A cascade of new fuel regulations is a disaster-in-the-making

The business community in California and the petroleum industry in particular are facing a cascade of regulations in the next few years that will make energy much more costly to produce, job creation much more difficulty to accomplish, and the supply of abundant, reliable and affordable fuel much more perilous.  Under the banner of climate change programs, the California Air Resources Board is implementing a series of transforming regulations like the Low Carbon Fuel Standard, cap and trade programs for stationary sources as well as for transportation fuels, and the Clean Fuel Outlet regulation.

The Low Carbon Fuels Standard, which has been declared unconstitutional by a federal judge, requires refiners and importers to reduce the carbon intensity of gasoline and diesel fuel 10 percent by 2020.  We estimate this regulation could cost fuel suppliers as much as $42 billion over the next eight years.  The cap and trade program carries the potential to add another $30 billion to the cost of making fuel for California businesses and consumers. The Clean Fuels Outlet regulation requires oil companies to pay for the installation of hydrogen fueling facilities at service stations they neither own nor operate.  In addition to the questionable legality of this regulation, it has an initial estimated cost of $1.5 billion and ongoing costs that have not been determined.

Combined, these programs will add tens of billions of dollars to the cost of making and supplying transportation fuels for businesses and consumers. All of this is being done with little or no legislative input or oversight. What started as a simple goal of reducing greenhouse gas emissions to 1990 levels has evolved into a monstrously complex and exorbitantly costly disaster-in-the-making for California.  It has become increasingly clear that these programs are infeasible, loaded with unintended harmful consequences, prohibitively expensive and in many cases illegal.

CARB’s climate change programs are becoming more and more economically risky with the passage of each new regulation. California legislators need to know these programs will be impacting their constituents in the next few years and that it’s in their interests to get informed and engaged.

WSPA has worked hard to identify and help craft climate change policies that will reduce greenhouse gas emissions without unduly burdening businesses and consumers and slowing our state’s economic recovery.  Too often CARB has rejected the input of the business community and instead adopted regulations that are needlessly complex, costly and infeasible.

Now is the time for everyone who cares about California’s economic future and abundant, reliable and affordable fuels to speak up in favor of sensible and balanced climate policies.

Catherine Reheis-Boyd