Author Archives: Tim O'Connor

A Major Step to Protect Californians from Gasoline Price Manipulation

Tim O'Connor, EDFYou can’t turn on a TV or radio in California these days without hearing the oil companies and their industry associations complaining that the state can’t afford to move to cleaner fuels and predicting that cutting pollution from the transportation sector will drive up gasoline prices.

What the oil industry’s $56 million political campaign, and even wider reaching ad campaign,  doesn’t say is that if gas prices do go up this year, it is likely to be the oil industry—not clean energy—that’s to blame.

Since 2005, the price of gas in California has fluctuated by an average of $1.16 per gallon, while diesel has fluctuated by $1.01. Year after year, prices at the pump shoot up – yielding significant additional profits for fuel suppliers – then casually drift down back to a point higher than where they started. The phenomenon is so well known, industry insiders call it rockets and feathers.

The oil companies say they don’t cause these fluctuations, but the problem is so severe that Governor Jerry Brown and the state legislature just gave the California Energy Commission $342,000 to investigate and prevent gas price fixing and market manipulation by the industry.

Market domination can lead to price manipulation

Transportation fuel is a concentrated market where a handful of suppliers control a product everyone has to have. Small and large businesses, commuters, soccer moms, motorcycle clubs—pretty much everyone needs the gas and diesel supplied in California by just 22 companies, six of which (Chevron, Tesoro, BP, Phillips 66, Valero and Shell) control 90 percent of the total supply.

Since the early 2000’s, government officials have recognized that this concentrated, opaque market is a problem. As a 2004 report by then-Attorney General Bill Lockyer reported:

“Without changes in public policy that address market conditions, California will not rid itself of high gasoline prices. Policymakers must begin taking the steps necessary to increase competitiveness, supplies and fuel conservation…and to reduce California’s petroleum dependence through increased fuel economy and non-gasoline based technology.”

Eight years later, in 2012, U.S. senators from California, Washington and Oregon sent a letter  to U.S. Attorney General Eric Holder requesting an investigation into oil company market manipulation and price fixing. Citing analysis produced by McCullough Research, the lawmakers observed that refinery shut down reports were inconsistent with production data. According to McCullough, price increases generated an estimated $25 million per day in windfall profits for the oil companies.

A promise made in 2013

In September 2013, the California state legislature took a stand against market manipulation by passing a landmark bill, SB 448. The bill provides resources and direction to the state’s Energy Commission to perform market analysis to identify the causes of gas and diesel price spikes and fluctuations.

By passing the bill, the legislature made California the first state to provide dedicated resources to look into gasoline price swings and protect California drivers. Governor Brown, recognizing that his state needed the capacity to deal with sudden price fluctuations, directed “the Commission to work with the Attorney General to evaluate market trends and ways to respond to price volatility.”

The answer: Fuel diversification and clean fuels policies

There are many reasons to support cleaner fuels. California still has the worst air quality in the nation, and spends over $30 billion per year on gas and diesel from imported oil. No wonder more than 70% of Californians support its clean fuel policies. Yet the oil companies, led by Chevron, Tesoro and Valero are doing everything they can to kill these measures – common sense solutions that clean up the air and accelerate home-grown alternative fuels that break our dependence on gasoline and diesel.

In early 2014, EDF teamed up with nation-leading economists who focus on fuel market dynamics to describe some of the benefits of California fuel policies, such as long term price reduction. In the analysis, we found that:

“By diversifying the state’s fuel mix with a portfolio of alternative and conventional fuels, California’s overall fuel price volatility and price levels (for all fuels in the portfolio) are likely to be reduced in the long run… By extension, policy changes that undermine or take away incentives to diversify the fuel mix are bad for California consumers, the economy, and the environment.”

As California implements its new state budget, hires new experts and uses its law enforcement tools to look into the true causes of market fluctuations, the benefits of California clean fuels policies will become even clearer. The recommendations made by Attorney General Lockyer ten years ago will finally be fulfilled and the oil industry’s blame game may even be shut down once and for all. Best of all, the popular new policies that will lead California to cleaner, cheaper fuel will be strengthened and preserved.

