On September 20, stakeholders gathered in Boston to discuss the results of an economic analysis of a northeast regional Clean Fuels Standard (CFS), similar to the Low Carbon Fuels Standard recently enacted in California. The standard, which is being considered by eleven states from Maine to Maryland, would gradually reduce the carbon intensity of fuels used for transportation in the region by 5% to 15% over the next 10 to 15 years.
The independent economic analysis
commissioned by the Northeast States for Coordinated Air Use Management (NESCAUM) showed that a clean fuels standard could have significant economic benefits for the region, including saving the region up to $41 billion in fuel expenditures by reducing gasoline and diesel consumption by as much as 9 billion gallons annually in 2022 and beyond. The findings showed a projected increase in jobs by up to 50,000 over business as usual; growth in gross regional product of up to $29 billion; and an increase of up to $15 billion in personal income within the region.
E2 and NRDC were well represented among the stakeholders.
E2 New England Director Berl Hartman discussed the impact of standards on investment and innovation. The CFS is well designed because it is a technology-neutral, performance-based standard that will provide the industry with tremendous flexibility to find the most effective, lowest cost solutions. By creating a binding, long-term standard, the CFS will send a clear market signal to investors and help to create a market for industries such as advanced biofuels, biodiesel, advanced batteries and other materials required to produce electric and hybrid vehicles.
She also highlighted the fact that the industry is booming and that the Northeast and Mid-Atlantic are well positioned.
Since 2006, venture capital (VC) investment in biofuels has totaled over $4 billion worldwide (Cleantech Investment Monitor, March 2011, 4Q10/FY2010, www.cleantech.com
) and the market is projected to grow from $56.4 billion in 2010 and to a $112.8 billion by 2020, putting it on a par with wind and solar markets (Clean Energy Trends 2011, March 2011, CleanEdge, www.cleanedge.com
Currently there are 47 active biofuel companies headquartered in the Northeast/Mid-Atlantic region that are producing 234 million gallons of fuel. These companies estimate that given appropriate policy and financing mechanisms, they could produce 439 million gallons per year by 2015. There are another 12 companies in the region whose primary business models support the production of advanced biofuels.
VC investment in transportation and advanced batteries has also grown dramatically from $224 million in 2006 to $1.353 billion in 2010 (Cleantech Investment Monitor, March 2011, 4Q10/FY2010, www.cleantech.com
). In 2009, the U.S. produced just 2 percent of the world’s batteries for advanced vehicles, but by 2012 the U.S. will have the capacity to produce 20 percent of these batteries and up to 40 percent by 2015 (www.whitehouse.gov/files/documents/Battery-and-Electric-Vehicle-Report-FINAL.pdf
). Several of the leading companies are located in the New England region.
Luke Tonachel, a Senior Analyst in NRDC’s Energy and Transportation Program, pointed out that according to economic analysis, transportation emits one-third of our carbon pollution in the Northeast and Mid-Atlantic region. However, the sector is actually responsible for a larger percentage of emissions when we consider the pollution from the production and delivery of transportation fuels.
Luke focused on the fact that domestic vehicle manufacturing is already responding to new federal mileage standards by putting people back to work. Recently, the United Auto Workers and National Wildlife Federation partnered with NRDC to quantify the jobs related to making clean vehicle technologies. They jointly released a report titled “Supplying Ingenuity: U.S. Suppliers of Clean, Fuel-Efficient Vehicle Technologies
,” which found that over 150,000 U.S. workers are employed today to make automotive components that boost vehicle efficiency and cut emissions to meet near-term standards. Those workers are spread across 43 states and 300 companies. As the standards continue to improve, reaching the equivalent of 54.5 mpg in 2025, we expect more jobs will be created—potentially another 150,000 (UAW, NRDC and Center for American Progress, “Driving Growth: How Clean Cars and Climate Policy Can Create Jobs”, March 2010. Available at http://www.nrdc.org/energy/drivinggrowth.asp
Mary Solecki, E2’s Advanced Biofuel Industry Consultant, pointed to the results of the recent E2 Advanced Biofuel Market Report (Available at http://www.e2.org/ext/doc/E2%20Advanced%20Biofuel%20Mkt%20Report%202011.pdf
) which showed that the combination of market forces and public policies has put the advanced biofuel technology and industry in the United States on a path where it should be able to produce a significant amount of low-carbon fuel in the next few years. The report found that investment, not technology, is the biggest market barrier and that regulatory certainty is needed to ensure market stability.
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