Industry attack campaign way off base on tar sands and low carbon policies: Part 2

With input from my NRDC colleague, Simon Mui.

In my blog last week on the attack campaigns against the Low Carbon Fuel Standard (LCFS), an innovative policy tool for reducing the global warming pollution in our fuels, I wrote about the Consumer Energy Alliance (CEA) and its affiliated “organizations.” While it portrays itself as a consumer organization, it is in reality a front group run by a lobby group and backed by the American Petroleum Institute, the U.S. Chamber of Commerce, and other titans of the status quo, bent on keeping America addicted to oil. And not just any oil but the dirtiest oil on the planet.   

Big Oil backed CEA would move America in the wrong direction by locking us into decades of dependency on high-carbon and environmentally destructive tar sands and shale oil. Both require huge amounts of energy and water to produce.  Both will make a wasteland of some of the last wildlands on our Continent. Both put endangered wildlife at risk. But one policy stands in the way of this backwards plan – the low carbon fuel standard – which would provide incentives for the development of cleaner, non-oil sources of fuel. 

So what is the low carbon fuel standard?

California adopted the first low carbon fuel standard in the country as part of its implementation of its path-breaking global warming legislation. It would require petroleum producers and importers over time to lower the carbon content of their fuels (the amount of carbon per unit of energy in the fuel). By 2020, they are to reduce the carbon content of fuels sold in California by 10%. This can be accomplished by either providing or producing low-carbon fuels such as electricity, natural gas, hydrogen and sustainably produced biofuels themselves, or purchasing credits from low-carbon fuel producers.

It is effectively a performance standard – no fuel is barred and no technology is prescribed. In the event that a refiner or blender falls short, the policy allows credits to be purchased from other low-carbon fuel providers to get over the top.  Contrary to assertions by CEA that it was “cooked up on California campuses over the past decade,” the California low carbon fuel standard was in fact issued as an Executive Order by Republican Governor Arnold Schwarzenegger. Many other states and some Canadian provinces are in the process of adopting policies similar to California’s.

This is truly 21st Century policy. It is not the command and control regulation so often criticized by industry. It allows for innovation and continuous improvement to be rewarded.

Okay, so that is how it is described by scholars, government officials and environmentalists. How does Big Oil backed CEA describe it?

According to scrolling assertions on CEA’s “Secure Our Fuels” webpage, the LCFS is variously described as:

- A plan to expand America’s dangerous foreign energy dependence

- A mandate for higher fuel costs

- A sure-fire way to ship millions of American jobs overseas

- A massive transfer of wealth from Main Street to Wall Street. 

What follows is our response to these unfounded and fear-mongering assertions. We believe that – in vast contrast to CEA’s arguments – the low carbon fuel standard will: 

Reduce America’s dangerous foreign energy dependence  

According to an analysis by the Center for American Progress, the five biggest oil companies recorded a combined profit of $100 billion in 2008 alone yet invested less than 4 percent in renewable and alternative energy. The low carbon fuel standard will help reduce our dependence on foreign oil by putting Big Oil on the hook to put their money where their “mouth” is and invest in alternative, low-carbon fuels. Currently, the global warming pollution imbedded in fuels is not accounted for, making it more difficult for cleaner fuels to compete. By diversifying our fuels, including those grown in America, America will be more self-sustaining. This will make us more – not less – secure. 

While CEA argues that the low carbon fuel standard would block some of the dirtiest fuels in North America from being developed (tar sands, liquid coal and oil shale), thereby making us more dependent on oil from other, less savory regions of the world, the reality is that the LCFS starts to wean us from the choke-hold that oil has on today’s transportation and will help us gradually transition to more diverse, cleaner choices for fueling our mobility.

NRDC’s analysis shows that with policies such as the low carbon fuel standard and vehicle emission standards, the U.S. is on the path to save over 4 million barrels a day (mbd) – one fifth of our daily usage – by 2020 and 10 mbd – fully one half – by 2030 compared to scenario in which vehicle efficiency and biofuels penetration stays at today’s levels. To put this in perspective, we import approximately 4 mbd from the Middle East, Venezuela, and the Canadian tar sands combined. Low carbon policies, like California’s, can help us achieve this goal so that we don’t need to deepen our dependency on Canada’s dirty and destructive tar sands oil. 

