Wednesday, February 18, 2009

Embrace Canadian Energy

IER: Embrace Canadian Energy
The Institute for Energy Research, Feb 18, 2009

Washington, D.C. – The Institute for Energy Research (IER) today released the following fact sheet on the important energy trade relationship between the United States and Canada in advance of the President’s trip there tomorrow. President Obama should resist the call from some organizations to antagonize Canada, our largest and most stable trading partner. Today’s economic climate should reinforce that he instead must move to strengthen our important economic ties with our northern neighbors.

We import more energy from Canada than any other country:
The United States imports more natural gas, refined gasoline, and oil from
Canada than any other nation in the world—17 percent of our oil and 18 percent
of our natural gas.

Nearly 100 percent of Canada’s energy exports go to the United States.

Canada supplies 2.5 million barrels of oil for the U.S. each day, which is
roughly the equivalent of what we import from Saudi Arabia and Nigeria combined.

Oil sands make up 97 percent of Canada’s total proven reserves and 13
percent of total U.S. imports.

The United States imports 36 percent more oil from Canada than Saudi Arabia
and 320 percent more than Iraq.

We export more goods to Canada than any other country:
According to the U.S. State Department, The United States and Canada share
the largest energy trading relationship in the world.

Among other products, the United States exports 18.4 million short tons of
coal to Canada.

In 2007, 65 percent of Canada’s imports came from the United States.

Our shared resources could provide both nations with an energy and economic boon:
Canada’s total oil sands resources could be as large as 2.6 trillion

According to the Department of Energy, if developed, U.S. oil shale
resources—which could total 2.1 trillion barrels—combined with Canada’s tar
sands, could allow the U.S. and Canada to claim the largest oil reserves in the

NOTE: The important energy trade relationship between the United States and Canada is indisputable. Any attempt to impede on that relationship would further the economic uncertainty in the United States.

Industry Views: Low Carbon Fuel Standards: Recipes for Higher Gasoline Prices and Greater Reliance on Middle Eastern Oil

Low Carbon Fuel Standards: Recipes for Higher Gasoline Prices and Greater Reliance on Middle Eastern Oil
IER, Feb 18, 2009

Last December, California released a draft low carbon fuel standard (LCFS) which calls for a 10.5 percent reduction in the carbon intensity of gasoline and a 10 percent reduction for diesel. Following California’s lead, representatives of 11 Northeastern states recently signed an agreement to pursue a region-wide low-carbon fuel standard.

The proponents of LCFS claim the plan’s goal is to reduce emissions from motor vehicles and home-heating fuels. But as this analysis shows, an LCFS is another tax on transportation. An LCFS increases the price of gasoline and home heating oil, leads to more oil imports from the Middle East, and penalizes oil imports from our largest trading partner and biggest oil supplier—Canada.

What is a Low Carbon Fuel Standard?

For all practical purposes, LCFS is a new tax on gasoline and heating oil. It is new regulation designed to reduce the greenhouse gas emissions from fuels. The goal of these regulations is to take into account all of the greenhouse gas emissions from the production (including land use changes), manufacture, transportation and combustion of these fuels and then reduce these emissions.

According to the letter of intent signed by 11 states (Connecticut, Delaware, Maine, Maryland, Massachusetts, New York, New Hampshire, New Jersey, Pennsylvania, Rhode Island and Vermont) participating in the Northeastern LCFS scheme, an LCFS is a “market-based, technologically neutral policy to address the carbon content of fuels by requiring reductions in the average lifecycle GHG [greenhouse gas] emissions per unit of useful energy.”

Despite the assertions of LCFS proponents, an LCFS is not market-based— it’s a classic top-down regulation. It is not entirely technology neutral—in practice it obviously penalizes certain fuel-producing technologies. More importantly, it does not address the difficultly and possibly impracticality of accurately calculating “lifecycle GHG emissions.”

Seven Reasons Why LCFS Schemes are Flawed:

LCFS are based on the Field of Dreams principle—if you mandate it, it will come. LCFS are expensive, harmful to consumers, and diverts resources away from more productive investments. Breakthroughs in technology occur in the marketplace, not in government committee rooms. Policymakers are free to set standards and goals—such as 10 percent less carbon intensity or a manned missions to Mars—but that does not mean the technology to economically achieve those goal will immediately follow. For example, a couple of years ago, many people thought we could economically have low carbon fuels by merely increasing the biofuel content of gasoline. The majority of the science, however, does not support this belief (see bullet point 4 below).

