September 26, 2009
Syd S. Peng: Energy proposal offers problems for W.Va., nation
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CHARLESTON, W.Va. -- If environmental advocates in Congress succeed in pushing through new energy rules for transportation fuel, the government will no longer be able to solve the problem of moving our country away from heavy dependence on oil from politically volatile regions of the world, a change that will harm the nation's economy, cost thousands of jobs and hurt consumers.

Because we are blessed with vast amounts of coal and reserves of unconventional "heavy oil" in the United States or in close proximity to this country, these fuels could substitute for oil that's imported from unreliable or unfriendly countries. The technology to convert coal into liquid fuels is well established, and crude oil made from Canadian oil sands is already supplying more than one million barrels of oil daily. In addition, shale formations in the U.S. West hold enormous amounts of oil, an estimated 800 billion barrels of recoverable oil, which is three times greater than the proven oil reserves of Saudi Arabia.

But a proposed national low-carbon fuel standard would severely restrict and possibly prevent access to these critically important resources.

Bills have been introduced in the House and Senate that would set new environmental rules for transportation, by penalizing fuels such as liquefied coal and heavy oil that contain more carbon than conventional crude oil. The idea behind this is to reduce carbon dioxide emissions from the transportation sector.

Although a provision for a national low-carbon fuel standard was pulled from proposed climate legislation before the House approved the measure in June, it could pop up again. A similar measure is awaiting action in the Senate. Two states, California and Oregon, have adopted a  low-carbon fuel standard, and other states might do the same. But restricting the use of some fuels and not others will require the United States to use more expensive oil, and it would jeopardize national security.

The Defense Department objected to a low-carbon fuel standard that was inserted in energy legislation that Congress adopted in 2005. The Air Force was concerned that jet fuel processed from Canadian oil sands would be placed off limits. And the Air Force said that given the dimensions of possible oil import problems, liquefied coal also needs to be available to protect national security.

What this means is that a national low-carbon fuel standard could leave the United States vulnerable to a sharp rise in oil prices resulting from an extended drop in world oil supplies.

Not too long ago, energy costs were having a crushing effect on family budgets. Though they have eased off from the high levels of two years ago, it's anyone's guess what could happen in the years ahead. If alternative fuels such as liquefied coal and heavy oil aren't available to supplement conventional oil supplies, the cost of gasoline, jet fuel and other petroleum products could swing up again.

As for the environment, Congress incorporated requirements mandating lifecycle greenhouse gas reductions for different types of fuels in the 2007 Energy Independence and Security Act. That measure requires increased use of renewable fuels like ethanol and bio based diesel. So there is no need for a  low-carbon fuel standard in addition to the existing mandate for renewable fuels. Both are designed to achieve the same clean energy goal, and therefore would be duplicative.

Congress should utilize market mechanisms and consumer choice to the maximum extent possible in crafting energy policy. The best way to achieve that is to avoid unnecessary regulation of fuels, for there is no credible path to energy security without liquefied coal, oil sands and Western oil shale.

Peng holds the Charles E. Lawall Chair of Mining Engineering at WVU.

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