Posted in Cap and trade, Clean Energy, Climate, Global Warming Solutions Act: AB 32, Low Carbon Fuel Standard, Transportation | Leave a comment

The United States Supreme Court Hears the Other Side of the Story on California’s Cleaner Fuels Policy

rp_OCONNOR-PHOTO-MAY-20121-200x300.jpgYesterday, the Environmental Defense Fund, the Natural Resources Defense Council, the Sierra Club and the Conservation Law Foundation filed a brief in opposition to March 2014 petitions for Supreme Court review in American Fuel & Petrochemical Manufacturers Association v. Corey and Rocky Mountain Farmers Union v. Corey, cases in which oil and ethanol companies attack the constitutionality of California’s Low Carbon Fuel Standard (LCFS).

The LCFS, adopted under California’s trail blazing Global Warming Solutions Act, is a central contributor in the effort to move the transportation system away from the current paradigm of unsustainable global warming pollution, foreign energy dependence, and community-choking air pollution. The LCFS works by putting market incentives in place that encourage the production and use of low carbon fuels that were not prevalent when the program went into effect.  It is projected to reduce greenhouse gas emissions from California’s use of transportation fuels by 16 million metric tons per year by 2020.

As we have explained in prior posts here and here about this important case, the challengers in the litigation have argued that the LCFS discriminates against ethanol and oil coming from outside of California and that it attempts to regulate actions occurring outside the state in violation of the U.S. Constitution's Dormant Commerce Clause. A panel of the United States Court of Appeals for the Ninth Circuit rejected these arguments in September 2013. In their March 2014 petitions, the industry challengers seek Supreme Court review of the appeals court’s decision. The Supreme Court’s decision on whether to take the case could come as early as late June. Read More »

Posted in Global Warming Solutions Act: AB 32, Litigation, Low Carbon Fuel Standard, Transportation | Comments closed

New Study: California Climate Law Cuts Billions in Health, Pollution Costs

rp_OCONNOR-PHOTO-MAY-20121-200x300.jpgCalifornia drivers don’t have much choice when it comes to what fuel they fill their cars with, or how dirty it is. As recently as five years ago, nearly 97 percent of the energy used for transportation in the Golden State came from gas and diesel – over half of which was made from imported oil.

This basic lack of consumer choice means that California drivers like myself are stuck with a high-priced product that is made from dirty crude and controlled by a few major multinational oil companies.

What’s more, our transportation system has a direct effect on our health – in addition to contributing to climate change and energy insecurity.

And it’s not a pretty picture.

A study just out from the Environmental Defense Fund and the American Lung Association, with modeling by Tetra Tech, finds that the negative impacts of California’s transportation system cost us a staggering $25 billion per year. It also shows that the benefits of policies aimed at supporting the use of cleaner fuels can significantly reduce such costs.

25 million drivers, worst air pollution in the U.S.

I’m probably similar to many other drivers around here. Last year I drove some 15,000 miles, paying about $2,400 for gas – a sizeable portion of my disposable income. This gas is always more expensive in the summer than in winter, and it won’t matter if I fill up my car at the Shell station on the corner or from Chevron at the freeway on-ramp.

My 15,000 miles of driving last year released about 5 tons of greenhouse gas pollution and other air contaminants. When combined with the pollution released from California’s other 25 million drivers, I have, unfortunately, helped give California the nation’s worst air pollution.

Not only is our state home to the top five most polluted cities in the United States, but countless Californians suffer from lung and heart problems, and even risk early death, from pollution-related health impacts cause by transportation. Read More »

Posted in Cap and trade, Clean Energy, Global Warming Solutions Act: AB 32, Low Carbon Fuel Standard, Transportation | Comments closed

Turning Lemons into Lemonade: How Two Companies are Turning Your Trash into Low Carbon Fuel

ca_innov_series_icon_283x204By Tim O’Connor and Chloe Looker

EDF’s Innovators Series profiles companies and people across California with bold solutions to reduce carbon pollution and help the state meet the goal of AB 32. Each addition to the series will profile a different solution, focused on the development of new technology and ideas.

