It’s been estimated that as much as one quarter of carbon dioxide emissions in China results from the production of goods that are exported, largely to the United States and Europe. It’s part of a phenomenon known as carbon leakage, in which reduced emissions in one country result in higher emissions elsewhere, and quite possibly a net increase in worldwide emissions.
It goes something like this: Country A passes legislation reducing emissions (good), but does so in a way that fails to contemplate the global impact of its move (not so good). As a result of the tighter standards in Country A, the cost of manufacturing goods and services there goes up, resulting in increased demand for those same products out of countries B, C and D, where production costs are comparatively low and emissions standards are slim to nonexistent. Country A loses more of its manufacturing base, and jobs along with it, without ever really achieving its main objective of cleaning up the planet. Its emissions legislation has only served to encourage increased output from some of the places with the lowest environmental standards.
The problem of carbon leakage is often cited as an unintended consequence of carbon offsets. But it also relates to the issue of low carbon fuel standards in the U.S. As CEA recently noted, policies designed to favor production of light crude oils, which in general require less energy to produce than their heavier counterparts, could easily create the unintended consequence of increasing the country’s need for foreign oil.
Now, in one sense, all foreign oil is created equal, at least when you’re measuring the amount the U.S. imports from all over the world. But just for a moment put oil from Canada in a category of its own: yes, it’s foreign oil, but it is at least a nearby and stable source that can help support jobs on pipelines and in refineries near the U.S./Canadian border.
A newspaper in South Dakota recently complained the passage of a low carbon fuel standard could kill a new oil refinery project that had been expected to create more than 1,000 jobs, by cutting off supply of heavy crude oil from Canada. This is not oil that could be easily replaced by a U.S. source: Under a low carbon fuel standard, a refinery in Middle America with a healthy supply of oil in its own backyard might have to tap supplies in the Middle East, where the crude is, as they say, sweet.
“Do a little digging,” the story says, “and you quickly find out that the low carbon fuel standard isn’t at all interested in making the fuel in your car today better, cleaner or more affordable. It’s only interested in making those fuels scarcer, more expensive and less available.”
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