Energy Exchange

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.

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.