For California and other states that want to emulate its precedent-setting low-carbon fuel standards (LCFS), some industry leaders are warning there may be some unintended environmental and economic consequences waiting around the bend.
California producers are required to report carbon emissions under the LCFS and the state climate change law-driven (AB 32) cap-and-trade program now in effect.
Some of the production fields in the nation’s fourth largest-oil producing state have a carbon footprint equal to, or in some cases greater than, Western Canada’s oilsands production. And the emergence of the fact that a barrel of California crude could produce more carbon dioxide (CO2) than the oilsands has environmentalists raising red flags.
The oil industry as represented by the Western States Producers Association (WSPA), which has opposed the LCFS, contends that there is more to the story, and with the mandates for ever-lower carbon emissions the state could end up raising the carbon footprint from the production, refining and distribution of petroleum products in the state.
WSPA does not deny the accuracy of some comparisons of California crude concluding it can be higher in carbon-intensity than the oilsands supplies, but the reason is not the crude itself, rather it is the fact that the majority of the supplies use natural gas-fired enhanced recovery technologies involving steam injection.
The California Air Resources Board (CARB), which regulates both the LCFS and cap-trade programs, counts the carbon footprint of natural gas used in the steam injection (and in cogeneration producing electricity) in calculating the overall carbon-intensity of the oil supplies produced.
“All of this has very little to do with reducing global emissions and climate change and everything to do with CARB’s insistence on placing carbon intensity values on every crude oil source in the world as part of the LCFS, “a WSPA spokesperson told NGI on Monday.
Another WSPA official called it “crude oil shuffling,” as part of a recent report in the San Francisco Chronicle that also stressed the Sierra Club’s push in a “Beyond Oil” campaign to have U.S. policymakers reject dirtier sources of oil even if those sources are domestic.
Some critics in the state think there need to be “other forms” of enhanced oil recovery (EOR), and within the industry, majors like Chevron Corp. reportedly are experimenting with the use of solar energy to produce the steam used in EOR rather than natural gas.
For now, however, WSPA is telling policymakers and the news media that the practical implications for the current LCFS is that California producers may be forced to export their supplies and refineries will have to import more crude that carries a lower carbon-intensity. The WSPA spokesperson labeled this as “absurd.” (The increased ship traffic in both directions also would contribute to a larger carbon footprint.)
“It is difficult to believe that is what people had in mind when they created this regulation,” he said.
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