The low carbon fuel standard will provide the necessary framework to transition our transportation sector from dirty oil to electricity and new, cleaner, homegrown fuels. For these reasons, this complementary policy approach has been endorsed by the U.S. Climate Action Partnership, a consortium of leading companies and environmental groups.

Reduce costs by diversifying fuel sources and improving innovation

The low carbon fuel standard is expected to reduce our fuel costs by making America more fuel efficient and by providing alternatives to our oil dependency. Our economy has become vulnerable to oil price volatility. With China and the rest of the developing economies growing rapidly, demand for oil and prices have nowhere to go but up. This policy will create competition in the fuels market, helping break a near 100% monopoly in the transportation sector by a single product: oil. The dirty fuels that the Big Oil- backed CEA would have us increase our reliance on are actually some of the most expensive fuels in the world to produce. That is why, during this recession, 85% of the slow down in global oil extraction has occurred in the tar sands. They also argue that a low carbon fuel standard is an energy tax in disguise. There is no basis for this claim and seems to be simply an extension of their attacks on pricing carbon under cap-and-trade policy. 

Create American jobs as we shift to using energy made in our own country 

By encouraging investments in alternative fuels and development of home-grown fuels like advanced cellulosic biofuels and natural gas generated from waste, we will create more jobs in North America. Clean transportation policies such as the low carbon fuels standard can accelerate economic growth and job creation in the cleantech sector. If California’s experience is a guide, these promising new fuels could help provide jobs in biofuels, wind energy and other renewables in the Midwest where tar sands expansion is at a fever pitch. An analysis by the University of Amherst at Massachusetts shows that three times more jobs are created in a clean energy economy than by staying the course of our reliance on fossil fuels. In terms of global competition, reducing – not increasing – carbon is the path to success and innovation. That’s why companies like Wal-Mart are making major voluntary commitments to reduce their carbon footprint in the U.S. and globally. Policies like the LCFS will help make the U.S. more competitive by encouraging the use of more sustainable resources and complement the creation of millions of clean energy jobs under new climate policies. 

Create flexible implementation measures that will help companies comply and reduce costs 

Under California’s low carbon fuel standard, a credit system is created, which works as follows: Low carbon fuel producers will generate credits (each credit represents a ton of carbon reduction). Oil companies need to hold a certain amount of credits (or reductions) to comply with the 10% reduction by 2020. They can generate their own credits by producing their own low-carbon fuels (as some oil companies plan to do like BP’s biofuels program) or purchase credits from low-carbon fuel producers. This system will save consumers money and make it easier for companies to comply. 

For nearly twenty years, companies have been able to “trade” emission reductions under the Clean Air Act’s acid rain program, which has made compliance with the requirements to cut sulfur dioxide emissions in half much less expensive than they would otherwise have been, saving Americans billions of dollars.  

While CEA claims that Wall Street will be enriched at the expense of Main Street, we don’t expect Wall Street to be involved in this credit market. This policy will benefit Main Street by providing consumers with more choice.

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The CEA is distorting the debate with its unfounded assertions in order to derail policies that would help level the playing field for alternative fuel providers. CEA needs to be seen for what it is – a Big Oil backed front group with a mission to keep America addicted to oil. The need to reduce our addition to oil has never been greater, yet CEA’s Big Oil backers are bent on opening a new industry of dirty, high carbon fuels. The American people should reject this backwards plan – found here in its letters . 

The reality is that the U.S is already on track to reduce its use of oil, thanks to policies that were put in place by the last two Administrations. The low carbon fuel standard will accelerate this trend and help us protect our precious North American environment, improve the health of communities already living with too much pollution, and reduce the need to commit U.S. troops in unstable, oil rich areas of the world.  

That sounds like a far better path to me than the status quo so fiercely defended by Big Oil and its front groups. If you agree, please visit the tar sands network’s website, www.dirtyoilsands.org, and send a letter to the President through www.lovewinter.org.

1600 ducks died in one incident at Syncrude's tar sands tailing ponds – this photo released by Canadian court last week. See's this blog on the trial.