The ad campaign: “Rethink Alberta,” is paid for by a U.S.-based activist group and attempts to foster a negative view of the Canadian province among American tourists.  The ads frame oilsands exploration in the region as destructive to local communities and the environment.

The truth is Canadian oil producers adhere to some of the most stringent environmental regulations in the world— and the LCFS illusion of “dirtier” Canadian oil is a fabrication of such groups.  Now more than ever, the U.S.-Canadian strategic energy partnership must be preserved.  Tumultuous times in other energy bearing regions of the world should only strengthen the bond between the two neighboring countries.

Rob Renner—Alberta’s environment minister— slammed the misleading ad campaign:

“I think most people, given the opportunity to see both sides of the story… are going to see through what amounts to a significant amount of rhetoric in these anti-Alberta campaigns.”

Canada provides the American public with one out of every six barrels of oil.  As proponents of LCFS continue to focus on limiting the importation of Canadian oil, Americans still need the resource to maintain their modern lifestyles.  More importantly— unity with our friends to the North is a major component of America’s strategic position in the world.

In fact, Alberta’s oil producers are more efficient than ever— and oil production in the province counts for a mere 5% of the country’s total greenhouse emissions.  This is a far cry from the sentiment found in the misleading ad campaign targeting the province.

Americans need affordable energy—and restricting the flow of Canadian oil to America based on mythologies like LCFS end up inflating prices at the pump.  In fact, LCFS proponents hurt the very people they claim to protect:  everyday Americans.

“Not fast enough” may be considered a vast understatement, if you ask residents in Wisconsin and the 13 other states hoping to improve job numbers on the back of a big transaction. The federal Export-Import bank denied the sale of U.S. coal-mining equipment to a company in India this week, citing concerns over supporting the use of a carbon-intensive fuel source. What was supposed to be a decision made with respect to the health of the environment became a sudden pink slip for thousands of Americans:

 “The decision means “throwing 1,000 jobs in the ditch,” Tim Sullivan, chief executive officer of the South Milwaukee, Wis., maker of mining equipment, said in an interview. Bucyrus cited an estimate that the order would create or protect 984 jobs in 13 U.S. states.”

But the Ex-Im bank isn’t the only federal agency that hasn’t gotten the president’s memo on the importance of job creation. The State Department held yet another hearing on whether to grant a routine permit for a critical pipeline, the Keystone XL, seeking to deliver secure energy from the Canadian oil sands to U.S. consumers. If it’s ever approved, the project is slated to create 13,000 jobs in the construction phase alone. However, vocal environmental and native groups have thus far stalled the project, citing land preservation concerns, and even referencing the gulf oil spill as reason not to continue with the project.

We’re only hurting ourselves on this, says Russ Breckenridge, legislative representative for the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry in both the U.S. and Canada.  Attending the State Department’s public hearing this past week, Breckenridge was able to give his own employment report, explaining how uplifting the Keystone project would be to his industry:

“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.”

And in the Houston Chronicle, the vice president of the company planning to build the pipeline explained how the project is a no-brainer:

“The significant benefit is energy security,” said Robert Jones, the TransCanada vice president in charge of the Keystone XL pipeline project. “If we don’t look at Canada as a stable source, then we’ll have to look more at the Middle East.”

So if an energy source from a single country could increase our nation’s energy security and decrease our dependence on unstable regions of the world, what’s the hold up? Nothing related to the pipeline itself, actually – but very much related to the stuff that’s expected to travel through it. It turns out some folks don’t like the Canadian oil sands, wrongly believing they emit more carbon than other petroleum sources.

It’s precisely this type of thinking that’s led some to support what’s known as a Low-Carbon Fuel Standard (LCFS). Nevermind the benefits of where we get our energy, an LCFS looks at the carbon content of our everyday fuels and restricts those considered to be too carbon-intensive, which would include the very same fuel to be transported by the Keystone. By denying this fuel source, not only would it not prove to be any better for our environment, but would also force the hands of American consumers to rely on energy rich, yet expensive foreign nations not as friendly as our northern neighbors. 

In the addition to paying more at the pump and seeing any number of industries flounder under the extra economic burden of an LCFS, Americans are already losing the very jobs that would be required to finance that burden.  While the jobs report may suggest a slow improvement, we have to ask of our leaders: why would we deny guaranteed job opportunities and a stable energy supply during a time when we could use it the most?

