Energy companies face individual states taking action on climate change reform

Energy companies that have fought climate legislation in Congress are also facing threats in the states, where governors and legislatures are acting on their own to curb carbon dioxide emissions.

The latest example is a move by 11 governors from the Northeast and the Mid-Atlantic region to adopt a low-carbon fuel standard (LCFS) to reduce greenhouse gases from cars and trucks, and possibly home heating systems that use oil products.


Emissions from the transportation sector alone account for 30 percent of the carbon dioxide released in those states.

Greenhouse gas emissions from human activity pose “serious risks to human health, terrestrial and aquatic ecosystems and economies globally and in the Northeast and Mid-Atlantic region,” states a memorandum of understanding (MOU) the governors signed on Wednesday.

The goal is to develop a framework to reduce emissions from fuel use by 2011.

Oil companies and industry-backed groups argue there aren’t good alternatives to gasoline. Efforts to lower carbon dioxide emissions from fuel use in the Northeast won’t have an impact on global emissions and could raise energy prices in the region, critics say.

A low-carbon fuel standard could “have dramatic negative impacts on transportation costs and the overall economy,” the Consumer Energy Alliance, a group of energy consumers and producers, said in written comments to the Northeast States for Coordinated Air Use Management (NESCAUM), which is developing the rule.

The American Petroleum Institute, ConocoPhillips and BP all wrote NESCAUM opposing the low-carbon fuel standard.

One target of the effort is the importation of oil produced from oil sands in Canada. A low-carbon fuel standard measures the life-cycle emissions of the fuel, not just the carbon content of gasoline that propels cars and trucks. Life-cycle standard includes the emissions produced to extract the fuel, refine it and use it. Because it is harder to extract oil from the oil sands, Canadian oil often has a comparatively higher carbon footprint than oil produced elsewhere.

Chris Tucker, a spokesman for CEA, said the standard won’t reduce global emissions because the oil sands producers will simply sell their product to other countries. He pointed to a recent agreement with a Chinese oil company to buy a stake in the sands as evidence.

Supporters of the effort in the Northeast say it will force producers in Canada to extract the oil in a more environmentally sensitive way.

Opposition to a proposed pipeline to the West to open up the Asian market will likely leave the U.S. as the only “viable export market,” according to the Investor Network on Climate Risk, a group of investors that support action against climate change.

“A broad adoption of LCFS in the U.S. would force oil sands producers to significantly reduce the carbon intensity of the producer in order to maintain access to this critical market,” the Investor Network on Climate Risk said in written comments.

The group said the low-carbon fuel standard would reduce the region’s dependency on foreign oil by encouraging use of alternatives and “fostering a strong clean fuels market.”

One reason oil companies are lobbying against the effort in the Northeast and Mid-Atlantic is that they fear regional efforts will increase pressure on Congress to adopt a federal low-carbon fuel standard. A standard was originally in the House version of climate change legislation but was taken out after opposition from oil-patch Democrats.

The effort in the Northeast and Mid-Atlantic follows a similar push in California to adopt a low-carbon fuel standard. All but one of the 11 states working on the new MOU is also part of the Regional Greenhouse Gas Initiative, an effort to cap carbon emissions at power plants.

Climate legislation passed the House last summer but faces an uncertain future in the Senate, with several centrist Democrats urging their leaders to delay action beyond this Congress.

The environmental group Environment America released a report last month that listed all the actions at the state level to curb carbon dioxide. The list includes the low-carbon fuel standards and other efforts to conserve energy through efficiency programs and to require utilities to purchase renewable energy from wind and solar and other sources.

Environment America said state actions would reduce carbon dioxide emissions by 7 percent by 2020 relative to the 2007 level. States have acted as “laboratories for the rest of the country” that show greenhouse gas curbs needn’t be a burden to the economy, said Anna Aurilio, a director at Environment America.

Still, Congress needs to pass a climate bill that calls for steeper cuts than states are now contemplating and that would apply to all 50, Aurilio said.