Analysis: Low-Carbon Fuel Standard a Gift to Ethanol Lobby

A low-carbon fuel standard is being pushed by some in Congress, including Michigan Sen. Debbie Stabenow, as a way to lower greenhouse gas emissions. A low-carbon fuel standard will do little to reduce greenhouse gas emissions, but it is a gift to the ethanol lobby.

A low carbon fuel standard sets a limit on greenhouse gas emissions from both the production and consumption of transportation fuel. Low-carbon fuel standards require a life cycle analysis of petroleum-based fuels and the creation of a standard for reducing greenhouse gas emissions per unit of energy from the production and use of those fuels. While the idea may sound good in theory, it provides significant problems in practice.

Implementation of a low-carbon fuel standard will likely result in increasing the amount of corn-based ethanol in gasoline due to the fact that there are currently no other large-scale commercially available alternatives available to American refiners to meet the standards. Studies of the production of corn-based ethanol for fuel raise serious questions regarding the fuels' ability to reduce greenhouse gas emissions. Without question, using corn to produce fuel has serious negative economic and environmental consequences.

In their study "Economics of a National Low Carbon Fuel Standard," authors Michael Canes and Edward Murphy estimate that a 10 percent reduction in greenhouse gas emissions from low-carbon fuel would result in increased gasoline prices of 61 cents per gallon. There are also negative environmental consequences of producing more corn-based ethanol to meet low carbon fuel standards, especially when forest and grass land is converted to corn production, which is both energy intensive and requires extensive use of fertilizers. Using corn for ethanol production also raises the cost of food.

Proponents of a low-carbon fuel standard often site national security concerns in addition to environmental concerns as a justification for its adoption. A low-carbon fuel standard may actually make us more dependent, not less, on Mideast oil. Canada is the number one exporter of crude oil to the United States. A low-carbon fuel standard could make it difficult for us to use oil derived from the extensive deposits of oil sands in Canada. Other countries, including China, are more than anxious to take oil derived from high-carbon life cycle oil sands in Canada. If we refuse to import oil derived from oil sands in Canada, it will result in more imports of oil from the Mideast. Michigan could also benefit economically from development of Canadian oil sands due to its proximity to Canada which would make the state an economically attractive location for processing and distribution, providing much needed jobs.

According to a report from the Marshall Institute titled "National Security, Energy Security, and a Low Carbon Fuel Standard," the western United States posses enough oil shale to meet current American import levels for 110 years. Elected leaders who claim to care about national energy security should be encouraging the development of these important energy resources rather than passing laws like the low-carbon fuel standard that would make those reserves off limits.

For the time being, cap-and-trade may be dead in Congress but other legislation, such as the low-carbon fuel standard, is still being pushed. It should be seen for what it is - an energy tax on Americans that will make us more dependent on Mideast oil and will likely do more harm than good to the environment.