News - American Energy Alliance

Solar Power’s Great, If We Ignore Its Problems

August 5, 2014 by AEA 1 Comment

The following graphic was recently making the rounds on social media:

The total area of solar panels it would take to power the world, Europe, and Germany:

The purpose of the graphic, of course, is to show what a “no brainer” it is for humans to switch to solar-powered electricity plants. Many people presumably saw that graphic and were pleasantly surprised to see how little it would take, in order to provide for all of Earth’s electricity needs using solar. But in this post I want to walk through the issue a bit more thoroughly, to see why this graphic—though at first quite interesting—actually doesn’t prove anything at all about whether solar is good or bad, or whether governments should enact policies to promote solar power.

In the first place, consider a different graphic: How big would the square have to be, to contain enough coal-fired power plants to provide electricity for the planet? Why, the square would be tiny—you couldn’t even see it. That’s because coal-fired electricity generation doesn’t take nearly as much surface area as solar. So did I just prove that we should embrace coal-fired generation, since it wouldn’t take up much space in the desert?

Presumably the people who dreamt up the above image would retort that coal-fired plants are inadmissible because of concerns over climate change and air pollution; the point of the graphic is to show that a “clean” technology like solar can provide us with all we need.

Yet this mentality completely ignores the economic realities. Specifically, why don’t the fans of the above image go invest in solar panels and erect them in a square grid in Algeria? The answer is obvious: They would lose a lot of money doing so. For one thing, you have to somehow transmit the electricity from Algeria to the rest of the world.

Continuing with this train of light, it soon becomes clear that the above image isn’t an actual proposal, but is rather a provocative way of illustrating facts about physics and engineering. Namely, given current solar technology, and given the amount of global electricity consumption, a simple math problem shows how much surface area in solar panels it would take to generate that much electricity.

But so what? By the same token, we could run through some back-of-the-envelope calculations and “prove” that we could provide for the entire annual energy needs—not just electricity—of the planet with a single elephant…so long as it was made of antimatter. Now I suppose one might object that my antimatter elephant solution for energy is a bit impractical. Well, the same is true for filling Algeria with solar panels.

All things considered, coal- and natural gas-fired power plants are the most economical ways to provide households and businesses with large amounts of electricity. (Depending on the specific circumstances and liability rules, nuclear plants might also do the job economically.) This is why free markets gravitate to these technologies. Currently, solar and other favored “green” technologies can serve niche roles, but they are not yet profitable for widespread adoption without government support. Mere arguments from physics and chemistry are not sufficient to pick an energy source. The choice involves economic considerations as well—an area where government intrusion will only lead to waste.

IER Senior Economist Robert Murphy authored this post.

Filed Under: News, Products and Power Tagged With: coal, natural gas, solar, solar power

Obama’s Workshop

August 1, 2014 by AEA Leave a Comment

Filed Under: Blog, Cartoons

Chicago’s Proposed E15 Mandate is Bad News for Consumers

August 1, 2014 by AEA Leave a Comment

Five members of Chicago’s City Council have proposed an ordinance to require all self-serve gas stations within the city to offer mid-grade E15 at their pumps. This mandate will harm the small business owners that operate many of these gas stations and it will likely lead to more damaged engines as consumers use E15 in engines that were not specifically designed for it. Hopefully, the Chicago City Council will reverse course.

E15 is a blend of gasoline with up to 15 volume percent ethanol. According to the Environmental Protection Agency (EPA), E15 is sufficient for use in “all model year 2001 and newer light-duty vehicles”. But others disagree and explain that using E15 in engines not specifically designed for it could have potentially disastrous effects because the engines are not designed to hold up against ethanol’s harsh corrosive properties.

With this understanding, automotive manufacturers have announced that they will not cover fuel-related claims on vehicles that have used E15 as a fuel source and, according to testimony from AAA’s President and CEO (p. 2) Robert Darbelnet before the U.S. House Committee on Energy and Commerce, only 5 percent of vehicles in the U.S. have warranties that approve the use of the fuel. In the same testimony, Darbelnet noted that in 2012, a short time ago, “95 percent of consumers had never heard of the fuel,” much less understand the impacts it could have on the health of their car engines. Many consumer advocate groups worry that individuals will inadvertently fill their tanks with E15 and end up paying for the repairs on their own.