Modern society makes a lot of garbage. The decomposition of organic material from garbage in landfills releases methane gas, a potent global warming pollutant.

At the same time, the modern transportation system is powered mostly by fossil fuels and also releases global warming and toxic air pollution. Today, two companies are turning rotting lemons (garbage) into lemonade (low carbon fuels for cars and trucks), and are showing that AB 32 creates a powerful incentive for new ideas and innovations.

Although the ultimate solution to the problem of waste generation and pollution from landfills must include reduction of waste going into the landfills, the fact of the matter is landfills aren’t going anywhere any time soon. Read More »

Posted in California Innovators Series, Clean Energy, Climate | 1 Response, comments now closed

Some Records Are Not Meant to Be Broken

Source: Drought Monitor

By Tim O’Connor and Katie Hsia-Kiung

2013 was a record-breaking year in many respects. Peyton Manning broke the record for the most touchdowns and passing yards thrown in a single NFL season. At age 19, Ryan Campbell became the youngest person to circumnavigate the world, and at age 80, Yuichiro Miura was the oldest to climb Mount Everest.

While many of the records broken last year demonstrated remarkable human stamina, determination, and grit, there were other “accomplishments” that shouldn’t be received so warmly.

Sacramento, for example, experienced the driest year since they began measuring rainfall in 1878.  Conditions are so dry that some cities in the Central Valley are already imposing water rationing orders and more are expected to follow. According to the U.S. Drought Monitoring System, approximately 85% of the state is suffering from severe drought, and the snow pack is so meager in some places, there is simply no snow to measure.

Across California, temperatures on Christmas Day set new heat records, reaching 15 degrees above average in some areas.  These unseasonably high temperatures followed a record-breaking cold snap just a few weeks earlier, begging the question of whether Santa left sweaters or T-shirts under the tree.

These extreme weather records are not just unique to California. This past December, New York City, Philadelphia, and Atlantic City all broke previous high temperature records– which has now been followed by extreme cold and snow storms across the eastern half of the U.S.

One question on the minds of many is what is causing this extreme weather, and whether man-made climate change is the culprit.  The response lies in science. That is, while it is difficult to attribute individual weather events to climate change, the continued rise in record-breaking events is just what has been predicted and statistically too significant to ignore.

Ironically, unlike records from sports or other human feats, it takes drive and determination to avoid breaking climate change records. Scientific experts across the world agree that after over a century of increasing fossil fuel combustion, the planet is on a path towards more frequent extreme weather events, and we must cut climate pollution to stop this from happening.  This will require investment in low-carbon solutions like clean energy, clean fuels, and efficiency.

Similar to how taking steroids out of baseball brought the sport back to its rightful state, cutting climate pollution through efforts like California’s Global Warming Law, AB 32, will bring the atmosphere back towards greater stability.  Though the state can’t solve climate change alone, AB 32 is a huge step in the right direction, one which is leading other jurisdictions to take action.

Like home runs and touchdowns, droughts and snowstorms will always be a part of the environment we experience, we just don’t need any extra ones. As climate pollution is reduced, and with it the human caused impacts of climate change, we’ll see lot fewer records being broken every year, letting communities – and statisticians everywhere – live a little better.

Posted in Climate, Global Warming Solutions Act: AB 32 | Comments closed

California’s Innovation Story: Real People, Real Solutions

EDF’s Innovator Series profiles companies and people across California with bold solutions to reduce carbon pollution and help the state meet the goals of AB 32.  Each addition to the series will profile a different solution, focused on the development of new technologies and ideas.  

Time and again, the people of California have affirmed  that pursuing policies to cut climate pollution is critically important for the health of current and future generations.  At the same time, history has shown it to be much harder to implement environmental policies if there is a perception that economic health will suffer.  The ultimate goal is well-designed public policy that delivers environmental, health and economic benefits together.

