Why low-carb fuel standard could hurt

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webmaster | 07/17/13
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By Rick Farinelli, District 3 Supervisor of Madera County

When you think about your local county government, you usually think about things like parks, libraries, building codes and other services and rules for which your elected representatives are responsible. One thing you probably don’t think of is the enormous amounts of fuel it takes keep things humming in your community.

Local governments are among the largest fuel users in California. We operate fleets of police, fire and emergency response vehicles, waste removal trucks, and maintenance vehicles. The cost of fuel is a constant budget concern.

Now local governments — and that means taxpayers — are facing a regulation that could not only materially increase the cost of fuel, it could cause serious supply disruptions. It’s the Low Carbon Fuel Standard (LCFS) and it wasn’t invented by your City Council, or Board of Supervisors or approved by voters — it’s the work of the California Air Resources Board (CARB).

Like many government regulations, the LCFS is well-intended. The goal is to reduce global warming emissions by requiring refiners to produce lower-carbon fuels and increase the use of non-petroleum fuels, biofuels and other low-carbon fuels.

Unfortunately, CARB has put the cart well before the horse. The LCFS is infeasible because there’s currently not enough low-carbon fuel to go around, and what there is will be enormously expensive. Further, low-carbon fuel technology is not sufficiently advanced to provide adequate, reliable supplies in the foreseeable future.

Lest you think this is just oil company rhetoric, think again. According to Dr. Severin Borenstein of the UC Berkeley Haas School of Business, “There is really not any low-carbon fuel that is even close to cost-competitive today.”

It gets worse. A study conducted by the well-respected Boston Consulting Group recently found that in addition to increasing the cost of fuels, the LCFS could also kill thousands of jobs, cost California billions of dollars a year in lost taxes, and cost local governments millions of dollars in property tax revenues.

And the Wall Street Journal recently opined: “The California government is forcing oil and gas companies to sell a fuel that barely exists … Californians could pay $6 dollars a gallon … The only real argument is over the extent of the economic damage.”

Here in Madera County that damage will hurt a lot more. Our county’s unemployment rate is well above the state average, and because much of our economy is largely dependent on fuel for equipment and transportation, the LCFS is sure to make things a lot harder here and in other Valley communities.

So why is CARB so stubbornly insistent on forging ahead with a rule that will kill jobs, cost billions of dollars in lost revenues, drive up the cost of fuel and open the door to severe fuel disruptions? A reason the agency frequently offers is the need to comply with AB 32, California’s Global Warming Solutions Act. But a main provision of AB 32 is that regulations adopted to achieve the law’s goals must be as cost-effective and technologically feasible as possible. The LCFS is neither.

It will also do little to nothing to reduce global warming since California accounts for only a minuscule percentage of the world’s carbon emissions. We’re more likely to actually increase those emissions by importing biofuels and LCFS-compliant feedstocks from other states and countries.

The Air Resources Board has been responsible for some real progress in cleaning up California’s air quality over the years, and is rightfully focused on initiating programs that will result in even more improvements. But with technology and the basic rules of supply and demand working against it, the agency should not let past successes fool it into believing it can make the LCFS work by sheer force of will.

The economies and safety of California communities should not be placed at risk in pursuit of CARB’s costly, doomed LCFS experiment.

 

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