Global warming threatens alternative-oil projects

Development of oil-sand, oil-shale, and coal-to-oil projects could be slowed by a new California law.

from the July 6, 2007 edition

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Los Angeles - Oil-sand, oil-shale, and coal-to-oil projects – alternative fuel sources that could enhance US energy security – have always faced one hurdle. They look good only when oil prices are high. Now, they have another challenge: global warming.

California has enacted new climate-change policies that make energy companies responsible for the carbon emissions not just of their refineries but all phases of oil production, including extraction and transportation. If that notion catches on – at least two Canadian provinces have already signed on to California's plan – then the futures of oil-sand, shale, and coal-to-oil projects may look less attractive.

The reason: Extracting these alternative sources of oil requires so much energy that their "carbon footprint" may outweigh their benefits.

The issue has gained fresh currency because of the new state legislation and predictions that Congress will call for mandatory carbon controls in the next two years.

"As the US and the world move toward more controls on carbon to solve the problem of global warming, it is clear that the development of high-polluting fuels will incur a penalty and the support of and investment in such fuels will be a more and more risky business," says Roland Hwang, a senior policy analyst at the Natural Resources Defense Council (NRDC).

California's move came in January, when Gov. Arnold Schwarzenegger (R) signed a state executive order creating a new "low carbon fuel standard." The standard gives petroleum refiners 13 years to cut the carbon content of their passenger vehicle fuels by 10 percent. In May, Governor Schwarzenegger signed agreements committing Ontario and British Columbia to adhere to California's standard.

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