All fuel sources should be allowed to compete in the market on an equitable basis. California's Low Carbon Fuel Standard was intended to signal a choice between petroleum fuels and low carbon alternatives. Addressing this objective did not require the exclusion of oil sands oil from the "basket" of fuels already available in California. Singling out Canada’s oil sands was unnecessary and inappropriate. On a life-cycle basis, Canadian oil sands crude compares favourably with many other crude oils currently supplying California, including some domestic California crude oils.
It is too early in the overall, longer-term policy-making process under way in both Canada and the U.S. to assess the impact of the CARB decision. The following points are worth noting:
- Canada and Alberta are international leaders in GHG management.
- The decision applies only to California. Oil imports from Canada are only two per cent of California’s total (about 27,000 b/day, including but not exclusively oil sands crude).
CAPP made the following points in its submission:
- Life cycle carbon emission intensities of products derived from oil sands crude are within the range of crude supplies currently in the California basket of oil from various sources.
- The upgrading of some of oil sands production in the production area produces a light crude that is particularly suited to producing transportation fuels. The refining emissions required to complete the production of transportation fuels from upgraded oil sands are lower than those associated with other crude oil feedstocks. Any comparison of crude supplies at the refinery gate has to take this into account to properly reflect life cycle intensities.
- If adopted widely in the U.S., discrimination against oil sands crude under LCFS policies would disrupt Canada U.S. crude oil trade, divert supplies to alternative markets thereby requiring more transportation, higher costs and higher GHG emissions, and be detrimental to U.S. energy security.
CAPP has also stated that:
- CAPP supports the need to signal the importance of all jurisdictions participating in a global climate change effort. However, using discrimination against oil sands crude supplies to pressure Alberta and Canada to participate in the international effort is unnecessary and inappropriate.
- Alberta was one of the first jurisdictions to put in place carbon pricing for large industry, five years ahead of when AB32 will introduce pricing in California.
- We anticipate that Canadian federal policy will be developed with a view to being compatible with that of the U.S. at the federal level.
- Alberta and the Canadian federal government are also developing with industry a strategy to demonstrate and deploy CO2 capture and storage in the oil sands and coal-fired power sectors, investing more than $2B to implement these and related strategies.