Energy security implications of a national low carbon fuel standard

This paper discusses the potential energy security implications of a national low carbon fuel standard (NLCFS). A low carbon fuel standard is designed to reduce greenhouse gas (GHG) emissions by targeting the fuel portion of the fuel-vehicle system. Specifically, a NLCFS would set national targets for the average carbon intensity (CI) of motor fuels, and establish a market for credits that allows fuel producers and importers to respond in a variety of ways to the signal provided by the credit price. An important method for lowering the CI of transportation is to substitute lower-carbon alternative fuels such as advanced biofuels, electricity, CNG, and H2. Despite the focus on GHGs, so long as transportation fuels remain dominated by petroleum, transportation fuel policies like a NLCFS also will be evaluated in terms of their energy security impacts. We examine the fuel substitutions that are projected to be induced by a NLCFS and consider the energy security implications of displacing higher carbon fuels, such as imported Canadian Oil Sands oil or certain imported crude oils, with lower-carbon domestic oil, biofuels, or lower carbon oil imported from other sources.

► We explore energy security implications of a U.S. national low carbon fuel standard (NLCFS). ► A NLCFS encourages oil substitutes, e.g., biofuels, with notable security benefits. ► The mean energy security benefits of NLCFS range from $5–$22/BBL in 2035. ► Oil sands compliance costs (mitigation or credit) are well below production profit. ► Diminished Canadian oil sands production is possible but seems unlikely as a result of a NLCFS.