“Governors, Canadian premiers agree on energy goals” – that’s the headline you’ll find in the Boston Herald today, attached to a quick dispatch from the Associated Press reporting on the 34^th Conference of New England Governors & Eastern Canadian Premiers held in Lenox, Mass. earlier this week.

But exactly which energy-related goals were agreed upon by the audience of top government decision-makers from Canada and the United States? According to a press release issued by Massachusetts governor Deval Patrick, the group “agreed to examine implementation of a regional low carbon fuel standard — a market based, technology-neutral policy to reduce the carbon intensity (and greenhouse gas impact) of transportation fuels.”

Of course, you probably know the Low-Carbon Fuel Standard (LCFS) better as that policy which seeks to prevent sources of secure and affordable Canadian energy from crossing the border into the United States – forcing our country to grow its dependence on far-away, unstable energy to make up the difference (and costing lots of jobs in the process). So why would the Canadians support a policy like that? Short answer: They wouldn’t. And don’t – which is a fact made plain in today’s edition of the New Brunswick (Canada) Telegraph Journal. Below we compare and contrast.

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.” (audio)

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.” (audio)

Additional resources and audio files available from today’s State Dept. event:

•  Audio file: Russ Breckenridge, United Association of Plumbers and Pipefitters
•  Audio file: Jim Skillestad, Commissioner, Dawson County, Mont.
•  Audio file: Jeanne Barnard, Big Flat (Mont.) Electric Cooperative
• Audio file: Richard Moskowitz, American Trucking Associations
• Audio file: Hon. Thomas Corcoran, Center for North American Energy Security
• Audio file: CEA Vice President Michael Whatley
• CEA column in DC Examiner: Foggy Bottom Should OK Keystone Pipeline (6/28)
• Written statement: Delivered by CEA Vice President Michael Whatley

WASHINGTON — The imposition of a nationwide Low-Carbon Fuel Standard (LCFS) would boost average U.S. gasoline and diesel prices by as much as 80 percent within five years of the start of the program and up to 170 percent within 10 years, according to a study issued today by Charles River Associates.

Assuming a nationwide LCFS program is implemented in 2015 with gasoline prices at today’s level, this would result in an average national price for gasoline of nearly $5 per gallon in 2020 and close to $7.50 a gallon by 2025.

The study also projected that a nationwide LCFS program starting in 2015 would:

• Cause an estimated net loss of 2.3 million to 4.5 million American jobs by 2025 from baseline levels. As many as 1.5 million of these jobs would be in the manufacturing sector, while as many as 3 million would be in the service sector. These job cuts reflect the cumulative impact businesses would face from reduced consumer demand and higher costs for goods and services caused by an LCFS.

• Drive down household annual purchasing power by between $1,400 and $2,400 by 2025.

• Cause the U.S. Gross Domestic Product to decline by approximately 2 to 3 percent, or $410 billion to $750 billion, by 2025.

Charles River Associates, a Boston-based global research firm that specializes in economic modeling and analysis, conducted the study for Consumer Energy Alliance (CEA).

“Any way you slice the data, the future projected by this study is a frightening one – higher fuel prices, fewer jobs, and lower consumer purchasing power,” said Michael Whatley, vice president of CEA and a leading policy expert on the LCFS. “This nightmare scenario is clearly one that policymakers in the United States should avoid at all costs.”

Added Whatley: “Intuitively, it’s always made sense that policies such as the Low-Carbon Fuel Standard, which seeks to restrict Americans’ access to secure and affordable sources of energy, would result in higher fuel costs and fewer jobs. But with the release of this study, we can now quantify those impacts under several different scenarios, and understand how they apply to different regions across the United States.”

The LCFS would prevent certain sources of reliable, affordable petroleum from being converted into fuels such as gasoline, diesel fuel, kerosene and heating oil. The theory justifying the LCFS says that if the supply of these resources is cut, enough lower-carbon alternatives will arrive on the market to replace them – even if sufficient amounts are currently considered decades away from commercial realization.