In 2006, the state legislature took the environmental and economic paradigm to heart when it passed California’s global warming law, AB 32, creating a fundamental promise that cutting pollution and growing the Golden State’s prosperity will go hand in hand.  Today, California business and community leaders are proving that promise to be a reality – and new stories are regularly emerging to show it.  Our new AB 32 Innovator Series will work to capture these stories, bringing the companies – and people behind them – into light.

One of the reasons AB 32 has succeeded has been its ability to use market-based programs to cut pollution, allowing for both environmental and economic progress.  Economic, government and academic experts have long suggested that well-designed market-based programs are the best tools for achieving pollution reductions because they inspire businesses to identify and apply new and innovative solutions.  These solutions are often cheaper and faster at cutting pollution than prior methods, resulting in reduced compliance costs and rapid pollution declines.

For example, in a 2012 paper published in the Proceedings of the National Academy of Science, it said this about a market mechanism used in AB 32 (cap and trade):

“Facilitating innovation in “clean” technologies may be the key to achieving climate change stabilization without dampening economic productivity…CTPs [cap and trade programs] have several attributes that support clean technology innovation.”

For a concrete example of the possibility that innovation provides, think back to the acid rain problem of the 1990’s.  Sulfur pollution was spewing from major coal-fired power plants across the U.S., degrading forests, lakes and architectural landmarks at a threatening rate.

When the U.S. Environmental Protection Agency (EPA) adopted a cap-and-trade regulation to help solve the problem, most experts thought installing expensive scrubbers and equipment upgrades across the U.S. was the solution.  As a result, power companies across the U.S. predicted runaway costs and facility closures.   However, when faced with the opportunity of a market-based solution and its inherent signal to innovate, a simple low-cost solution was developed by these same companies: find lower-sulfur coal and bring it to the power plants by train, rather than using high-sulfur coal located closer by.

Through this simple innovation, compliance costs were 80–90% cheaper than initially estimated.

Unfortunately, most economic models and regulatory implementation scenarios are ill-equipped at predicting innovation because it tends to happen in ways people don’t expect.  If it was easy to predict how and when ground-breaking ideas occur, they would have already been applied.   As the acid rain example shows, innovation can, and does, take many forms. Accordingly, by documenting the development and implementation of innovative solutions as they emerge, the true potential of policies like AB 32 can be realized. This is the essence of our new California Innovators Series.

In California, AB 32 is helping to develop groundbreaking solutions, proving that the state’s climate policy mission of protecting the economy and the planet can be realized.  EDF’s Innovator Series will recognize several of these bold solutions throughout the year in an effort to distinguish the companies positively impacting California’s landscape and inspiring future innovators to come.

Please note, EDF has a standing corporate donation policy and we accept no funding from companies or organizations featured in this series.  Furthermore, the EDF California Innovators Series is in no way an official endorsement of the people or organizations featured, or their business models and practices.

Posted in California Innovators Series, Clean Energy, General, Global Warming Solutions Act: AB 32, Jobs | Comments closed

From the ozone to your refrigerator, putting the chill on climate change

oconnor_tim_287x377(This post originally appeared on EDF Voices)

Back in the 1980s, an international alarm was sounded when a growing hole in the Earth’s ozone layer was discovered over the Antarctic. This phenomenon was caused, scientists said, by the presence of Ozone Depleting Substances (ODS) like the gases used in air conditioners, refrigerators and elsewhere.

There were predictions, if the ozone hole were to spread, of massive crop failures, an explosion in skin cancer rates, and mass extinction of species. Concern over the problem became so widespread that it even became the subject of a skit on “Saturday Night Live.”

Ultimately, however, the world community acted: In 1987 theMontreal Protocol was signed  by 46 nations, mandating a global phase out of ODS. Since then, scientists have shown that the production phase out of ODS has helped to shrink the hole in the ozone layer, while at the same time helping slow climate change.

Replacing chemicals that are 10,000 times more potent than CO2 as accelerants of climate change with ones that are a few thousand times stronger is no solution. ODS substitutes still make their way into the atmosphere when refrigerators are recycled and air conditioners leak. Furthermore, as globalization and economic growth makes refrigeration increasingly available in the developing world, the climate change problem associated with growing use of ODS substitutes is getting worse.

