Clean fuel proposal would drive up gas prices 34 cents per gallon by 2035

If Michigan pursues a proposed clean fuel standard, gasoline costs for the typical Michigan household would increase by $350 per year, according to a new study.

Researchers Isaac Orr, Ewan Hayes and Mitch Rolling wrote the Mackinac Center for Public Policy report Low Carbon, High Costs.

In 2023, Sen. Sam Singh, D-East Lansing, introduced Senate Bill 275 to create a statewide standard for fuels. If passed and enacted into law, this would require the carbon intensity of fuel to be reduced by at least 25% by 2035.

“It is past due that we take action to address climate change and invest in the resources needed to make Michigan a leader in environmental resiliency and sustainability,” Singh said in a 2023 news release. “Creating energy efficiency standards and working to reduce carbon emissions and utility costs for residents will make a significant economic impact.”

The group Always On Energy Research calculated that the clean fuel proposal would increase gasoline and diesel prices by about 10%. The proposed standard would increase gasoline prices by $0.34 per gallon and diesel prices by $0.39 per gallon by 2035, according to the model.

U.S. Energy Information Administration data show Michiganders consumed nearly 4.3 billion gallons of gasoline in 2022, or about 1,048 gallons per household. Increasing the cost of gasoline by $0.34 per gallon would cost the typical household an additional $356 per year.

The extra costs Michigan drivers would pay at the pump would not help fix the state's roads and bridges. The proposal would reduce revenue for road maintenance because drivers would purchase less fuel at higher prices. The biggest winners from this proposal would be the companies that produce and sell so-called clean fuels.

The clean fuel proposal would also increase the state budget to fund government fuel costs and administrative costs associated with creating the fuel mandate. Lawmakers would need either to raise taxes or to redirect current spending priorities toward the program.

The legislation requires the standard to become increasingly more stringent. The most common ethanol fuels like E-10 and E-15 would quickly be considered no longer “clean.”

Environmental benefits would be negligible. If the standard works to reduce carbon emissions, it might reduce future global temperatures by an estimated 0.0003° C in 2100, the study said.

Gov. Gretchen Whitmer’s MI Healthy Climate plan calls for enacting a clean fuel standard to reach carbon neutrality by 2050.