Biofuel production increases the price of food and makes life more difficult for the world’s poor. Biofuels are “a crime against humanity” in the words of Jean Ziegler, the UN special rapporteur on the right to food. Biofuel takes land that has been used for food crops and replaces the food crops with fuel crops. This unnecessarily takes food out of the mouths of the world’s poor. Increased ethanol production has helped increase food prices and has led to great hardships around the world including food riots. Next-generation biofuels are supposed to somewhat relieve this problem by using non-food crops, such as switchgrass or miscanthus, to produce biofuel, but these crops will still compete for arable land and agricultural resources.

A nationwide LCFS would dramatically increase the price of gasoline. CRA International found that an LCFS of 8 percent by 2015 would cause motor fuel prices to increase by 140 percent in 2015.[1] An LCFS would reduce motor fuel supplies or cause fuel producers to purchase carbon dioxide offsets.

Many biofuels emit more greenhouse gases than gasoline. According to a recent study published in Science from the Nature Conservancy and the University of Minnesota, many biofuels emit more greenhouse gases than gasoline. The study’s authors stated that many biofuels produce “17 to 420 times more carbon dioxide than the fossil fuels they replace.” Other research has come to similar conclusions. The Energy and Resources Group at the University of Berkeley found that “if indirect emissions [resulting from the production of ethanol] are applied to the ethanol that is already in California’s gasoline, the carbon intensity of California’s gasoline increases by 3% to 33%.” Corn-based ethanol production not only emits more greenhouse gases than gasoline, but it may also be worse for air quality.[2]

An LCFS discriminates against oil production from oil sands in Canada and favors oil from the Middle East. The U.S. gets more oil from Canada than any other foreign country. Much of Canada’s oil production comes from oil sands. The production of oil from oil sands requires more energy (and carbon dioxide emissions) to produce than production of crude in the Middle East. As a result, an LCFS favors oil from the Middle East and penalizes our friends to the North.

An LCFS discriminates against coal-to-liquids technology and oil shale technologies. The United States has vast reserves of coal and oil shale. These sources are not yet economically competitive with other sources of oil, but if prices where to return to last summer’s highs, these technologies would be cost-competitive. One possible source of fuel is coal-to-liquids technology. The U.S. has the world’s largest reserves of coal. At current usage rates, we have 200-250 years of demonstrated coal reserves. Coal-to-liquids could give the U.S. much larger reserves of petroleum fuels. The U.S. also has massive reserves of oil locked in oil shale—at least 800 billion recoverable barrels of oil. This is nearly three times as much oil as Saudi Arabia has in reserves. Because we would need more energy to recover these energy sources than it takes to produce light crude, an LCFS discriminates against these domestic resources.

If the United States implemented and somehow complied with a nationwide LCFS of 10.5 percent today, the American reduction in emissions would be offset by emissions increases from the rest of the world in less than 80 days.[3] Global warming is a global issue. What matters are not just emissions from the United States, but emissions worldwide. Unilateral changes by the United States alone will not have much of an impact, especially when we are talking about very small reductions in one sector. Because developing countries are dramatically increasing their carbon dioxide emissions, the U.S. will emit a smaller and smaller share of the world’s total greenhouse gas emissions.[4] According to data from the Global Carbon Project, from 2000 through 2007, global total greenhouse gas emissions increased 26 percent. During that same period, China’s carbon dioxide emissions increased 98 percent, India’s increased 36 percent and Russia’s increased 10 percent, while the U.S. increase was a mere 3 percent.[5] Because of these increases from developing countries, unilateral actions by the U.S., such as implementation of a nationwide LCFS, will have little to no effect on the global climate. Actions taken by California, or 11 Northeastern states will have even less impact.

Conclusion: An LCFS is Another Tax on Transportation

An LCFS, either nationwide or at the state level, would damage economy without having an impact global temperatures. The technology to implement an LCFS does not currently exist. If an LCFS resulted in increased biofuel use, it would be very harmful to the world’s poor. Finally, for those worried about energy security, an LCFS would favor Middle Eastern oil over Canadian and domestic fuels.