“The stated purpose of the Low-Carbon Fuel Standard is to be technology forcing, and to bring new fuels into the market,” the report’s authors write. “But the LCFS becomes a policy that drives large changes in consumer behavior and in new vehicle fuel economy because the targets are beyond reach with foreseeable fuel technology. … Thus the LCFS is turned into a policy that in effect rations gasoline until the required improvement in emissions per gallon is met.”

A federal LCFS was added to the Lieberman-Warner climate change bill in 2008 and proposed as part of the Waxman-Markey climate change bill in 2009 (although the LCFS provision was removed before the bill was passed by the House). Supporters of a national LCFS continue to work for its enactment, even as proposed programs are being developed in several states and regions.

BOSTON, Mass. – The environment minister from the Canadian province of Alberta participated in a regional energy conference in Boston today that, among many important issues, examined the potentially adverse consequences of imposing a Low-Carbon Fuel Standard (LCFS) on the Northeast, a policy that could greatly reduce the region’s access to secure and affordable energy from Alberta.

“Alberta is committed to reducing the environmental impact of oil sands development, and we have already made great strides.  We are uniquely able to provide safe and secure energy resources that are essential to the northeastern United States and beyond,” said Alberta Environment Minister Rob Renner. “We are not asking for special treatment, only fair treatment. When one considers the full life cycle of a barrel of oil, the carbon intensity of Alberta’s oil sands is very much in line with many other sources of crude, including those in the United States.”

An improperly designed LCFS in the Northeast could discriminate against reliable, affordable sources of Canadian fuel and raise the prices of gasoline and diesel, forcing New England states to increase imports from foreign, far-away suppliers, participants discussed today. Massachusetts imported more than 2.8 million barrels of petroleum products from Canada in the month of March alone, according to the Energy Information Administration – supplies that would be put in danger under an LCFS.

“During this time of unprecedented economic uncertainty, instituting a region-wide policy designed to drive up gas and diesel prices and make essential energy commodities such as home heating oil a whole lot more scarce doesn’t make a whole lot of sense,” said Michael Whatley, vice president of Consumer Energy Alliance (CEA) and the emcee of the forum today. “Maybe the more unfortunate reality of the LCFS, though, is that it won’t do a thing to reduce global concentrations of greenhouse gases in the atmosphere. But that’s the LCFS: All pain, no gain.”

This afternoon’s regional low carbon fuel forum, hosted by CEA, drew the participation of the environment minister of Alberta, as well as a number of local and regional stakeholders, consumer groups and policy experts to discuss the regional impact of an LCFS, an initiative supported by Gov. Patrick and being pushed by the Boston-based group known as the Northeast States for Coordinated Air Use Management (NESCAUM).

Addressing the forum earlier today, Renner provided participants with an overview of the latest technological advances being deployed to develop Alberta’s oil sands in an environmentally sensitive way, highlighting among many other important points that CO2 emissions from the production of oil sands has come down by an average of 39 percent per barrel since 1990.

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 by clicking HERE.

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. Please click HERE make your voice heard on this vital project.

WASHINGTON – America’s historic and ongoing partnership with Canada on issues related to energy security, affordability, and reliability is a “model” for other nations to follow, a senior advisor from the U.S. State Department said today at the Canadian Embassy – and according to Alberta premier Ed Stelmach, Canada stands ready, willing and eager to build upon that existing relationship and leverage those resources into jobs, security and opportunity on both sides of the border.

“Canada is our closest trading partner in the world, and our most important strategic ally in the hemisphere,” said Michael Whatley, vice president of Consumer Energy Alliance and a panelist at today’s summit. “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.”