The Chicago ordinance will require stations with annual sales in excess of 500,000 gallons to offer the fuel, along with new equipment to dispense it. To put this in perspective, “the average convenience store in 2011 sold roughly 128,000 gallons of motor fuels per month” according to The Association for Convenience & Fuel Retailing (p.12). That’s over 1.5 million gallons a year on average. The only stations exempt from the proposed requirement are those that have underground storage tanks that are incompatible with blended fuels.

This leaves stations with incompatible equipment responsible for installing the upgrades necessary to dispense E15. A report by the Petroleum Equipment Institute, commissioned by the U.S. Department of Agriculture finds that these additions have an average cost of $40,874. This expense could have a big impact on station owners. A study by Sageworks, a financial analysis firm, determined that the owners of privately held gas stations pocket less than three cents of every dollar spent by consumers and as a result, “any unexpected expense could be crippling” to the business.

There was a time when consumers could safely assume that any fuel at a gas station was safe to use in their engines. If this ordinance passes, this will no longer be the case. Chicago City Council’s plan to require E15 dispensing equipment and fuel at self-serve stations is a costly move with no upside for gasoline buyers. Station owners will be required to shell out thousands of dollars to retrofit their equipment so that it can pump a fuel that is restricted for use in a small number of vehicles, is distrusted by automotive manufacturers and insurance companies, and is less efficient (3-4 percent fewer mpg) than traditional gasoline.

IER Summer Associate Justin Bohlen authored this post.

Filed Under: News, Products and Power Tagged With: AAA, Chicago, E15, Energy and Commerce committee, EPA, Gasoline

Technological Advancements Increasing Access to Oil and Gas in Atlantic OCS

July 30, 2014 by AEA Leave a Comment

A recent assessment from the Bureau of Ocean Energy Management (BOEM) found that there has been a 42 percent increase in technically recoverable oil and a 20 percent increase in technically recoverable gas[1] in the Atlantic Outer Continental Shelf (OCS) since 2011, when the last assessment was conducted. This amounts to a mean of 4.72 billion barrels of undiscovered technically recoverable oil and 37.51 trillion cubic feet of undiscovered technically recoverable natural gas[2] just off the east coast in the Atlantic. This massive increase in technically recoverable resources is yet another example of the increasing availability of fossil fuel resources in the United States, as extraction technology and further improvements in data analysis are fueled by market innovation.

Specifically, the BOEM report stated that these advancements allow ships to drill down to 12,000 feet of water depth and 40,000 feet of total depth. [DS1] Additional improvement in horizontal wells and multilateral completion systems that allow for drilling of multiple wells with in a single wellbore have also allowed for previously unreachable resources to be tapped and utilized.

BOEM’s report was optimistic about future resource recovery and stated that resource extraction will “…likely expand the envelope of producible oil and gas resources in very challenging environments”[3] such as the Atlantic Outer Continental Shelf (OCS), and that this report measured resources only taking existing technologies into account. Only the future can tell what future innovations will do to increase our access to natural resources and subsequently increase our quality of life.

New discoveries and technological advancements such as these have shown that the often-repeated mantra – that we are ‘running out of resources’ – is wearing thin. While “renewable” sources of energy such as solar, wind, and biofuels spent massive amounts of effort in Washington D.C. arguing for subsidies to further their technologies and policies that restrict their competitors, oil and gas companies have literally reshaped the energy landscape and turned the United States into the largest producer of oil[4] and gas[5] in the world.

This post was authored by IER Policy Associate, John Glennon.

[1] Bureau of Ocean Energy Management, Assessment of Undiscovered Technically Recoverable Oil and Gas Resources of the Atlantic Outer Continental Shelf, 2014 Update, http://www.boem.gov/Assessment-of-Oil-and-Gas-Resources-2014-Update/

[2] Id.

[3] Id.

[4] Energy Information Agency, International Energy Statistics, http://www.eia.gov/cfapps/ipdbproject/IEDIndex3.cfm?tid=3&pid=26&aid=1

[5] Id.

Filed Under: News, Products and Power Tagged With: Atlantic OCS, BOEM, gas, largest producer of oil, oil

SURVEY: Americans Reject Costly EPA Proposal

July 29, 2014 by AEA Leave a Comment

WASHINGTON – A new survey released today by the American Energy Alliance found that the majority of American voters oppose EPA’s recently proposed power plant regulations when confronted with the real world impacts of the rule. The survey was conducted among registered voters in Arkansas, Colorado, Iowa, Montana, and North Carolina.

