Allocation of Carbon in the Production of Liquid Fuels and Electricity

Abstract

The crude from Canadian oil sands provides enormous security and economic advantages to the United States, but the carbon dioxide emitted during its extraction and refinement is about double that of most conventional crudes. This paper proposes that the U.S. government formulate policies that foster the diversion of Canadian oil sands crude to U.S. Gulf refineries, offsetting the additional carbon dioxide they create by using gas instead of coal to generate electricity. The development of oil sands should reduce the U.S. trade deficit; it would also ease the economic pressure to accelerate the production of coal-to-liquid fuels, which would result in four times as much carbon dioxide per gallon of fuel as the Canadian oil sands.