Low Carbon Fuel Standard

Issue

Should the state enact a policy that requires a low-carbon fuel standard?

Policy

• Minnesota should not enact a policy adopting a low-carbon fuel standard.

• Enacting a policy requiring an increase in the use of low-carbon fuels will increase fuel prices, result in the loss of thousands of jobs, potentially cause supply disruptions and strand investment in millions of dollars of infrastructure in the petroleum refinery industry.

Business Impact

Enactment of a policy that would require the use of low-carbon fuels in Minnesota will result in higher fuel prices, supply instability, job loss and will strand millions of dollars in infrastructure in the petroleum refinery industry. About 1.1 million barrels per day flow from Canada into the Upper Midwest through Minnesota on their way to be refined and used throughout the central United States. Minnesota gets more than 80 percent of its crude oil from Canada. A low-carbon fuel standard could possibly disadvantage Canadian crude oil and encourage the use of oil imported from the Middle East.

Minnesota’s fuel supply also may be isolated under a low-carbon fuel standard and could lead to wild price fluctuations. Billions of dollars have been invested by Minnesota companies in pipeline infrastructure built specifically to process Canadian crude oil. Jobs would be at risk for workers who help maintain processing facilities. Refineries in Minnesota at any given time employ between 200 and 2,000 contractors working at their facilities.

Minnesota already has one of the nation’s most aggressive biofuels mandates requiring 10-percent ethanol blend and a 5-percent biodiesel blend. Adding a new low-carbon fuel standard will not lead to improvements in the greenhouse gas emissions from Minnesota, while threatening a stable energy supply for our economy.

The Minnesota Chamber believes that before a low-carbon fuel standard is considered, a study on the proposed standard should be undertaken. The study should include such parameters as the economic and environmental impacts of each transportation fuel involved and its production pathway, scope of the fuel use and vehicle types affected, and analysis of the proposed standard and its effect on reducing greenhouse gas emissions.