“At a time when Americans are struggling with cost of living and still asking the question ‘where are the jobs’, there is concern about the proposed EPA regulation and the economic impact it will have,” said David Winston, President of the Winston Group, which conducted the survey.

Highlights from the survey:

The majority of voters in all five states believe that improving the economy and creating jobs should be the top priority of the Obama administration.
Before receiving any information about the regulations, no less than 57 percent of voters in any state supported the regulations. But after listening to key facts about their impact (both positive and negative), no more than 44 percent in any state supported it.

“When faced with the harsh economic reality of the EPA’s new rule, the majority of Americans reject this unprecedented attack on American energy security,” said AEA President Thomas Pyle.

“From the start, the Obama administration has not been forthright with the American public about the exorbitant costs of this rule. Unfortunately, this has become the norm for the ‘most transparent administration in history’: regulating from the shadows and deliberately hiding the consequences of their actions from the American people. And the myriad consequences of the EPA’s new rule are all too real. From lost jobs to rising electricity bills, the EPA’s most recent effort to undermine affordable energy hurts low income families the most.”

“The American people, especially those who live from paycheck to paycheck, cannot afford higher energy costs. Unfortunately for Americans, President Obama seems intent on delivering on his promise to make electricity prices ‘necessarily skyrocket.'”

The survey was conducted for the American Energy Alliance by the Winston Group among 500 registered voters in each of the following states: Arkansas, Colorado, Iowa, and North Carolina, and 503 registered voters in Montana for a total of 2,503 registered voters. The margin of error is +/- 4.4 per state.

To view the results, click here

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Filed Under: Press Releases Tagged With: EPA, job losses, Obama, power plants

ICYMI: Lessons from Australia’s Carbon Tax Debacle

July 28, 2014 by AEA Leave a Comment

WASHINGTON — American Energy Alliance Vice President of Policy Daniel Simmons penned an op-ed for Roll Call titled “Lessons Congress Can Learn from Australia’s Carbon Tax Debacle.” The text of the op-ed follows:

“Lessons Congress Can Learn From Australia’s Carbon Tax Debacle”
By Daniel Simmons

For the past few years, Australia has been lauded by environmentalists as an example other countries should emulate. The adulation began in 2012, when the country enacted its “carbon tax” — a $21.50 charge (in U.S. dollars), increasing annually, on each ton of carbon dioxide emitted by the country’s power plants. Australia’s list of admirers extended all the way to the White House, where President Barack Obama described the country’s actions as “good for the world.”

Yet Australia is now the first country to eliminate its carbon tax. In so doing, it struck a blow in favor of sound public policy — and American legislators should pay attention.

Last September, the Institute for Energy Research released a comprehensive study on the effects of Australia’s carbon tax. The tax was a disaster. In its first year of existence, the tax increased household electricity prices by 15 percent — the highest quarterly increase in the country’s history. Businesses fared no better — their electricity prices jumped 14.5 percent in a single year.

It doesn’t take an economist to see how this stifled the country’s economic growth. Rising electricity costs mean higher prices for almost all goods and services. They also mean fewer future job opportunities for businesses trying to stay in the black. Australia’s unemployment rolls rose by an astounding 10 percent over the course of a year — the equivalent of the United States adding 950,000 people to the unemployment line by next July.

Meanwhile, there was no environmental benefit to speak of. According to the Australian government’s own data, carbon emissions actually increased after the tax was enacted. Even if the carbon tax were still in operation, the country’s emissions levels weren’t expected to fall below current levels until 2045.

No wonder Australians turned against the tax. They’d have to endure three decades of fewer jobs and higher prices on every day goods just to achieve negligible environmental gains.

But this isn’t just a lesson for Australia. For years, American environmentalists have clamored for a similar carbon tax. They have been joined by a dozen U.S. senators, who several years ago sent a letter to Senate Majority Leader Harry Reid demanding Congress levy “a price on greenhouse gas emissions” — a carbon tax by another name.

Among the letter’s signatories are several Democratic senators facing re-election this year, including New Hampshire’s Jeanne Shaheen, Alaska’s Mark Begich and North Carolina’s Kay Hagan.

