How to End Our Dependency on Oil Rich Dictators like Putin
Across the globe, peace-loving people are appalled by the dire situation in Ukraine. At the same time, the world must come to grips with the fact that Vladimir Putin took this violent course of action because he believed that Russia’s dominance of European fuel and energy markets would force the NATO countries to acquiesce. We must also recognize that despite our role as the world’s top oil and natural gas producer, the current reality demonstrates that the U.S. remains vulnerable to petroleum power plays by authoritarian regimes.
Now, U.S. policymakers are asking a critical question: How can we fight climate change and boycott Russian oil without imposing painful costs on American drivers and the U.S. economy?
In response, two schools of thought have proposed dramatically divergent solutions: The US should either double down on fossil fuels by ramping up American oil production or go all in with electrification of the nation’s cars and trucks.
Unfortunately, neither of these strategies – expanding domestic oil production or switching to a fully electric vehicle fleet – provides a short-term answer to our pain at the pump. If we choose to reinforce our petroleum addiction, American consumers and the U.S. economy will nonetheless continue to suffer because all of the readily available U.S. oil production has already been tapped and the strategic reserve is being utilized. If we choose to only invest in electrification, we will encounter the reality of shortages in rare minerals, semiconductors, electric vehicles and chargers.
What we need instead is a disciplined and long-term commitment to liberate our economy, expand our geopolitical options, and slow the quickening natural disasters triggered by climate change. While there is no “quick fix," it is absolutely in our national interest to transition from our current economic vulnerability rooted in petroleum dependence to a diversified and decarbonized transportation sector. This path gives power back to consumers by creating a competitive fuel market, reducing harmful and toxic air pollutants that damage human health and shorten life spans, and improving air quality particularly in disadvantaged communities that live in or near freight, industrial, and traffic corridors.
The policy mechanism to cost-effectively decarbonize transportation has been proven in states for over a decade. It is called a Clean Fuels Standard (CFS), and takes a technology-neutral approach to reducing the carbon intensity of transportation fuels. A CFS does not skew the market by favoring specific fuels, vehicles, or technologies, nor does it include any mandates or subsidies. Instead, a CFS takes an all-the-above approach by setting a performance standard that ensures transportation fuels cut carbon emissions every year.
By not picking winners and losers, a CFS allows all fuels, vehicles and technologies to compete on an even playing field in an open market. Because it is technology-neutral, a CFS attracts the broad stakeholder support, ranging from companies involved in electrification to biofuels to green hydrogen to petroleum decarbonization, as well as support from environmental, health and labor groups that recognizes the program benefits. Investing in carbon reductions spurs innovation and creates value in the market for clean and innovative fuels, vehicles and technologies.
The CFS approach also recognizes that our fossil-based transportation system has developed over the past century, with trillions of dollars of assets spread upstream across oil production, refining, transport, wholesale distribution; and downstream across retail stations, vehicle manufacturing, and more than 310 million commercial and personal vehicles. Therefore, CFS programs provide market incentives to petroleum suppliers to modernize and decarbonize their process energy, fuels and operations.
Most importantly, a CFS works. California, Oregon and British Columbia have had CFS programs in place for years, and Washington state approved one last year. Consequently, clean fuel companies are diversifying these markets and creating greener fleets, high-wage jobs and economic development. Over the past decade, California’s CFS has reduced over 75 million metric tons of greenhouse gases and unleashed clean fuel innovation worth over $10 billion.
Amongst these real-world achievements is an added benefit: lower-priced fuel options that emerge when the petroleum industry’s century-long monopoly is finally broken up.
My organization recently funded a comprehensive economic analysis of the factors that drive retail gasoline prices and conclusively found that pump price is primarily determined by crude oil costs, with no measurable impact from a CFS. This reality is being starkly demonstrated across the nation today, where gasoline is setting record highs because of skyrocketing oil prices and because we again have nowhere else to turn but to petroleum.
Reducing carbon, pollution and toxins from transportation has always made sense. But today, while we are heavily suffering the impacts of petroleum dependence and Vladimir Putin’s own hubris, we have a rare opportunity to work together as a nation to begin permanently diversifying and decarbonizing our transportation system by implementing a national CFS.
Graham Noyes is executive director of the Low Carbon Fuels Coalition and the author of The Carbon Rush: America’s Path to Fire and Gold.
