Canada energy at risk in low-carbon standard: group

WASHINGTON (Reuters) - Rules to add costs to fuels that emit the highest levels of carbon dioxide would deny millions of Americans access to stable Canadian energy and add to the nation’s security risks, an interest group backed by oil companies said Thursday.

The Consumer Energy Alliance said a so-called low carbon fuel standard would restrict the use of fuel derived from Canada’s oil sands, a major supplier of crude oil to the United States. The group called for an Obama administration study of of the issue.

“Considering the enormous investment involved and the serious security implications an LCFS entails -- greater dependence on unstable energy, greater volatility of supply -- it stands to reason that the National Security Council would want to take an active role in studying this issue,” the alliance said in a letter to national security advisor James Jones.

A low carbon fuel standard would rank fuels, and potentially feedstocks like crude oil, by the amount of carbon dioxide they emit and levy fees on the dirtiest ones.

U.S. President Barack Obama has expressed support for a low carbon fuel standard but his administration has not taken a tough stance against Canadian oil sands.

With an estimated 173 billion barrels, Canadian oil sands are the largest source of crude outside the Middle East. But development of these reserves requires open pit mines and carbon-spewing processing plants, placing oil sands producers at a disadvantage under any fuel standard that rewards low carbon sources.

The group argued that a low carbon fuel standard would hinder the nation’s ability to take advantage of the recently approved $3.3 billion Alberta Clipper pipeline project, which will mostly transport crude from the oil sands.

With members such as Exxon Mobil and the National Association of Manufacturers, the U.S. group has launched a campaign in opposition to low carbon fuel standards.

An initial draft of the House approved climate change bill included such a standard, but it was dropped from the final bill.

As a matter of national security, the letter said it is in the United States interest to reject a policy that would decrease oil imports from a friendly neighboring country.

The group’s request comes as environmental groups have ramped up their efforts protesting oil sands this week. Greenpeace temporarily shut down a oil sands mine Tuesday,