The Keystone XL project will consist of three new pipelines spanning roughly 1,380 miles across the United States from Canada. 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.

As it stands today, we already receive about 2.5 million barrels of petroleum from Canada each day – 2.5 million barrels that we don’t need to buy from suppliers in the Middle East. The good news is our imports from Canada are slated to grow significantly in the coming years. Believe it or not, oil sands from Canada are expected to become America’s top source of imported oil this year, surpassing conventional Canadian imports and almost equaling the volume of crude received each day from Saudi Arabia and Kuwait combined.

Prior to the hearing, David Holt, CEA’s president, penned a column in the Washington Examiner,  titled, “Foggy Bottom Should OK Keystone Pipeline”  that highlighted many of the reasons why the U.S. needs the Keystone XL pipeline as part of our nation’s energy plan to take meaningful steps towards reducing America’s reliance on foreign, unstable energy. Here are key excerpts:

In Canada’s oil sands, we’re talking about an energy resource that’s expected to grow from a share of 1.34 million barrels a day of the American market to as many as 5.7 million by 2030 – or about 36 percent of U.S. oil imports by then. But for these opportunities to be fully realized, we need the infrastructure in place to actually get it here.

And, 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.  The Keystone is initially slated to 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 more than 13,000 jobs in the project’s initial construction phase alone.

Echoing CEA’s support for the Keystone XL pipeline, Michael Whatley, provided comments and stated the following during the hearing (audio):

“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.”

In addition to CEA, a number of organizations representing consumers, organized labor, and state and local governments appeared at the hearing to provide testimony on why the Keystone project is so important to them and their constituents (Click HERE and HERE to listen to audio from two Montanans who traveled to D.C. to voice their support for the pipeline).

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, stated the following to the officials at the hearing (audio):

“We came here today to show our strong support for the TransCanada Keystone XL pipeline. 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.”

 

“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.”

Adding to the drumbeat of support for the Keystone XL pipeline, Richard Moskowitz, vice president and regulatory affairs counsel for the American Trucking Associations,  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)

As the State Department continues to consider the application for the Keystone XL pipeline, CEA hopes that it remembers the economic and energy security benefits of Canada’s vital resources and the 2.5 million barrels of petroleum Canada sends the United States each and every day. It is clear that policymakers should continue to expand America’s access to safe, affordable energy supplies to help ensure improved energy security and stable prices for consumers. Please click HERE make your voice heard on this vital project.

CRA found that a nationwide LCFS program, implemented in 2015 with gasoline prices at today’s level, could 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 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.

According to a recent article in Diesel Fuel News by Jack Peckham on the LCFS forum, titled “U.S. Low-Carbon Fuel Standard Hikes Fuel Prices 90% to 170%; Shuts 55 Refineries: Study”:

A new study released June 17 by Charles River Associates (CRA) for Washington, D.C.-based energy producer/ consumer group Consumer Energy Alliance finds that a national U.S. nationwide low-carbon fuel standard (LCFS) starting in 2015 could cause diesel and gasoline prices to soar by 90% to 170% by 2025, while drastically reducing U.S. oil refining capacity… “It is highly unlikely that it will be possible to produce sufficient quantities of fuel with sufficiently low emissions to meet the [notional LCFS national] standard without drastically reducing the total amount of fuel consumed,” according to CRA.

An LCFS could also drive down household annual purchasing power by between $1,400 and $2,400 by 2025 and cause the U.S. Gross Domestic Product to decline by approximately 2 to 3 percent, or $410 billion to $750 billion, by 2025.

Given these dramatic study findings, Michael Whatley, vice president of CEA and a leading policy expert on the LCFS, stated the following during a media teleconference last week:

“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. This nightmare scenario is clearly one that policymakers in the United States should avoid at all costs.” 

 “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.”

Reporting on this launch under the headline, “Low carbon fuels will bite deep into economy, says industry study” Tom Fowler in the Houston Chronicle adds:

The LCFS is supposed to hurry up the development of new fuel technologies, according to the study. The LCFS will drive major changes “because the targets are beyond reach with foreseeable fuel technology,” the study says. “None of these changes are likely to involve new technology, because again the time frame is too short to provide new transportation infrastructure or new vehicle technologies on a large scale. Thus the LCFS is turned into a policy that in effect rations gasoline until the required improvement in emissions per gallon is met.”