Yet the effects would be little different in America than they were in Australia. The Heritage Foundation, using data provided by the Energy Information Administration, recently estimated the effects that a slightly more aggressive carbon tax would have (the EIA data assumed a $25/ton tax, compared to Australia’s $21.50/ton rate).

Heritage found that America could be looking at an economic disaster.

In its first four years, the tax could cut a family of four’s income by nearly $2,000 a year. It could raise the same family’s electricity bills by more than $500 per year and increase gas prices by 50 cents per gallon. Finally, it could eliminate more than a million jobs in the first few years.

Yet Americans’ economic despair would ultimately be for naught. Using assumptions from the data from the United Nations Intergovernmental Panel on Climate Change’s assessment report, a recent analysis found America could eliminate all of its carbon emissions and still only lower global temperatures by 0.137 Celsius by 2100 — a statistically insignificant amount.

Put another way: A carbon tax is all economic pain and no environmental gain. Surely we can agree that sapping the economy and stifling innovation won’t make it any easier for us to promote a healthy environment.

Australians learned that the hard way.

It only took them two years of higher prices, fewer jobs, and no environmental benefits before they abandoned their carbon tax. America’s environmentalists and the legislators who listen to them should take note. There’s no need for history to repeat itself in a different hemisphere.

Click here to see the original post.

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Filed Under: Press Releases Tagged With: Australia, carbon tax, daniel simmons

Politics not Policy Guiding the RFS

July 25, 2014 by AEA 1 Comment

The Environmental Protection Agency (EPA) is required by law to set the amount of biofuel they will require to be blended with gasoline for the following year. They are tasked with doing this before December to give businesses some idea of what their mandates will be for the upcoming year. But we are more than half way through 2014 and EPA still has not set the amount of biofuel required for this year. It appears that political interest is again trumping public interest at the Environmental Protection Agency (EPA).

Continually pushing the target back is creating uncertainty for refiners and producers of biofuels for no discernable legitimate purpose, but makes political sense for the Obama Administration in an election year. When the government attempts to legislate and regulate a market it created, the needs of both consumers and producers are subverted to the needs of the politicians and the ever-changing political climate.

Regulatory Process for RFS

Refiners need to know the 2014 targets to produce their compliance with 2013 because the RFS allows refiners to save a certain amount of renewable credits (known as RINs[1]–are serial numbers assigned to biofuel for the purpose of tracking its production, use and trading, and can be purchased to fulfill part of the RFS requirement) to use to show compliance the next year.

Here is a table of how the regulatory process is supposed to work and what has actually happened:

How the regulatory process is supposed to work for the 2014 RFS:

What actually happened so far with the 2014 RFS:

Before end of September 2013:

EPA proposes RFS numbers for the next year (allowing companies to figure out whether to “spend” or “save” RINS for the 2013 compliance year)

November 29, 2013:

EPA released its proposed 2014 RFS numbers on November 29^th, 2013, which was followed by a comment period that ended on January 28^th, 2014.

Before November 30, 2013:

EPA finalizes the biofuel volume requirements for 2014

Ongoing…

EPA still has not finalized their 2014 RFS and originally stated they would finalize the numbers in February but didn’t meet that deadline and will release it “soon”.

Before February 28, 2013:

Refiners submit their compliance report detailing their use of RINs for 2013 compliance year.

Ongoing…

The deadline for the 2013 compliance report has been pushed back twice first to June 30^th, 2014 and now until September 30^th 2014.

It is apparent that EPA has been behind on their deadlines throughout the entire regulatory process for the 2014 RFS. However their recent extension for 2013 compliance buys them more time to delay the entire process which could likely result in similar uncertainty and delay next year when EPA is promulgating the 2015 RFS.

EPA Drags their Feet

This is not the first time EPA has waited until August to set the final volumes. In fact, EPA hasn’t met the statutory deadline in November since 2011. EPA claims that extensive comments on the proposal have forced them to take additional time to finalize the targets for the 2014 RFS[2], but this does not explain why EPA was late with the proposed rule in the first place. And it does not explain why, six months later, that EPA has not finalized the rule. None of the factors that EPA uses to determine RFS targets have changed in any material way since the fall, it’s likely the delay resulted from an internal decision.