[1] CRA International, Economic Analysis of the Lieberman-Warner Climate Security Act of 2007 Using CRA’s MRN-NEEM Model (Apr. 8, 2008) p. 29, cited in Larry Parker & Brent Yacobucci, CRS Report for Congress: Climate Change: Costs and Benefits of S. 2191, (Mar. 15, 2008) p. CRS-56.
[2] The study will soon be published in the Proceedings of the National Academy of Sciences.
[3] Calculated using the emissions data from the Global Carbon Project. According to EPA, the GHG emissions from the transportation sector total 28 percent of total U.S. emissions in 2006. Environmental Protection Agency, Regulating Greenhouse Gas Emissions Under the Clean Air Act; Proposed Rule, 73 Fed. Reg. 44354, 44403 (July, 30, 2008). Twenty-eight percent of the U.S.’s 2006 carbon dioxide emissions are 436,141 GgC. A nationwide LCFS for the entire transportation sector, if it followed California’s example, would reduce transportation emissions by 10.5 percent, or 45,795 GgC per year. From 2006 to 2007, the world’s carbon dioxide emissions (excluding the United States) increased by 213,436 GgC. At this rate of change, the 10.5percent LCFS-forced reduction in U.S. transportation emissions would be replaced in 78.3 days.
[4] According to the Global Carbon project in 2007, China emitted 21 percent of the world’s carbon equivalent and the U.S. emitted 19 percent.
[5] Calculated using the emission data from the Global Carbon Project. In 2000, China emitted 910,950 GgC, India 316,804 GgC, Russia 391,652 GgC, and the U.S. 1,541,013 GgC. By 2007, China emitted 1,801,932 GgC, India 429,601 GgC, Russia 432,486 GgC, and the U.S. 1,586,213 GgC.

Slaying of two dissidents, Stanislav Markelov and Anastasia Baburova

Murder in Moscow, by Stephen Schwartz
Press criticism, KGB-style.
The Weekly Standard, Feb 23, 2009, Volume 014, Issue 22

Vice President Joseph Biden has told the Europeans that the new administration wishes to "reset" relations with Vladmir Putin's Russia. But the January 19 slaying of two dissidents, 34-year-old human rights lawyer Stanislav Markelov and journalism student Anastasia Baburova, 25, on a Moscow street is one of several recent reminders that Americans cannot be comfortable in Putin's embrace.

Markelov, head of the Institute for the Supremacy of Law, may well have been murdered as a result of the release from custody, one week before, of Russian army colonel Yuri Budanov, who had been sent to prison for crimes he committed while serving in Chechnya. Markelov had been crucial to Budanov's 2003 conviction in the kidnapping, torture, multiple sexual assault, and murder of an 18-year-old Chechen girl, Elza Kheda Kungaeva. Budanov, although he admitted his guilt and was sentenced to 10 years' imprisonment, had benefited from an early release.

On the day he perished, Markelov delivered a statement to the press. Representing the family of the Chechen female victim, he accused the Russian authorities of improperly arranging for Budanov to be let go. He then walked to a metro station near the Kremlin with Baburova. The killer, wearing a ski mask, approached from behind and shot Markelov in the back of the head. Baburova pursued the shooter, who turned and fired into her forehead. She died several hours later.

Anticipating her graduation from journalism school, Baburova was working for the daily Novaya Gazeta, which has employed a distinguished roster of liquidated investigative journalists. Novaya Gazeta is co-owned by Alexander Lebedev, an ex-KGB official and billionaire turned political reformer, who purchased the ailing London Evening Standard on January 21, only two days after Baburova's death.

As the largest individual shareholder in Novaya Gazeta--he owns 39 percent--Lebedev is responsible for a publication that has experienced the high-profile killing of several of the country's leading reporters. Anna Politkovskaya, murdered in the elevator of her apartment building in 2006, was his top staffer; she too had exposed atrocities in Chechnya, and Markelov was her lawyer. Igor Domnikov was killed in a brutal beating in 2000. His colleague Yury Shchekochikhin was poisoned in 2003.

