CEA-backed study contests impact of regional low-carbon fuel standard

Establishing a regional low-carbon fuel standard (LCFS) for 11 Northeast and Mid-Atlantic US states would not establish its proponent’s goals and would significantly increase gasoline prices and cause economic hardship, a study commissioned by the Consumer Energy Alliance concluded.

CEA asked Science Applications International Corp. (SAIC) to examine the matter after the Northeast States for Coordinated Air Use Management (NESCAUM) issued findings on Aug. 18 that establishing an LCFS in the states would save money over 10 years when oil prices were high and be near parity at low oil price levels.

Gasoline and diesel fuel would still be the dominant motor fuels in the region, but their use would decline by 4-9 billion gal/year as they were replaced by advanced biofuels, electricity, and natural gas, the group said. Transportation-related greenhouse gas emissions would fall 5-9%, and the LCFS would create “a small, but positive, impact on jobs, gross region impact, and disposable [personal] income within the region under a wide range of compliance scenarios,” NESCAUM said.

“We believed their analysis was not thorough, and their assumption that such a program could be put in place was flawed,” CEA Executive Vice-Pres. Michael Whatley said on Mar. 26. “We’ve spent the past several months preparing a study we are releasing today, which takes a hard look at [an LCFS’s potential impacts] in the Northeast and Mid-Atlantic states.”

He said NESCAUM, which has been considering the idea of a Northeast and Mid-Atlantic regional LCFS since 2009, has not developed a final proposal, so California’s LCFS was used as a model for the CEA-commissioned study. It found that NESCAUM’s goal of reducing transportation GHG emissions by 10% in the 11 states could not be achieved in the 2012-21 period “while sustaining the full energy needs of the states and the region.”

SAIC’s study also found that establishing an LCFS in the states would cost at least $306 billion and at least 147,000 jobs over 10 years. “Nominal gasoline prices would at least double, and diesel and jet fuel prices would increase by at least 18-23% by 2022 from 2012,” it added.

The new study also found that NESCAUM relied on flawed assumptions about the market’s ability to secure an adequate biofuels supply, the infrastructure needed to support the demand, and the projected replacement of existing vehicles, according to CEA.

“At a time when many Americans can barely afford to drive themselves to work, how can an ineffective, costly, and duplicative standard like an LCFS be the right choice for any state?” Whatley said. “NESCAUM’s regional LCFS [concept] is simply an unfeasible option.”

Contact Nick Snow at nicks@pennwell.com.

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