EDITORIAL: Getting burned by biofuels – Washington Times

OBAMAS  MARXIST ADMINISTRATION ON DISPLAY FOR ...

OBAMAS MARXIST ADMINISTRATION ON DISPLAY FOR ALL TO SEE (Photo credit: SS&SS)

EDITORIAL: Getting burned by biofuels – Washington Times.

Energy firms are caught in green-credit crossfire

When individuals attempt to solve a problem and end up creating unforeseen troubles, it’s called the law of unintended consequences. When government does it, it’s called the law of the land. In its zeal for regulation, the federal leviathan has invented a market for something called renewable-fuel credits and, not surprisingly, it’s filled with fraud. Businesses are getting swindled and Uncle Sam’s unsympathetic response is “heads I win, tails you lose.”

The Energy Policy Act of 2005 mandated that the Environmental Protection Agency (EPA) implement a Renewable Fuel Standard forcing fuel refiners to dilute their petroleum products with vegetable oil, corn, algae and animal fat so companies that label themselves “green” would reap a financial windfall. Refiners who can’t make those substances on their own are allowed to buy renewable-fuel credits to meet their federal quota. Each credit carries a 38-digit renewable identification number (RIN) as proof of purchase. The credits can be traded.

As this is an entirely artificial market that serves no purpose other than to make politicians and their political donors happy, it’s rife with fraud. Since November, the EPA has claimed 140 million invalid RINs have been sold. The agency alleges 48 million bogus credits came from Absolute Fuels of Texas, netting about $62 million. Another 32 million were purportedly sold by Clean Green Fuel LLC in Maryland for $9 million, and 60 million were marketed by Green Diesel of Texas, worth $84 million.

House Republicans expect the scam to hit at least 300 million fake credits. “Unfortunately, the production of and trade in fraudulent or invalid RINs has developed into a large and growing problem,” wrote House Energy and Commerce Committee chairman Fred Upton, Michigan Republican, and three other committee members in a May 24 letter to EPA Administrator Lisa Jackson. “And EPA’s efforts to address the problem so far appear ineffective, and in some respects have harmed the renewable-fuels marketplace.”

Rather than taking responsibility for authenticating the RIN market, the EPA is putting refiners on the hook for unwittingly buying fake RINs. In March, the agency announced it would fine firms 10 cents for each invalid credit they use and 20 cents for each credit missing from their quotas. One credit trading company, OceanConnect, filed suit in federal court in April, charging the EPA’s “buyer beware” policy is undermining the biofuels industry.

That’s an industry that should be undermined if it’s unable to offer consumers an affordable product that they want. Instead, Washington insiders who view Big Oil as the root of evil have decided the nation must transition to energy products that aren’t anywhere near viable. It’s the essence of crony capitalism when lawmakers dictate that one product – corn fuel – the winner at the expense of another – affordable petroleum.

Ultimately, it’s the taxpayer and the environment that end up paying the price for this folly as the nation’s productive resources are diverted into the most wasteful endeavor of all: satisfying bureaucrats.

The Washington Times

EDITORIAL: Clean green fraud – Washington Times

EDITORIAL: Clean green fraud – Washington Times.

The spectacular failure of Solyndra opened a lot of eyes. Yet the bankrupt solar panel manufacturer is far from the only fly-by-night outfit to take advantage of the current “green energy” fad. No program is more ripe for abuse than the renewable fuel standards set by the Environmental Protection Agency (EPA).

Last week, House Energy and Commerce Committee Chairman Fred Upton, Michigan Republican, and Energy and Power Subcommittee Chairman Ed Whitfield, Kentucky Republican, opened their own investigation into the fraudulent outfits that sell tradeable biodiesel fuel credits to legitimate companies that need to meet the arbitrary mandates established by the EPA and Congress.

In 2007, President George W. Bush signed a law declaring 36 billion gallons of ethanol would be used in gasoline by the year 2022. Though the move purportedly would help the environment, it’s no secret that the corn fuel mandate has more to do with politicians seeking Midwestern votes. There wasn’t a lot of thought put into the consequences of this unrealistic and pointless command handed down from above.

As a result, each fuel refiner and importer has to meet a quota of “renewable” fuel that must be blended into proper petroleum products. For 2012, EPA decided the total amount needs to add up to 15.2 billion gallons. Companies that can’t meet the target on their own can purchase credits from renewable fuel producers. These credits are available on the EPA Moderated Transaction System, a trading scheme that lets companies that claim an abundance of “green” fuel to rake in the cash. It’s basically a government-run equivalent of the Chicago Climate Exchange that would have sold “carbon credits” had Congress enacted cap-and-trade legislation.

Beginning in 2009, the Maryland-based firm Clean Green Fuel sold credits representing 21 million gallons of biodiesel on the EPA trading system. This company was a model of political correctness, claiming it dispatched employees to collect waste vegetable oil from 2,700 nearby restaurants so that it could be converted into fuel. According to EPA, however, Clean Green had no facilities to collect or convert anything. Court documents assert that Clean Green’s owner pocketed $9.1 million in cash, which he then used to collect quite a carbon footprint from more than two-dozen luxury and sports cars, including several Ferraris, a Lamborghini and a Bentley purchased with a check for $377,210. Court documents also show the owner’s wife enjoyed $81,950 worth of diamond jewelry.

While the U.S. attorney is going after Clean Green, EPA is passing the blame to the 24 oil companies and brokers that purchased credits from the apparently fraudulent firm. In November, EPA sent notices of violation, insisting it is up to credit purchasers to verify that they are not buying flim-flam credits. Failure to do so exposes legitimate oil producers to penalties of up to $32,500 per day.

Such absurdity naturally follows when the government creates an artificial market. The best way for Congress to address the fraud problem is to pull the plug on the renewable mandate entirely.

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