Indeed, the poison cabinet seems to have become a favored anti-dissident weapon of the Russian state, as it was under Stalin. Politkovskaya herself was poisoned (though not fatally) in 2004 when she tried to travel to Beslan during the hostage crisis there. And less than two months after her eventual murder, Alexander Litvinenko, another former KGB agent critical of the Putin regime, was killed in a highly unusual poisoning in London.

In the aftermath of the Markelov-Baburov assassinations, the U.S.-based Committee to Protect Journalists reported that Lebedev, perhaps spurred by his KGB experiences, had announced the intention of Novaya Gazeta journalists to petition to arm themselves if necessary. Novaya Gazeta editor Dmitry Muratov denounced the Russian government for its inability to protect the press and asserted, "We have three options. The first one--to leave and turn off the lights. . . . The second--to stop writing about the special services, corruption, drugs, fascists; to stop investigating the crimes of the powerful. . . . The third option is to somehow defend ourselves."

Russian political life has increasingly assumed a pogrom atmosphere. Markelov had extended his investigation of human rights violations from Chechnya to the central Russian republic of Bashkortostan, which has a Turkic Muslim majority, but has not been the scene of Chechen-style rebellion against Russian rule. At the end of 2004, local police beat up to 1,000 people in Bashkortostan over a period of four days. Markelov had warned against "the spread of the Chechnya syndrome throughout other regions of Russia" and exposed the existence of a secret "order number 870" issued by the Ministry of Internal Affairs in 2003, which authorized the police to declare states of emergency without informing the public and to follow them up with repressive actions.

One of his closest friends, an academic named Vladislav Bugera, described Markelov as a perhaps naïve product of the old Soviet way of life. Writing in the online periodical Johnson's Russia List, Bugera called the dead lawyer a "socialist and an internationalist" whose many causes included an independent labor union, but whose socialism was "moderate . . . and reformist. . . . He was a reliable person. You could always be sure of him. . . . He is my hero."

Needless to say, a return to socialist ideals would stand no chance of protecting human rights from state abuse. Russia has been through its dark eras of internal strife and compulsory social experiment; Putinism, now aggravated by the global economic crisis, represents an attempt to revive aspects of both. The staggering challenge before Russian supporters of democracy is to find a way to construct a new and unburdened system of individual rights, secured by due process. Russian democrats and those abroad who would help them can ill afford to look away from the blood of Russian lawyers and journalists shed in the street.

Stephen Schwartz is a frequent contributor to The Weekly Standard.

Ethanol & Greenhouse Gas Emissions - Reconsidering the University of Nebraska Study

Ethanol & Greenhouse Gas Emissions - Reconsidering the University of Nebraska Study. By Jerry Taylor
Master Resource, February 18, 2009

The debate about the environmental impact of ethanol rages on. Last month, the most recent study on the greenhouse gas (GHG) emissions associated with ethanol use was published by researchers from the University of Nebraska (Liska et al.). That analysis used the most recent data available on individual facility operations and emissions, observed corn yields, nitrogen fertilizer emissions profiles, and co-product use; all of which prove important because of improved energy efficiencies associated with ethanol production over the past several years. The authors found that the total life-cycle GHG emissions from the most common type of ethanol processing facility in operation today are 48-59 percent lower than gasoline, one of the highest savings reported in the literature. Even without subtracting-out the GHG emissions associated with ethanol cop-products (which accounted for 19-38 percent of total system emissions), ethanol would still present GHG advantages relative to gasoline. The ethanol lobby went wild.

This may be the best study on the subject, but it is not the final word. There are three fundamental problems with the analysis.

First, the study examines only a subset of corn production operations and ethanol processing facilities; dry mill ethanol processors fired by natural gas in six corn-belt states. Together, those facilities accounted for 23 percent of US ethanol production in 2006. While this approach makes the study stronger because the authors are not forced to rely as heavily on estimates and aggregated analysis, the down-side is that the study ignores a large number of older, less efficient ethanol processing facilities and thus cannot be used to assess the GHG balance of the ethanol industry as a whole. While the findings may well point to where the industry will be in the future as older, less efficient facilities lose market share and are upgraded or retired, the bankruptcies that are shutting down many newer facilities at present caution against certainty on this point.

