National Security, Energy Security, and a Low Carbon Fuel Standard

Executive Summary
The principal aim of a low carbon fuel standard is improving environmental quality by reducing the carbon content of transportation fuels. However, proponents of this
approach also claim the standard will encourage the development and use of new kinds of transportation fuels to displace imported petroleum. Reducing imports is said to improve U.S. national and energy security by decreasing dependence on volatile regions and hostile governments.

A reduction in imports will not produce the national security benefits sought. The interconnectedness of the world’s energy marketplace, and indeed, the global
economy, prevent the kind of insulation from perturbations in the price of oil desired by advocates of energy independence. The United States will remain vulnerable to oil price and supply shocks regardless of fluctuations in its imports so long as it trades with countries that purchase petroleum off the world market. A sharp rise in prices that undermines the economic health of Europe or China, for example, will negatively impact the U.S. economy. Further, U.S. national interests in the Middle East, whose
instability is most commonly cited as justification for reducing oil imports, are more complex than the simple consumption of petroleum. Concerns about terrorism, the
security of Israel, the peace process, global and regional power projection, and international leadership all suggest that continued engagement will be the norm for the
U.S. for years to come, regardless of oil import patterns.

If the national security rationale for a low carbon fuel standard is dubious, the consequences of its imposition are not. The standard would restrict U.S. use of oil sands from Canada because of their high carbon lifecycle. The Canadian oil sands represent reserves equivalent to nearly one-quarter of projected U.S. transportation fuel needs in 2030. Presently, the U.S. consumes virtually all of Canada’s petroleum exports. Under a national low carbon fuel standard, those exports would flow elsewhere with consequences for U.S. energy security as well as harmful environmental outcomes. The standard also would deter further exploitation of the oil shale resources found in the western United States. Oil shale, like the oil sands, has a high carbon lifecycle that would not meet the standards sought by proponents of a low carbon fuel standard. Unlike the oil sands, there has been only sporadic investment in the technical base and related infrastructure needed to productively exploit the oil shale reserves. If a low carbon fuel standard is imposed, little incentive would remain to make further investments in this area. Doing so means that the United States will have elected to eschew the development of deposits estimated to hold enough oil to meet current U.S. import levels for the next 110 years. Enacting a policy that inhibits the use of ample and readily available resources hardly improves energy security, which is commonly judged as improving the reliability of supply through diversification of sources and fuels in an affordable manner. In fact, that policy is rightly judged as weakening energy security.

The likely result of a low carbon fuel standard is an expansion of biofuels. At present, corn-based ethanol is the only alternative fuel ready for the market not requiring major infrastructure development or introduction of new vehicles. More advanced biofuels are decades away from commercial use and face significant scientific, technical, and commercialization obstacles before they will be available for widespread consumption. Biobased fuels have lower greenhouse gas lifecycle emissions compared to unconventional petroleum products, with debate ongoing about their advantage relative to conventional petroleum. There are other consequences of shifting agricultural commodities into transportation fuel use, notably the effects on water and soil quality and food security, which must be weighed against the perceived advantages of lowering greenhouse emissions and the limited availability to meet projected transportation fuel needs.

The assertion that a low carbon fuel standard will improve U.S. security is not as clear cut as its proponents would lead the American public to believe. Reducing imports of petroleum will not prevent future incidents of international terrorism, reduce U.S. vulnerability to price and supply shocks, or preclude U.S. involvement in the politics of the Middle East. The real consequences of the policy—shifting Canadian exports to other nations and hindering the development of domestic energy supplies—actually reduce security.

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