California fuels rule sparks controversy

By Juliet Eilperin,January 29, 2012
(Page 2 of 2)

While both the California and European Union programs establish a trading system for carbon allowances, many traditional fuel suppliers say they cannot meet the mandated reduction targets. The E.U., which is finalizing its rule, has called for a 6 percent carbon cut by the end of the decade.

Tupper Hull, a spokesman for the Western States Petroleum Association, said California’s standards would be “incredibly costly and disruptive to a stable and secure supply of transportation fuels.” His members, which include major oil companies as well as independent producers, did not initially oppose the rule but have “become increasingly concerned about whether the program they were designing was feasible.”

Both programs would make it more difficult for Canada to sell heavy crude extracted from its “oil sands” region, because extracting that oil produces 15 percent more greenhouse gases than regular crude.

Canada has lobbied both Canadian and E.U. officials repeatedly over the past few years to minimize the extent to which its petroleum is penalized for being energy-intensive. Canada’s counsel general in California testified before the state’s Air Resources Board last month.

“Our main concern is fairness, and that Alberta crudes and our oil sands crudes are treated fairly,” said Bart Johnson, spokesman for Ted Morton, Alberta’s energy minister. He added that in light of California’s recent changes, “We certainly prefer the revised standards compared to what were originally put forward.”

In the meantime, however, interest groups are working hard to make sure the idea of a low-carbon fuel standard doesn’t catch on with other states and federal officials. CEA has launched a multimillion-dollar campaign aimed at persuading policymakers from the Midwest to Capitol Hill not to adopt similar programs. It has chilled some policymakers’ appetite for tackling the issue, according to several experts.

The group ran television and radio ads against Sen. Debbie Stabenow (D-Mich.) and half a dozen of her colleagues when she raised the idea in 2010 of introducing the fuel standard as part of a climate package, and has reached out to what its executive director, Michael Whatley, describes as “hundreds of state officials, state legislators and stakeholders nationwide.” He described it as “a top-tier priority” for his organization.

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