesman Stanley Young echoed Schwarzenegger. “The crucial determining factor here is what’s happening in Washington, because our goal is to develop a program that will meld seamlessly into a federal program,” he said. “This is about considering the future in terms of how California can become part of a comprehensive national program.”

But do American consumers really want California’s LCFS mandate – which effectively bans stable and reliable forms of North American energy – to be the law of the land from coast to coast? We can’t say for sure.

But what we do know is that the American people oppose higher fuel costs and increased imports from unstable regions of the world. Unfortunately, that is the prescription laid out by an LCFS.

Tags: California LCFS, Consumer Energy Alliance, Governor Schwarzenegger, Graham and Lieberman, Institute for Energy Research, Kerry, LCFS, Low Carbon Fuel Standard
Posted in Blog | 2 Comments »

CEA Asks Gov. Gregoire to Consider All the Facts Associated with LCFS

Tuesday, April 6th, 2010

CEA president: LCFS will not reduce greenhouse gas emissions, but may lead to severe economic and security consequences for citizens of Washington

HOUSTON – As Washington governor Christine Gregoire continues to weigh the prospect of imposing a Low-Carbon Fuel Standard (LCFS) on her state, Consumer Energy Alliance (CEA) president David Holt sent a letter to the governor yesterday laying out several specific facts and figures related to the potential impact of an LCFS on Washington – facts the governor should consider before taking another step forward on the initiative.

Holt’s letter is in response to the governor’s May 2009 executive order instructing her administration to assess the merits of enacting California’s LCFS or a similar proposal to help meet the state’s greenhouse gas emission reduction targets.

The full text of the letter below:

April 5, 2010

Dear Gov. Gregoire,

With your administration’s July deadline quickly approaching for assessing the relative merit of implementing a Low-Carbon Fuel Standard (LCFS), I write today in my capacity as president of Consumer Energy Alliance (CEA) to ask that you carefully weigh the unintended economic, security and environmental consequences this action would have for the state of Washington.

Although proponents of an LCFS believe its adoption would reduce transportation-related greenhouse gas (GHG) emissions, it will actually lead to increased fuel prices and greater dependence on foreign, unstable nations without reducing GHG emissions from your state’s vehicles. Some studies have even suggested that an LCFS may actually increase the concentration of carbon dioxide in the atmosphere.

According to the U.S. Environmental Protection Agency, every gallon of gasoline combusted in our vehicles emits a chemically consistent 19.4 pounds of carbon dioxide (CO2), regardless of octane or vehicle type. Given that the agency charged with promulgating standards to protect America’s air quality openly shares this fact about fuel emissions, moving forward with an LCFS is simply not logical if the intended goal is to reduce a state’s GHG emissions.

CEA is a non-partisan, not-for-profit organization actively working to reduce America’s reliance on foreign energy imports, maintain affordable energy prices for consumers and covert our nation’s abundant energy resources into jobs, revenue and opportunity for all Americans. While CEA generally supports the goals typically associated with proposals to enact an LCFS – such as lowering GHG emissions from the transportation sector, increasing the use of natural gas and commercially developing the production of cellulosic ethanol – we are strongly opposed to the implementation of an LCFS that fundamentally discriminates against fuels derived from unconventional sources of energy, including Canada’s oil sands.

Adopting a California-style LCFS, aimed at restricting the state’s use of Canadian oil, makes no sense for the state of Washington. Unlike California, Washington receives more than 25 percent of its crude from Canada. An LCFS would not only inhibit the state from obtaining and using that crude, but it would also restrict your state’s access to more than 10 percent of its current gasoline supply, which is refined in Montana and derived from Canada’s oil sands.

Indeed, to replace the supply lost under an LCFS, Washington will likely need to increase crude shipments from the Middle East, leading to additional energy security concerns. And as mentioned, as it relates to the imperative of reducing GHGs, several prominent studies have found that an LCFS may actually generate greater net emissions compared to the reference case (no LCFS) by requiring imports from distant, unstable countries instead of relying on crude from our North American neighbors such as Canada and Mexico. Under this scenario, not only would an LCFS increase our nation’s dependence on foreign energy sources, but it would also add significantly to global GHG concentrations.

The repercussions of an LCFS go beyond unrealized environmental benefits and diminished energy security. With five refineries, your state serves as a principal refining hub for the Pacific Northwest. According to the Energy Information Administration, the refining capacity in Washington is about 627,850 barrels/day. Currently, these refineries receive most of their oil from Alaska, but declining production there means that Washington’s refineries will become increasingly dependent on crude imports from Canada and elsewhere in the near future.

Without additional sources of oil, the more than 2,000 direct and 20,000 indirect workers supported by Washington’s refiners would find themselves at risk of losing their jobs. According to a report from the Washington Resource Council, these refiners paid more than $400 million in wages and almost paid the same amount to the state through sales, excise, occupation and various other taxes in 2007. Without these facilities and their associated jobs, your state would lose a significant revenue source, leaving a large budget gap to be filled by increased taxes or cuts in taxpayers’ services.

During this time of economic uncertainty, Washington cannot afford to lose more jobs or turn its back on more state revenue. Given the substantial economic and energy security costs of this proposal, and the absence of any quantifiable GHG reductions, CEA asks you to consider rejecting the adoption of an LCFS policy in Washington.

Thank you in advance for your consideration. I look forward to hearing from you soon.

Sincerely,

David Holt

President

Consumer Energy Alliance

Tags: David Holt, Gov. Gregoire, LCFS, Low Carbon Fuel Standard, Washington state
Posted in Action Alerts | 1 Comment »

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