Nationwide Low-Carbon Fuel Standard Would Increase Global Greenhouse Gas Emissions, Study Finds

WASHINGTON, Aug. 3 /PRNewswire-USNewswire/ -- The implementation of a nationwide low-carbon fuel standard (LCFS) in the United States would increase global greenhouse gas emissions by up to 19 million metric tons each year – contradicting the claim of LCFS advocates that the standard would reduce such emissions – according to a study issued today.

The study assumes that because an LCFS would prevent American refineries from importing petroleum obtained from oil sands in neighboring Western Canada, the United States would instead have to import more oil in tankers from the Middle East and elsewhere. At the same time, the Canadian oil would be shipped in tankers across the Pacific to China and other Asian locations.  

The study calls this long-distance movement of oil thousands of miles around the world in tankers a "shuffle" that would result in higher carbon dioxide emissions than simply extracting the Canadian petroleum from the oil sands for U.S. consumption, due to emissions created by shipping the oil such great distances.    

Barr Engineering Company of Minneapolis conducted the study for members of NPRA, the National Petrochemical & Refiners Association.

"In conducting this technical study, we looked at the most accurate data publicly available, and the conclusion was clear," said Joel Trinkle, senior air quality consultant at Barr and one of the authors of the study.  "Crude shuffling under a nationwide LCFS would substantially raise overall greenhouse gas emissions."

The study found that:

• "A LCFS implemented in the U.S. results in a notable increase in greenhouse gas emissions due to the displacement of Canadian crude imports to the U.S. and re-routing of crude imports and exports to accommodate this displacement. …  Nearby Canadian crude sources would be diverted to regions not affected by LCFS and replaced with supplies from distant parts of the world."  (Page 2)
• "While it is likely that LCFS would change the mix of crude imports to the United States, LCFS implemented in the United States is not expected to change overall trends in energy use and demand for crude resources throughout the rest of the world. A shift in U.S. crude-supply preferences will simply cause redirection of crude supplies elsewhere."  (Page 4-5)
• "This analysis of the change in crude-transport-related emissions accompanying implementation of a LCFS indicates that the net effect will be a doubling of GHG [greenhouse gas] emissions associated with changes in crude-transport patterns. It indicates an increase in global GHG emissions by 7.1 to 19.0 million metric tons per year, depending on the extent of resulting Canadian crude displacement."  (Page 3)

Canada is currently the largest supplier of petroleum imported into the United States, but other nations are looking to the Canadian oil sands as a potential energy source.  China alone has already invested more than $6 billion in Canadian oil sands projects as it continues to rapidly increase its presence in overseas energy production.

"By denying the American people access to oil from our friendly neighbor Canada, a low-carbon fuel standard would raise fuel costs and wipe out millions of American jobs," said NPRA President Charles T. Drevna. "Now this latest study shows that a nationwide LCFS won't reduce overall global greenhouse gas emissions – it will actually raise them.  These findings simply reinforce NPRA's long-held belief that a federal low-carbon fuel standard is a policy of all pain and no gain."

Additional concerns regarding American access to Canadian oil sands resources have surfaced following a recent U.S. State Department decision regarding a proposed pipeline to transport Canadian crude to refineries in the Gulf Coast region.  The decision will allow federal agencies an additional 90 days to comment on TransCanada's proposed Keystone XL project, pending the State Department's release of a final environmental impact statement.  The proposed pipeline expansion would more than double the amount of Canadian crude imported to the United States.

Several regional and state LCFS initiatives are currently underway, including a statewide LCFS program in California established as part of the state's AB 32 climate law, and proponents of a federal LCFS continue to seek its enactment.  

A federal LCFS provision was included in the 2008 Lieberman-Warner climate change bill that was defeated in the Senate. The 2009 Waxman-Markey climate change bill also contained an LCFS provision, although it was removed before the bill was passed by the House.  

Two other recent studies cast additional doubt on the efficacy of low-carbon fuel standards:

• A June 2010 report by Charles River Associates found that a nationwide LCFS implemented in 2015 would result by 2025 in: the loss of between 2.3 million and 4.5 million American jobs; an increase of up to 170 percent in the price of gasoline and diesel fuel; and a 2 to 3 percent decrease in the U.S. Gross Domestic Product (totaling between $410 billion and $750 billion).
• A report by the Canadian Energy Research Institute issued in October 2009 examined the impacts of developing Canadian oil sands on the U.S. economy. It found that such development – which would be threatened by the implementation of a nationwide LCFS in the United States – would result in an estimated 343,000 new U.S. jobs between 2011 and 2015, and that U.S. output of goods and services would increase by an average of $62 billion per year from 2009 through 2025.

SOURCE National Petrochemical & Refiners Association