Second, estimates regarding emissions are still relied on to some degree, and one of those estimates in particular – the estimate pertaining to the release of nitrous oxide (N2O) from fertilizer use in corn production – is problematic. While the study comports with convention in that it relies on emission estimates offered by the Intergovernmental Panel on Climate Change, a recent study finds that the IPCC estimates as they pertain to N2O release from fertilizer does not comport with the observed data (Crutzen et al., 2007). That study finds that N2O emissions from fertilizers used in biofuels production are 3-5 times greater than assumed by the IPCC and that, if we plug those higher emissions into the ethanol life-cycle models, “the outcome is that the production of commonly used biofuels, such as biodiesel from rapeseed and bioethanol from corn (maize), can contribute as much or more to global warming by N2O emissions than cooling by fossil fuel savings.” Given that the lead author of the study – Paul Crutzen – is a Nobel laureate chemist who has specialized in fields related to atmospheric science, his findings cannot be lightly dismissed.

Third, the study acknowledges the importance of the impact that ethanol production has on crop prices and, thus, on global land-use patterns, but it does not account for the GHG emissions associated with those changes. Those emissions are substantial and no life-cycle analysis of ethanol can credibly ignore them.

A worldwide agricultural model constructed by Searchinger et al. (2008) finds that the increases in crop prices that follow from the increased demand for ethanol will induce a global change in the pattern of land use. Those land use changes produce a surge in GHG emissions that is only dissipated by conventional life-cycle emissions savings many decades hence. Although Searchinger et al. modeled ethanol production increases that were beyond those mandated in existing law, “the emissions from land-use change per unit of ethanol would be similar regardless of the ethanol increase analyzed.”

While critics of Searchinger et al. are right to point out that the agricultural model employed in the study was crude, that much is unknown about the factors that influence global land use decisions, that improved yields are reducing the amount of land necessary to meet global crop demands, and that any land additions to crop production do not need to come from forests or other robust carbon sequestration sinks, none of those observations is sufficient to reject the basic insight forwarded in that study. If ethanol demand increases corn and other crop prices beyond where they otherwise would have been, profit incentives will induce investors to increase crop production beyond where production would otherwise have been. If that increased production comes in part from land use changes relative to the baseline, then significant volumes of GHG will likely be released and those emissions threaten to swamp the GHG savings found elsewhere in the life-cycle analysis. Even if the upward pressure on crop prices that are a consequence of ethanol consumption is more than offset by downward price pressures following from other factors, crop acreage retirement will not be as large as might otherwise have been the case and terrestrial sequestration will be lower as a consequence. Every link in that chain of logic is unassailable.

This is but one of the many impacts that ethanol might have on hundreds of industrial sectors worldwide. Searchinger et al. is ultimately unsatisfying because it is only a crude and partial consideration of those impacts, many of which might indirectly affect global land use patterns. For instance, if ethanol consumption reduces the demand for – and thus the price of – crude oil in global markets, how much of those “booked” reductions in oil consumption will be offset by increased demand induced elsewhere by the lower global crude oil prices that follow (known as a “rebound effect” in economics)? How might that increase in global demand for crude oil in response to lower price affect all sort of GHG emissions vectors? None of these sorts of questions are asked in ethanol GHG life-cycle analyses but they are clearly crucial to the analysis.

To summarize, the narrow, conventional consideration of the GHG emissions associated with ethanol from Liska et al. suggest that it reduces climate change harms relative to gasoline. If the IPCC has underestimated N2O emissions from fertilizer – as appears to be the case – then ethanol probably is at best a wash with regards to GHG emissions. Even if that’s not the case, consideration of secondary and tertiary emissions impacts strongly suggests that most if not all of all advertised GHG gains are lost in the changes in land use patterns that follow from increases in ethanol production relative to the baseline. Other changes in anthropogenic emissions – positive and negative – would almost certainly follow as well, but existing models do not bother to search for them and thus we do not know enough to say much beyond this with confidence.

Based on what we know now, it would be hard to make a compelling case that ethanol is preferable to gasoline with regards to total greenhouse gas emissions - and last month’s study out of the University of Nebraska does not change that.