Colin Sullivan with E&E News writes about the CRA study under the headline “Study claims national low-carbon fuels rule would spike gasoline prices,”: 

The firm modeled a 10-percent reduction in carbon intensity over 10 years and found the cost of fuel and goods would experience a price shock because of supply constraints caused by so-called low carbon fuel standards. The study was completed by Charles River for the Consumer Energy Alliance, which represents truckers, shippers and airlines, among other sectors.

Sullivan continues with an excerpt from the press conference to explain an LCFS:  

David Montgomery, an analyst at Charles River, compared the low carbon fuel standard (LCFS) concept to diluting coffee with cream. He said the dilution of fuels to trim their greenhouse effect is such that prices would spike as clean fuel supply lags behind the current pace of demand, especially as oil sands and other sources prominent in North America are forced out of the market.

“If enough cream is not on the table to achieve the desired mix, then the only alternative is to reduce the amount of coffee in the cup,” he said. “To reduce transportation fuel consumption sufficiently for the LCFS to be met requires very large increases in fuel prices, so that consumers will limit their driving and demand new vehicles that are much more costly.”

Interestingly, concerns about price impacts on consumers were echoed in both an Albany Times-Union story that highlighted the economic impact of an LCFS on the eastern United States, and an article in The Trucker that reported the devastating impacts that increased gas and diesel prices would have on truckers, titled “Low carbon standard could hike gas and diesel prices 80 percent, study shows.”

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

As highlighted in the CRA study, the real-life outcome of an LCFS will lead to higher prices at the pump and more economic distress – the last thing America’s struggling economy needs at this time. Instead, we need to ensure that Americans have access to secure and stable fuel supplies as our economy continues to move and grow.

If implemented in the region, an LCFS could prevent secure and affordable Canadian energy from reaching consumers in the Northeast, making refined products like home heating fuel hard to find – forcing New England states to increase imports from foreign, far-away suppliers to make up the difference. Massachusetts alone imports more than 2.8 million barrels of petroleum products from Canada a month – supplies that would be put in danger under an LCFS.

During the forum, Michael Whatley, CEA’s vice president and the emcee of the forum, explained what an LCFS is and the state of this policy in the Northeast and stated this about an LCFS to the participants:

“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. 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.”

Following these comments, Rob Renner, the environment minister of Canada provided participants with an overview of the latest technological advances being deployed to develop Alberta’s oil sands in an environmentally sensitive way. Renner also discussed why an LCFS will not reduce carbon emissions and highlighted that CO2 emissions from the production of oil sands has come down by an average of 39 percent per barrel since 1990. 

Reporting on this event under the headline, “U.S. emissions laws could backfire, Alberta minister warns,” Archie McLean in the Vancouver Sun reports:

New low-carbon fuel standards proposed in the Northeastern U.S. could actually slow the greening of the oilsands, Alberta Environment Minister Rob Renner warned Monday. “We need to make sure that whatever we do doesn’t have the unintended consequence (of discouraging further investment) into technology that will reduce greenhouse gas emissions,” Renner said from Boston, where he was attending an energy forum.

A number of eastern and Midwestern states are weighing similar laws, which would force refiners to cut back on the amount of oilsands fuel or buy offsets or credits. They recently signed a memorandum of understanding urging the U.S. government to impose national standards but warning they could go ahead on their own if those don’t materialize.

According to a recent article in Diesel Fuel News by Jack Peckham on the LCFS forum, titled “Truckers Fear Huge Diesel Price Hike from Low-carbon Fuel Standard”:

Massachusetts Motor Transport Association Executive Director Anne Lynch last week told a Consumer Energy Alliance (CEA) panel discussion in Boston about a proposed U.S. Northeast regional low-carbon fuel standard (LCFS) that such rules potentially could cause a 90% cost increase for diesel fuel.  Any regionally-based LCFS mandate would put local truckers at a disadvantage to fleets operating in border areas outside the LCFS mandate, she added. What’s more, “there’s no [commercially competitive] powertrain that could handle these kinds of changes” contemplated by the proposed LCFS scheme, she said.