According to EPA, “The four separate renewable fuel standards (cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel) are based primarily on 49 state gasoline and diesel consumption volumes projected by EIA, and the total volume of renewable fuels by EISA (the legislation that created RFS) in the coming year.”[3] In this case, EPA can revise the numbers set by EISA by looking at the EIA projection for demand and setting targets lower than the “blend wall.”

The blend well is a term to describe the fact the vast majority of cars can only use E10 (gasoline that is 10 percent ethanol). This places a cap on the total amount of ethanol that can be blended with the gasoline supply.

These constraints leave little room for the EPA to make any drastic changes to the numbers they already proposed last fall.

The only opportunity that would allow EPA to significantly change the 2014 numbers they proposed last November would be to set the target above the “blend wall” to “create” a market for higher blends of ethanol. However the White House has already stated this is not a “practical solution” when promulgating the 2013 RFS because vehicle engine durability would be compromised, manufacturers won’t warranty gasoline vehicles for more than 10 percent ethanol, and there is a lack of fueling infrastructure.[4] Since the situation has not changed this year, it seems unlikely that the White House would reverse its claims from last year.

Political Considerations

Given that that there have been no material changes to the fuel market since last year, it is difficult to see why EPA would not have finalized the 2014 volumes, especially now that it is July, 2014. But another possible explanation for EPA’s actions is that EPA is working to create a political issue to be used by RFS supporters in the upcoming mid-term elections.

More specifically, the recent extension has been reported by Energy and Environment Publishing as a possible “gift package”[5] for Rep. Bruce Braley, who is campaigning for the seat of the retiring Iowa Senator Tom Harkin. Braley has been a critic of the 2014 EPA proposal to reduce the required RFS volumes and has signed onto numerous letters asking President Obama to reconsider the cuts.[6] If the EPA’s final 2014 renewable fuel mandate is higher than their fall proposal, Braley can claim his influence in the administration directly benefited corn growers in Iowa while an election is looming. Competitive Senate races such as Braley’s are now critical to the Obama administration.[7]

Because the administration has not finalized the 2014 RFS, Senators and Representatives from both parties are using this as an opportunity to express their support for the RFS. Recently, 50 members of Congress sent a bipartisan letter to President Obama, which urged him to boost the proposed target[8]. As the saying goes, “all policy is local” and these Members come from districts and states with constituents who benefit from the RFS and by failing to finalize the RFS volumes, the Obama administration keeps the RFS issue alive for their political allies by giving the allies an important issue to use in their campaigns.

Conclusion

EPA is many months behind schedule with their rule specifying 2014 RFS mandated volumes. One of the only possible reasons for this is politics—creating a issues for the Obama administration’s allies to talk about. But in the long run, politically-motivated timing hurts everyone involved, regardless if they support reducing or increasing the target.

Everyone else is hurt by the distortions the RFS has created in the liquid fuel market. A recent report by the Congressional Budget Office shows that the RFS will increase the price of gasoline next year. If the targets are not lowered or removed.[9] Removing the RFS would allow Americans to decide what fuel works best for themselves instead of relying on a politicized process.

IER Policy Associate John Glennon authored this post

[1] Amanda Peterka, EPA extends compliance period for the 2013 blend requirement, E&E News, 6/6/14, http://www.eenews.net/eenewspm/2014/06/06/stories/106000088585.

[2] Environmental Protection Agency, EPA Extends the Compliance Deadlines for the 2013 Renewable Fuels Standards, 9/30/14, http://www.gpo.gov/fdsys/pkg/FR-2014-06-16/pdf/2014-14019.pdf

[3] 40 C.F.R. § 14716(e)1

http://www.gpo.gov/fdsys/pkg/FR-2010-03-26/pdf/2010-3851.pdf

[4] Office of Management and Budget, The U.S. Renewable Fuel Standard, http://www.whitehouse.gov/sites/default/files/omb/assets/oira_2060/2060_08142012-1.pdf

[5] Amanda Peterka, EPA extension of RFS deadline ‘a gift package’ for Braley in Iowa?, 6/9/14, http://www.eenews.net/eedaily/stories/1060000917

[6] http://braley.house.gov/press-release/braley-%E2%80%9Cangered-and-frustrated%E2%80%9D-obama-renewable-fuels-standard

[7] Paul Lewis and Dan Roberts, US midterm elections: Republicans could triumph- but it’s not a sure thing, 6/10/14, http://www.theguardian.com/world/2014/jun/10/midterm-elections-republicans-senate-races