This morning’s summit, hosted by the Center for North American Energy Security (CNAES) and held at the Canadian Embassy in Washington, D.C., drew the participation of a number of U.S. and Canadian experts on energy, the economy and the environment – addressing issues ranging 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 the Low-Carbon Fuel Standard (LCFS), a policy that would severely restrict American access to secure and affordable sources of energy from Canada.  

Addressing the summit earlier today, both Stelmach and senior U.S. State Department official David Goldwyn agreed that the energy resources made available to U.S. consumers today by way of the oil sands have strengthened our nations’ existing strategic partnership and contributed to robust economic development both in Canada and here in the United States. Stelmach additionally provided summit-goers with an update on the latest technological advances being deployed to develop the oil sands in an environmentally sensitive way, technology that has helped producers reduce the sands’ carbon emissions by nearly 40 percent over the past two decades.

Added Tom Corcoran, executive director of CNAES and a former member of Congress from Illinois: “As the energy and climate change debate continues to take shape in the U.S., policymakers should remember the 2.5 million barrels of petroleum Canada sends the United States each and every day — and the unique role that Canada plays both as America’s largest fuel supplier and its closest friend.”

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:

 Source: Energy Information Administration, Dec. 2009 (latest available)

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.

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.”

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 can be found online HERE and 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

In December, Vermont governor Jim Douglas joined several other states in signing a Memorandum of Understanding laying out a timetable for the future implementation of an LCFS. In committing Vermont to the agreement, Gov. Douglas declared his state “a leader in limiting greenhouse gas emissions,” and suggested the imposition of an LCFS would help both “meet our environmental challenges and encourage the creation of green jobs.”

Unfortunately, the only way an LCFS can “work” as engineered is by rendering secure, affordable sources of energy off limits – thereby having the effect of significantly expanding our nation’s dependence on foreign, LCFS-favored energy to meet its daily needs and costing thousands of jobs in the process. Ironically, studies show that an LCFS may actually contribute to an increase in the concentration of carbon dioxide in the atmosphere – bringing into question the governor’s notion of using an LCFS as a means to “meet our environmental challenges.”

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

Vermont produces no petroleum of its own, refines none, and remarkably receives none via petroleum pipelines – rendering it completely dependent on others (and their trucks) for the energy resources necessary to fuel and heat the state.

While Vermont does receive occasional fuel imports from neighboring states, the vast majority of its refined petroleum comes directly from Canada – and nowhere else. Unfortunately, under the bizarre accounting methodology of the LCFS, secure and affordable energy resources from Canada could be denied entry into U.S. markets, creating serious doubt as to where the energy resources essential to Vermont residents would come from.

Every month, nearly 150,000 barrels of heating oil cross the border from Canada into Vermont – a number that shoots past 200,000 barrels a day during the winter months. As the graph below demonstrates, home heating oil isn’t the only refined product that Vermonters receive from their northern neighbors – they also rely on Canada for diesel fuel, propane, kerosene and even asphalt:

Source: Energy Information Administration, Company Level Imports, Dec. 2009                                                                                                                                               

LCFS Impact on Vermont

Vermont, according to the federal Energy Information Administration, is “vulnerable to distillate fuel oil shortages and price spikes during the winter months” in particular – a function of the fact that more than 60 percent (three-fifths) of households in the state rely on fuel oil for space heating.

Regrettably, under a system envisioned by supporters of the LCFS, home heating oil – especially supplies from Canada, from where all Vermont heating oil originates – will be rendered more expensive to purchase and more difficult to access. In Vermont’s case, it’s not entirely clear where substitute supplies could even possibly come from, given the lack of ports and pipeline infrastructure.

In 2009, Vermont secured over $36.2 million from the federal Low-Income Home Energy Assistance Program (LIHEAP) to help subsidize the purchase of these fuel resources for those in need – nearly 30 percent of that sum in the form of an emergency “contingency” payment above and beyond the original budget request. Unfortunately, under the LCFS, a large portion of this fuel oil may be targeted for elimination, adding additional strain to an already over-extended LIHEAP budget.