Peckham continues with an overview of how a broader LCFS could force a conversion of the U.S.light-duty vehicle fleet to electric power:

The problem is that relatively quick, massive conversion to electric power or high-level ethanol blends would require U.S. vehicle fleet turnover rates that far exceed historic turnover rates, expert panelists said. If the vehicle turnover rate (or ultra-low-carbon biofuels volume expansion) is “too slow” to meet LCFS “carbon reduction” deadlines, then forced, artificial restrictions on gasoline or diesel sales could result, causing huge fuel price increases, panelists warned.

CEA’s Michael Whatley said that a proposed Northeast region LCFS, patterned after the existing California LCFS, seems designed to favor electric vehicles, compressed natural gas (CNG) and certain types of supposedly low-carbon ethanol. However, much of today’s U.S. corn-based ethanol is produced at coal-fired, relatively high-carbon production facilities, according to California Air Resources Board calculations.

Following the myriad of concerns highlighted by the LCFS forum panelists, Northeasterners can only hope that the 11 governors from Northeast and Mid-Atlantic States currently considering an LCFS don’t follow the Golden State’s model. 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.

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. Down below please find the call-in information you’ll need to join the conversation.

CALL-IN #:

713-337-8800

at the recording: Press 7

 PASS CODE:    2580#

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.

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.

Lea N. Wilson – executive director of the Washington Oil Marketers Association – recently penned a Bellingham Herald column entitled “Low-carbon fuel standard would hurt Washingtonians.” Here are key excerpts:

There’s a lot more than weather and wine that makes Washington different from California. But judging by Gov. Chris Gregoire’s recent legislative intentions, Washington may start to look a lot more like our coastal neighbor – and not to our benefit.

In short, an LCFS will only make the fuels in our tank harder to find and more expensive to purchase. And supporters of the initiative admit that if successful, an LCFS will make traditional energy sources so expensive that we Washingtonians will learn to favor those alternative sources that have yet to reach maturation and availability. Does your car run on hydropower? Mine doesn’t, and probably won’t for a long time.

Wilson continues:

And this will only hurt what has become a healthy and burgeoning trade relationship between Washington and our border neighbors to the north. Canada imports almost $6.6 billion worth of goods from Washington, including refined oil products. But with the burden of increased transportation costs lingering under LCFS provisions, we stand to lose much of that revenue.

Certainly our governor must know that Washington derives its energy from different places than California does – and further, that an LCFS scheme conjured up by consultants in Sacramento might not achieve its desired effect here in the Evergreen State. Unfortunately, it doesn’t appear as if that knowledge is making a shred of difference.

Gov. Gregoire’s administration is charging toward its July deadline, when it is set to fully assess what an LCFS would bring to Washington. But what we outlined here leaves little to assess: an LCFS will increase the cost of fuel during an economically challenging time, and make us ever more energy dependent.

Wilson is correct in voicing concerns about Governor Gregoire’s fast approaching July deadline and the fact that Washington’s fuel supply would be threatened under an LCFS policy. While Washington’s economy, and its consumers and small businesses, does rely on oil from Saudi Arabia, Angola and Argentina, more than 25 percent of its crude comes from Canada. Therefore, over a quarter of the state’s secure, affordable oil supply would be threatened under an LCFS.

Additionally, about 10 percent of the state’s gasoline – refined in Montana, but derived from Canada’s oil sands – could be prevented from crossing its eastern border. The consequences are far greater and more profound for the state’s workforce. Discrimination called for under an LCFS against Canada’s energy could also impact many jobs in the state, since refiners in Washington directly employed more than 2,000 workers in 2007 (latest numbers), and indirectly supported another 20,000 – paying out more than $400 million in wages.

Regrettably, Washington isn’t the only state in the nation that is currently considering adopting a California-style LCFS – which would effectively ban stable and reliable forms of North American energy from reaching U.S. consumers. The American people oppose higher fuel costs and increased imports from unstable regions of the world. Unfortunately, the real-life outcome of an LCFS will lead to higher prices at the pump and a deeper and more dangerous dependence on unstable regions of the world to ensure that our economy continues to move and grow.

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.