New Study: Clean Fuels Are Good for the Economy in Northeast, Mid-Atlantic

The state of Maine recently released an economic analysis of a regional clean fuels standard for 11 states in the Northeast and Mid-Atlantic.

The verdict: The region can cut air pollution, slash our dangerous dependence on oil, bring in billions of dollars to local economies, and create thousands of American jobs under a Clean Fuels Standard (CFS).

This is welcome news as drivers struggle with gasoline prices that are up nearly a $1 per gallon from this same time last year. And it’s particularly significant here in the Northeast and Mid-Atlantic, where transportation is the single largest emitter of carbon air pollution and nearly 100 percent of our fuels are imported from outside the region.

Fortunately, a clean fuels standard can promote stability in fuel costs, while improving our self-sufficiency with cleaner, domestic fuels and put us on a pathway away from oil.

How it works:

Under a CFS, our region follows a gradual trajectory away from today’s reliance on oil as a transportation fuel, to fuels that emit less carbon dioxide air pollution. The clean fuels standard doesn’t ban any single fuel or require use of any single fuel. Rather, it sets a cleaner performance threshold for transportation fuels, which encourages innovation and investment in all fuels cleaner than petroleum, and lets the market decide which ones flourish. Clean, low-carbon fuel examples include electricity for electric vehicles and advanced biofuels.

And on the flip side, it encourages companies to move away from the dirtiest sources, like fuels made from tar sands that emit more carbon than conventional gasoline fuel.

Economic benefits:

The economic analysis, led by 11 Northeast and Mid-Atlantic states and the Northeast States for Coordinated Air Use Management (NESCAUM), evaluated the benefits of cutting the carbon intensity by 10 percent in 10 years in cases with both low and high oil prices. In all cases, the results are positive. In just the 10th year, the study found the following:

  • Employment increases by 9,490 to 50,700 jobs. Gross regional product, a measure of the states’ economic output, increases by $2.1 billion to $4.9 billion.
  • Household disposable income increases by $1 billion to $3.3 billion.
  • Gasoline and diesel demand drops 12 to 29 percent.
  • Carbon pollution from transportation is cut by 5 to 9 percent.

Looking over the whole 10-year period, the net benefits range from $26 billion to $55 billion when including reductions in petroleum consumption and the costs of clean fuels, vehicles and infrastructure.

Job growth comes from the provision of cleaner fuels and their infrastructure as well as the increase in disposable income being reinvested in the economy. Electricity and natural gas for transportation need charging and fueling stations and biofuel manufacturing facilities need to be built, supplied with biomass, and operated. Industry sectors dependent on household and business spending, such as healthcare, finance and insurance also see a boost.

As my colleague Nathanael Greene points out, it’s no surprise that the oil industry, which has invested heavily in the status quo of dirty fuels and is trying to bring in more, dirtier tar sand fuels, is already trying to dismantle clean fuel policies.

We cannot let Big Oil stand in the way of American jobs and economic progress. A Clean Fuels Standard can put us on the right path to a stronger, more secure economy and cleaner air.

About the Authors

Luke Tonachel

Director, Clean Vehicles and Fuels Project, Energy & Transportation program

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