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Section 526 of the 2007 U.S. Energy Independence and Security Act prohibits U.S. federal agencies from buying fuels whose lifecycle emissions are higher than those of conventional petroleum. This means U.S. agencies cannot buy Alberta oilsands petroleum the way it is produced today. Which is why Canadian petroleum exports to the U.S. will certainly be a subject for discussion when president Obama visits Ottawa on February 19.
The author of s. 526 is Henry Waxman, a Democratic congressman from Los Angeles and the chairman of the Committee on Energy and Commerce. His target in part was fuels derived from coal (via gasification and Fischer-Tropsch synthesis), and specifically U.S. Air Force plans to build coal-to-liquids (CTL) plants on airbases in the U.S. Waxman made it clear in a May 2008 letter to the Senate Committee on Armed Services that s. 526, having survived intact after numerous markups and revisions to the legislation, is staying put.
Oilsands supporters will be cheering on Senator James Inhofe (R-OK), who might try tacking on a repeal of s. 526 in the next defense authorization bill. They’d better cheer hard: Inhofe tried the same thing last year and failed, and a Republican congressman failed last month in an attempt to repeal s. 526 in the House version of the economic recovery package.
Meanwhile, the Air Force decided to walk away from a coal-to-liquids project at a Montana air base, apparently for fear of lawsuits based on s. 526. It might abandon its entire CTL program for the same reason.
If the oilsands get a reprieve, it will likely come in the form of an explicit excemption in s. 526. But that won’t end the threat from the U.S. Though the Lieberman-Warner Climate Security Act failed to win enough votes in June 2008, it will almost certainly reappear in 2009. Lieberman-Warner called for a national cap and trade system for greenhouse gases (GHGs) from three major sectors: industry, electric power generation, and transportation.
Nobody knows how Lieberman-Warner II will change as it moves through the legislative process. Hopefully Canadian diplomacy can prevent it from unduly harming the oilsands. If Canada and the U.S. collaborate on a North American cap and trade system, the negotiations that precede and accompany this collaboration will surely include the oilsands.
And near-term, there’s still Henry Waxman’s section 526.
It’s time for oilsands operators and their political supporters to start thinking seriously about nuclear energy and carbon capture and recycle.