Studies have revealed that cooling systems in places like grocery stores and office buildings in Southern California regularly leak 15% to 30% of their refrigerant per year. That means that, worldwide, millions of tons of climate change pollution is being released every year.

NASA Goddard Photo and Video/flickr

There are simple fixes to this leakage problem. In California, for example, equipment inspection and leakage standards have been adopted as part of the state’s global warming law (AB 32). This has resulted in reduced ODS substitute losses into the air and savings for businesses that otherwise would have to buy recharge chemicals. In addition,companies are popping up to help manage refrigeration use, and some equipment operators are demonstrably leaking less.

In June 2013,President Obama and President Xi of China agreed to work together to phase down the consumption and production of hydrofluorocarbons (HFCs), a key ODS substitute gas. This a pact that has the potential to reduce about 90 gigatons of CO2equivalent by 2050 (that’s equal to roughly two years’ worth of current global greenhouse gas emissions).

The U.S.-China pact could point the way toward a national and international policy on ODS substitutes. In the face of the growing urgency over climate change, we need a comprehensive solution to this problem.

Posted in Climate, Global Warming Solutions Act: AB 32, Offsets | Comments closed

From the Pacific Coast Climate Plan, a Path Forward for the Low Carbon Fuel Standard

While several stories have been written on this week’s historic climate pact signed by California, Oregon, Washington and British Columbia, little has been mentioned about the path its created for low carbon fuels in Western North America.  Such a clear statement on the direction for West Coast low carbon fuels development has never been made, so it certainly deserves a deeper dive.

In Part II of the pact: “Transition the West Coast to clean modes of transportation and reduce the large share of greenhouse gas emissions from this sector” the leaders agreed to “Adopt and maintain low-carbon fuel standards in each jurisdiction. Oregon and Washington will adopt low-carbon fuels standards, and California and British Columbia will maintain their existing standards.”

The relevance of this statement cannot be understated.

According to the US Energy Information Agency, the 3 western states burn a combined 23.7 billion gallons of gas and diesel every year, emitting just over 200 million metric tons of carbon dioxide.  British Columbia, for its part, releases about 15.5 million tons from burning gas and diesel in cars and trucks every year.

Furthermore, based on recent projections of alternative fuel industry growth from the California energy commission, the US Energy Information Agency, and consulting firms like Navigant, stringent Low Carbon Fuel Standards (LCFS) are achievable.

For example, according to recent cutting-edge research on electric vehicle (EV) sales, California and Washington will likely lead the nation in EV sales by the year 2022 with about 813,000 and 105,000 EV’s sold respectively.  Additionally, the state of Oregon is expected to account for over 5% of all EV sales in 2022.  With policies like the LCFS, these vehicles can capitalize on the huge amount of zero carbon power (hydroelectric, wind, etc.) produced throughout the pacific northwest on a yearly basis – yielding even greater economic investments while also significantly reducing pollution that causes climate change and public health impacts.

In addition to the EV example, a set of LCFS standards across the western region can build upon the large amount of low carbon biofuels that are being produced.   By way of example, according to the US EIA, at least 14 different biodiesel production facilities with a production capacity of 183 million gallons of fuel are already located in California, Oregon and Washington, with more to come.  Furthermore, as documented by the California Energy Commissions, at least a 3-fold increase in alternative fuels production is expected by 2020, enabling the achievement of goals for “petroleum displacement, in‐stage biofuel production, and LCFS compliance.”

These alternative fuel facilities and companies mean local jobs, economic growth and reduced imports – a much different picture than the current trend of buying massive amounts of foreign crude oil and sending billions of dollars abroad.

For years, members of the oil and traditional ethanol industries have fought to undermine the LCFS in the media, the courts and at the ballot box. These groups have spared no expense to build implementation road blocks and cast doubt over the standard, hiring consulting firms that deliver highly criticized sky-is-falling cost estimates, sponsoring industry groups aimed at casting doubt over implementation readiness, and suing California in state and federal court.  With this most recent announcement, those efforts were again proven futile.