[8] Amanda Peterka, 50 bipartisan House members urge Obama to boost RFS target, 6/27/14, http://www.eenews.net/eenewspm/2014/06/27/stories/1060002110

[9] Congressional Budget Office, The Renewable Fuel Standard: Issues for 2014 and Beyond, 6/26/14, http://www.cbo.gov/publication/45477

Filed Under: News, Products and Power Tagged With: biofuels, Environmental Protection Agency, EPA, ethanol, Renewable Fuel Standard, rfs

California’s LCFS Raises Prices at the Pump

July 23, 2014 by AEA Leave a Comment

The United States Supreme Court announced on June 30 it would not review California’s Low Carbon Fuel Standard (LCFS). This decision allows California to go forward with its LCFS. As a result we will likely see even higher gasoline prices in California.

A Low Carbon Fuel Standard limits the amount of greenhouse gases vehicle fuel can emit in its production and usage. Transportation fuel (ie. gasoline and diesel) producers are encouraged to reduce the amount of greenhouse gas emissions used in the manufacturing of fuel or to purchase credits to offset their impact.[1] According to California, certain biofuels decrease the “carbon intensity” of the fuel, which means that one way to comply with an LCFS is to blend biofuel with gasoline. Because of the need to buy credits or use more expensive feedstocks an LCFS program increases the cost of gasoline at the pump.[2]

California’s LCFS Law Upheld

The first state to adopt a LCFS was California in 2007. It has served as a model for other proposed LCFS regulations throughout the world.[3] California hopes the regulation will reduce all greenhouse gas emissions by 10 percent by 2020. California’s regulation assigned each fuel a “carbon intensity rating” a calculation based on projected emissions. The rating takes into account the conversion of forests and diverse ecosystems into farmlands to grow biofuels (land use factor), transportation of the raw resources to the refineries, the refining process, transportation to the consumers, and the usage of the fuel.[4] As a result, fuel from states and countries outside California has a higher carbon intensity rating than the same fuel produced within California.

Biofuel producers outside of California and conventional fuel producers filed a lawsuit against the California Air Resource Board alleging the regulation violated the Commerce Clause because it favored in-state biofuel producers to out-of-state producers. At trial, federal district court Judge Lawrence O’Neill found that California’s LCFS violated the Commerce Clause by giving an economic advantage to Californian fuel producers by assigning a mandatory economic disadvantage to out-of-state and foreign fuel producers.[5] Accordingly, the Court ordered an injunction that prevented implementation of the law. On appeal, the Court of Appeals for the Ninth Circuit reversed the district court’s decision, holding that the regulation did not violate the Commerce Clause because it served a legitimate local purpose.[6] The decision lifted the injunction, allowing California to implement its LCFS.

In response to the Ninth Circuit, fuel producers petitioned the Supreme Court for writ of certiorari. The Court decided not to hear the case.[7] The Supreme Court’s decision is not an endorsement of the California policy, but it means that the Ninth Circuit’s decision will stand. Because the Supreme Court did not rule on the case, it means that courts outside of the Ninth circuit are not bound by the Ninth Circuits opinion and can rule with the Ninth Circuit and allow LCFS or agree with the Judge O’Neill and not allow LCFS.

LCFS Standards in the Ninth Circuit

The Court’s decision affects two other states that have discussed implementing LCFSs—Washington and Oregon. Washington State Governor Jay Inslee issued an executive order that authorizes the Legislation and Policy Office to draft a LCFS proposal for the state. The Office’s commission is creating a legislative proposal to establish the total reduction goals and target year, and Governor Inslee hopes to make the proposal in 2015.[8]

Oregon’s legislature began implementing a LCFS in 2009 by collecting data to aid lawmakers in developing their standard. The legislature hopes to reduce CO₂ emissions by 10 percent by 2020.[9] Using this data, the legislature can determine the availability of advanced biofuel and the potential economic and societal effects of implementing a LCFS. If the legislature cannot agree that there are enough advanced biofuels available in Oregon to implement the standard by 2015, the data collection process will end without implementing a LCFS.

