Nationwide LCFS would raise GHGs in US, study finds

Nick Snow
OGJ Washington Editor

WASHINGTON, DC, Aug. 5 -- Implementation of a nationwide low-carbon fuel standard (LCFS) would increase greenhouse gas (GHG) emissions by as much as 19 million tonnes/year, a new study commissioned by the National Petrochemical & Refiners Association concluded. The findings contradict claims by LCFS advocates that such a requirement would reduce GHG emissions, NPRA said.

Minneapolis-based Barr Engineering Co.’s study, which the trade association released on Aug. 3, assumed that the US would have to import more oil from overseas because an LCFS would keep US refineries from using oil from oil sands deposits in western Canada. That oil would be shipped by tanker across the Pacific to China and other Asian locations, the assumption continued.

“By denying the American people access to oil from our friendly neighbor Canada, a [LCFS] would raise fuel costs and wipe out millions of American jobs,” NPRA Pres. Charles T. Drevna said. “Now this latest study shows that a nationwide LCFS won’t reduce overall global [GHG] emissions—it will actually raise them. These findings simply reinforce NPRA’s long-held belief that a federal [LCFS] is a policy of all pain and no gain.”

Barr Engineering’s analysis compared a base-case of transport emissions associated with current Canadian-US and Middle East-China import-export patterns to a “crude shuffle” case where Middle Eastern crude replaced Canadian exports to the US and Canadian crude exports went to China instead.

It suggested that while a nationwide US LCFS would change the nation’s crude import mix, it would not alter overall crude demand worldwide. “A shift in US crude supply preferences will simply cause redirection of crude supplies elsewhere,” the study said.

Range of increase
“This analysis of the change in crude-transport-related emissions accompanying implementation of an LCFS indicates that the net effect will be a doubling of GHG emissions associated with changes in crude-transport patterns,” it continued. “It indicates an increase in global GHG emissions by 7.1-19 million [tpy], depending on the extent of resulting Canadian crude displacement.”

NPRA said additional concerns regarding US access to crude produced from Canadian oil sands have surfaced following the US State Department’s decision regarding a proposed pipeline to transport Canadian crude to US Gulf Coast refineries. The decision would allow federal agencies an additional 90 days to comment on TransCanada Pipelines Ltd.’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 exported to the US.

Several regional and state LCFS initiatives are under way, 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, according to NPRA.

It said a nationwide LCFS was part of a 2008 climate change bill cosponsored by US Sens. Joseph I. Lieberman (D-Conn.) and John W. Warner (R-Va.) which was defeated. The 2009 climate change bill cosponsored by US Reps. Henry A. Waxman (D-Calif.) and Edward J. Markey (D-Mass.) originally contained an LCFS provision, but it was removed before the House approved the bill at the end of June that year, NPRA said.

In a response posted Aug. 5 on his blog on the Natural Resources Defense Council’s web site, Simon Mui said that the Barr Engineering study contains several flaws, including an assumption that all Canadian crude shipments to the US would be shipped overseas instead of just those produced from oil sands.

Once this worst-case scenario is corrected so that only an additional 6 million tpy of CO2 results from increased tanker emissions from overseas imports, he continued, an LCFS would lead to a net domestic CO2 reduction of 253 million tpy.

Contact Nick Snow at nicks@pennwell.com.

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