As world leaders returned from climate talks in Copenhagen without a concrete plan to address climate change, governors from Pennsylvania to Maine were moving forward with plans to regulate carbon in fuels.
Rhode Island and 10 other Eastern states plan to use the fuel standard recently developed in California as the template for the program. But Northeast governors would be wise to take a closer look at what California is selling.
While California has led many key environmental initiatives, its recently adopted Low Carbon Fuel Standard (LCFS) misses the mark. The problem is not the policy’s ambitious and important goals, or its general framework, but rather its bias for and against certain fuels.
In concept, the program makes sense. It scores all fuels based on their life-cycle climate impact, then requires oil companies to reduce carbon emissions over time. The idea is that the most climate-friendly alternative fuel will be the most attractive for meeting the targets, creating a market-based competition to produce the cleanest fuel.
Supporters of the California approach assert that the policy is performance-based, and does not pick winners and losers. Of course, this is only true if the carbon-accounting methodology is sound, and judges all fuels through the same analytical lens.
Unfortunately, this is not the case. California uses different rules for different fuels, distorting the relative values of the eligible alternatives and needlessly jeopardizing the credibility of the program.
The problem is actually quite simple. There are only two kinds of carbon emissions, direct and indirect. Direct effects are supply-chain emissions from producing and using the product. Indirect emissions are those theoretically occurring as a ripple effect of using a particular product.
Consider the Prius. The direct effect of driving a Prius is less gasoline consumed and fewer emissions per mile. The indirect effect is a bit muddier. Prius owners may drive more because fuel costs are lower. Millions of hybrids will lower gasoline demand, keep fuel prices down economy-wide, and indirectly enable wasteful driving habits and the sale of inefficient vehicles like SUVs.
Most people would argue that pinning these uncertain future market responses, large or small, on the Prius is illogical. Yet this is exactly what California does with biofuels.
Instead of holding biofuels accountable for the land actually used to produce the fuel, California penalizes them for the indirect market response to using land for fuel. In other words, they use economic models to predict that more pristine land will be converted to agriculture in Brazil if land is used for fuel in the U.S., then penalize biofuels for this land conversion in Brazil even though it is not cleared to produce biofuels.
This type of carbon accounting is controversial, with coalitions of scientists, advanced biofuel companies and some environmental groups crying foul. But it becomes indefensible by virtue of the fact that California does not take this approach with any other fuel. That’s right, Exxon is allowed to pay for the crude oil it actually uses, without penalty for indirect effects. Same for electricity, natural gas and hydrogen.
Truth is, every action has an indirect effect. If you buy a ticket on an airplane, you are occupying a seat that may force someone else somewhere else. The same is true for energy resources. The use of land, coal, electricity, natural gas and a dwindling crude-oil supply takes that resource away from other users and forces a market response to meet ongoing demand.
But regulators have to make a choice. Either these types of effects are in play, or they are not. It is simply bad public policy to penalize biofuels for market-mediated effects while pretending that we can use as much electricity, hydrogen, natural gas and petroleum as we want without indirect consequences to the planet.
At the end of the day, the LCFS must be durable and credible to survive closer political and legal scrutiny. A program that cherry picks indirect effects for certain fuels, and turns the basic concept of fairness on its head, will end up wasting valuable time and energy.
Brooke Coleman is executive director of the New Fuels Alliance, a coalition of biofuel and bioenergy companies and groups.
© 2010 , Published by The Providence Journal Co.
