What Is a Low Carbon Fuel Standard?
A low carbon fuel standard (LCFS) is a government mandate promoted by some as a way to reduce greenhouse gas emissions. In reality, however, an LCFS is a rationing scheme for traditional transportation fuels that will drive up consumer costs at the pump.
An LCFS depends on the development and deployment of “lower carbon” fuels which will not be available for many years and may never be practical. Therefore, an LCFS is inherently unworkable. Rather than achieving any meaningful climate benefits, it will instead raise gasoline prices for consumers, destroy jobs, and halt our progress towards energy security.
The only state currently implementing an LCFS is California. The program, however, remains mired in litigation. The Oregon legislature recently voted to uphold a “sunset” provision in its own LCFS program, which would effectively bring the Oregon LCFS to an end. Meanwhile, several Northeastern states are debating whether to move ahead with a regional LCFS. At the federal level, as recently confirmed by the administrator of the Environmental Protection Agency, there are currently no plans to develop and implement a regulatory LCFS.
American Energy Security at Risk: America is now the world’s largest producer of oil and natural gas, bringing us closer to energy independence. Yet policies such as the LCFS threaten to keep these resources out of reach, thereby denying Americans lower energy bills, hundreds of thousands of new jobs, and greater energy security.
Higher Gas Prices: Since so-called “low-carbon fuels” are not currently available at the quantities needed for compliance, consumers will have to pay substantially higher fuel costs as the supply of traditional fuels is rationed.
Unavailable Technologies: At its core, an LCFS program will require fuel providers to ration traditional fuels such as gasoline and diesel and replace them with “low carbon” fuels like ethanol from switchgrass (a type of cellulosic biofuel) to meet increasingly stricter low-carbon mandates. The problem is that such fuels are not commercially available today, and there is already a federal renewable fuel standard program in the United States to encourage their development. LCFS programs like California’s would also rely heavily on electric vehicles, since biofuels alone cannot meet the programs’ goals. However, electric vehicles typically cost thousands of dollars more than their gasoline-powered counterparts, are extremely limited in range, and are expected to remain substantially more expensive than traditional vehicles for the foreseeable future. Technical and economic challenges must be overcome before these alternative fuels and vehicles can be produced and brought into the marketplace at a significant scale.
Increase in Global Greenhouse Gases: An irony of the LCFS program is the phenomenon known as “fuel shuffling.” The policy leads to higher global GHG emissions due to increased transportation of crude oil and other fuels to and from more distant markets. For example, Canadian crudes that are assigned a higher “carbon intensity” value would be transported to Asia in exchange for greater volumes of Middle Eastern crudes with lower carbon intensity shipped to the United States. A similar phenomenon is already occurring with biofuels, as Brazilian ethanol produced from sugarcane is being “shuffled” with corn-based ethanol produced in the United States.