Eric Olson, Senior Vice President, Advisory Services, BSR

A Better Portfolio of Fuels

Note: This is part one of a two-part series looking at U.S. President Obama’s climate plan through the lens of BSR’s Future of Fuels Initiative.

As my colleague Edward Cameron noted in his recent blog, U.S. President Obama’s climate plan is a welcome expression of political leadership that nonetheless leaves us with the need for more collective ambition in the form of “more aggressive emissions reductions at the federal level, in cities, and also through the private sector.”

Whatever the merits and limitations of the specific provisions of the Obama plan (and these will be hotly contested for some time), the president takes an “all of the above” approach that should be embraced by business, civil society, and others to drive the large-scale, durable changes we need to meet the challenge of global climate change.

This means all industries and all sectors have a role to play—and it recognizes that ambition can emerge from a portfolio of sensible steps, from increased energy efficiency to changing patterns of land use and transportation. There’s no need to wait for a silver bullet.

I have been brought to this point of view in large part through my work with BSR’s Future of Fuels initiative. For the last two years, we have been working with industry leaders and key stakeholders in the area of transportation fuels to find collaborative approaches to promoting more sustainable transportation fuels and supply chains. While our work is not done, a few key principles have emerged, against which we can assess the president’s plan.

In this first of two pieces, I focus on our approach to specific fuels and the development of a more sustainable portfolio. In my next blog, I will focus on the need for business and government to work together to create a more sustainable long-term energy and climate policy.

Principle No. 1: We must find ways both to reduce the climate impacts of the fossil-based fuels that will remain a significant part of the mix for at least the next few decades, and we must accelerate the development and deployment of commercially viable low-carbon alternatives.

Related to this, here are some key focus areas of our Future of Fuels work that underscore the “all of the above” actions we need, and how the president’s plan does (or does not) address these issues:

1. Aggressive scaling up of improved production practices in unconventional as well as conventional fossil fuel sources that reduce environmental and social impacts, while benefitting producer regions and communities.

This issue is only partially addressed in the president’s plan. Notably, the plan includes support for greater adoption of heavy-duty natural gas vehicles, while also recognizing that issues such as methane leakage must be addressed in order to provide the desired reduction in carbon emissions.

Additionally, although the plan does not address the issue of unconventional oil (including Canadian Oil Sands), the president has indicated that he would not approve the Keystone XL pipeline if it was shown that it would “significantly” worsen climate change. Predictably, both proponents and opponents of the pipeline have taken this as an indication of support for their views, and it is not yet clear how this will end. What is clear is that, with or without Keystone, there is a lot more work to be done to ensure that we properly understand—and address—the impacts of oil production as part of an overall energy solution.

2. Development of truly sustainable biofuels solutions that produce lifecycle carbon benefits while creating positive land and social/community impacts.

This has been an area of intense interest and debate in our work, with both industry players and advocates expressing concern that the current U.S. and E.U. mandates for increased biofuels usage may be promoting first-generation biofuels that fail to provide climate benefits and create undesirable impacts on food prices and land use. There is broad agreement that we need to develop second-generation, or “advanced,” biofuels.

The president’s plan seems to acknowledge this tension, as it includes both increased support for the renewable portfolio standards and greater investment in advanced biofuels, as well as protection and restoration of critical landscapes such as grasslands, wetlands, and forests. Here again, the private sector will continue to have a critical role to play in working with stakeholders to identify and promote the most sustainable options for biofuels.

3. Effective scaling of other low-carbon/renewable resources with net positive environmental, social, and economic impacts.

In the coming weeks, the Future of Fuels initiative will be focusing on the role that electric vehicles (EVs) and related hybrid technologies can play in the development of more sustainable solutions in commercial/goods transport.

As part of this, we will consider two main questions: What are the total lifecycle sustainability advantages and challenges presented by EVs and related technologies? And what are the prospects for commercially viable solutions in different segments of the industry (short haul/light duty versus long haul/heavy duty), and what can be done to accelerate their development?

The president’s plan is relevant to these considerations in two areas. First, the climate advantages presented by EVs depend, in some measure, on the quality of power supplied by the grid, and president’s plan includes both the establishment of stricter pollution standards for power plants and a doubling of renewable electricity production by 2020.

Second, the plan seeks to use government purchasing power to accelerate the commercialization of low-carbon technologies by integrating alternative fuel vehicles into the U.S. flag fleet and by installing renewable power on federal housing and military structures. While these are positive developments, there remains a significant need for investments in the breakthrough technologies that will be required in areas ranging from batteries to the infrastructure that is needed to support the use of EVs by the commercial transport sector.

It should be clear by now that an “all of the above” approach is not business as usual. If anything, the broad and simultaneous progress required across multiple fronts makes this the most ambitious approach imaginable. More importantly, it’s what we need to succeed.

Stay tuned for my next piece, in which I will consider the kinds of policy frameworks that will be required to support this, and the degree to which the president is putting us on the right path.