Though time will tell how Oregon and Washington will implement the LCFS portion of the recent climate pact, for now, a green light means it’s go time for low carbon fuels across the region.

Posted in Clean Energy, Climate, Low Carbon Fuel Standard | Comments closed

History Repeats Itself Again: CARE’s New Cost Analysis Paints a One-Sided Picture

Major polluters funding skewed analysis of the costs and benefits of environmental regulations is a long-standing tradition in regulatory circles. In a recent version of this phenomenon, CARE (Californians for Affordable and Reliable Energy), an industry funded front group aimed at attacking clean energy and clean fuel policies in California, hired Navigant Consulting to do just that.

Last week, EDF economists pulled back the curtain on the recently released CARE report and found more of the same scare tactics: one-sided costs estimates yielding unfounded results and cherry-picked outcomes.

Unsurprisingly, our economists found that the CARE study “focused exclusively on the costs of California’s complementary clean energy and clean fuels policies while avoiding comparative assessment of the benefits.”  Additionally, the study was found to “rely on sources that have not been peer reviewed, and misinterpret analyses and energy market trends.”

Due to the noted inaccuracies of the study, the memo makes the point that “policy makers should treat the Navigant study with extreme caution; it likely overstates costs while considering neither the benefits to be enjoyed nor the cost-minimizing aspects of policies carefully designed to deliver environmental benefits as efficiently and quickly as practicable.”

A CARE funded analysis that results in a one-sided finding shouldn’t come as a shock.  The group is funded by some of the largest polluters and fossil fuels producers in California – those that have the most obligations to change under the state’s comprehensive clean energy and climate change laws.  CARE members include the Western States Petroleum Association, the California Manufacturers & Technology Association and the California Chamber of Commerce, as reported on its website.

As California transitions to cleaner, more diversified sources of energy, many businesses will be faced with the stark choice of participating in the modernization of our energy and transportation system or fighting against progress and innovation.  Whichever way those businesses trend, the recent CARE report prepared by Navigant shows that misinformation will continue to be a part of the portfolio approach used by polluters to undermine California’s progress.

For other analysis of industry reports that have overblown costs and underestimated benefits of California’s clean energy and clean fuels policies, read here, and here.

Posted in Cap and trade, Global Warming Solutions Act: AB 32, Low Carbon Fuel Standard | Comments closed

California’s LCFS Ruling is a Win for Consumers and Alternative Fuels Companies

By Tim O'Connor and Larissa Koehler

Last week, we saw a big win for California's Low Carbon Fuel Standard (LCFS) – a regulation to diversify the state’s fuel mix with lower carbon sources of energy.  After almost a year of deliberation, the United States 9th Circuit Court of Appeals filed a decision in the case Rocky Mountain Farmers Union, et al. v. Corey, in favor of California.

In its 79-page decision, the Court addressed two major constitutional issues: 1) whether the LCFS was invalid because it directly regulated wholly out-of-state ethanol producers (extraterritoriality); and 2) whether the LCFS was invalid because it impermissibly discriminated against out-of-state producers based solely on origin, thereby violating the Commerce Clause.  The court overturned a District Court ruling on both grounds, finding that the state can move forward with the LCFS unimpeded.  Of course, the ruling is only a temporary win for California, as additional legal process at the District court — and possibly U.S. Supreme Court — is forthcoming.

Although not required to do so, the Court of Appeals went to great lengths to recognize the importance of California’s leadership in developing and implementing environmental policy.  The Court said it did not wish to “block California from developing this innovative, nondiscriminatory regulation to impede global warming… [as] it will help ease California’s climate risks and inform other states as they attempt to confront similar challenges.”

These words of support for the LCFS and California’s leadership are supported by tremendous growth in alternative fuels industries like California biodiesel, and also by analysis that shows fuel diversification can yield long-term price reductions at the pump.  The 9th Circuit's decision which allows these trends to continue is not just a win for the state in a long legal battle, but also a win for California’s consumers and environment.

Posted in Global Warming Solutions Act: AB 32, Litigation, Low Carbon Fuel Standard | Comments closed