State Senators have attempted to implement a LCFS several times, but past attempts have failed because of concerns of fuel price volatility.[10] The current proposal to implement the LCFS in Oregon addresses this concerns by allowing for a suspension of the standard if the price of gasoline and diesel increase 4 percent above the “anticipated cost” because of the standard. The Senate Committee on Environment and Natural Resources has not yet reviewed this bill.[11] Critics of the bill are skeptical of the LCFS in Oregon because of its potential impact on poorer households.[12] The lack of large-scale production of advanced biofuels coupled with growing global food demand could contribute to high grocery and food prices, which would disproportionately affect low-income families.[13] Data from the EPA and U.S. Energy Information Administration provides evidence for this skepticism; national production of advanced biofuels has not kept up with the increase in national demand.[14] Despite this data, Governor Kitzhaber is calling for implementation of the LCFS.[15]

Conclusion

In the short run, the Supreme Court’s failure take up this LCFS case only means that California will go forward with their LCFS and Oregon and Washington will continue to consider implementing an LCFS. By not granting cert, the Court has given the LCFS a second chance, meaning that California and continue to implement its LCFS. .

But the main problem with the LCFS remains—it increases the price at the pump. As the Oregonian explains:

It will raise fuel prices for many Oregonians and create a costly compliance burden. And for what? The program will harm Oregon’s competitiveness far more than it will help the environment. And that assumes it works as intended. You’d think lawmakers would have learned by now how badly off-track attempts to shovel subsidies to chosen industries can go.

California’s LCFS is just one more reason why California has some of the highest gas prices in the county. So far, it’s good to see that no other states have followed California’s lead in implementing a program that is all cost and no benefit.

IER Summer Associate David Greenberg authored this post.

[1] Cal. Code Regs. tit. 17 § 95480 – 95490, (2009), http://www.arb.ca.gov/regact/2009/lcfs09/lcfscombofinal.pdf.

[2] Alexander E Farrell et al., A Low-Carbon Fuel Standard for California Part 2: Policy Analysis 108 (2007), http://www.energy.ca.gov/low_carbon_fuel_standard/UC_LCFS_study_Part_2-FINAL.pdf.

[3] Cal. Health & Saf. Code § 38550 – 38551, (2006), http://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=HSC&division=25.5.&title=&part=3.&chapter=&article=.

[4] Cal. Code Regs. tit. 17 § 95480 – 95490, supra note___.

[5] 843 F. Supp. 2d 1071, Rocky Mt. Farmers Union v. Goldstene, (2011), http://scholar.google.com/scholar_case?case=1592326759043682575.

[6] 730 F.3d 1070, Rocky Mt. Farmers Union v. Corey, (2013), cdn.ca9.uscourts.gov/datastore/opinions/2014/01/22/12-15131.pdf.

[7] Howard R. Rubin et al., 20005 Petition for a Writ of Certiorari (2014), http://sblog.s3.amazonaws.com/wp-content/uploads/2014/04/2014-03-20a-Rocky-Mountain-Farmers-v-Corey_Petition-for-Certiorari.pdf.

[8] Wash. Exec. Order No. 14-04, 9 (2014), http://governor.wa.gov/office/execorders/documents/14-04.pdf.

[9] Or. Rev. Stat. § 468A.270, (2009), http://www.oregonlaws.org/ors/468A.270.

[10] Or. S.B. 1570, (2014). Or. S.B. 488, (2013).

[11] https://olis.leg.state.or.us/liz/2014R1/Committees/SENR/Overview

[12] Todd Myers, Real World Costs Show Effective, Low-Carbon Fuel Standard Costs $1.01 Per Gallon Washington Policy Center (2014), https://www.washingtonpolicy.org/blog/post/real-world-costs-show-effective-low-carbon-fuel-standard-costs-101-gallon (last visited Jun 16, 2014).

[13] Carol Graham et al., (Un?) Happiness and Gasoline Prices 43 (2010), https://www.washingtonpolicy.org/blog/post/real-world-costs-show-effective-low-carbon-fuel-standard-costs-101-gallon.

[14] 2014 RFS2 Data, Environmental Protection Agency (2014), http://www.epa.gov/otaq/fuels/rfsdata/2014emts.htm. U.S. Product Supplied of Finished Motor Gasoline, U.S. Energy Information Administration, http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=mgfupus1&f=a (last visited Jun 14, 2014).

[15] Rachel Wray, Governor Kitzhaber announces new clean fuel initiative, http://www.oregon.gov/gov/media_room/Pages/press_releases/press_021314.aspx.