Free Markets, Free People


EPA: When reality meets bureaucratic inertia

What if you passed a law that required the use of alternative fuels from particular sources to be blended with petroleum based fuels to help “break our dependence” on petroleum from “unfriendly countries” (and cut greenhouse gases).  And what if, a few years later, new and abundant sources of domestic oil and gas were found, plus even more from secure allies like Canada?

Wouldn’t it makes sense to reconsider the original legislation in light of the new finds. 

Oh, and one more thing … what if one of the alternative fuels mandated to be mixed with gasoline hadn’t yet materialized commercially?  Would you exempt refiners or fine them?

Common sense says you exempt them.  The EPA has, instead, chosen to fine them.

When the companies that supply motor fuel close the books on 2011, they will pay about $6.8 million in penalties to the Treasury because they failed to mix a special type of biofuel into their gasoline and diesel as required by law.

But there was none to be had. Outside a handful of laboratories and workshops, the ingredient, cellulosic biofuel, does not exist.

Somehow that appears to be considered the fault of the refiners.  And the EPA is requiring the fines be levied and paid. 

Any guess as to who will end up paying those fines?

The 2007 law requires three types of bio fuels be mixed:  “car and truck fuel made from cellulose, diesel fuel made from biomass and fuel made from biological materials but with a 50 percent reduction in greenhouse gases” according to the NY Times.

But cellulosic fuel is commercially unavailable.  There simply is none to be had.

Michael J. McAdams, executive director of the Advanced Biofuels Association, said the state of the technology for turning biological material like wood chips or nonfood plants straight into hydrocarbons — instead of relying on conversion by nature over millions of years, which is how crude oil originates — was advancing but was not yet ready for commercial introduction.

Of the technologies that are being tried out, he added, “There are some that are closer to the beaker and some that are closer to the barrel.”

But the requirement – and the fines – remain.

Meanwhile, time has marched on and guess what? 

Mr. Drevna of the refiners association argued that in contrast to 2007, when Congress passed the law, “all of a sudden we’re starting to find tremendous resources of our own, oil and natural gas, here in the United States, because of fracking,” referring to a drilling process that involves injecting chemicals and water into underground rock to release gas and oil.

What is more, the industry expects the 1,700-mile Keystone Pipeline, which would run from oil sands deposits in Canada to the Gulf Coast, to provide more fuel for refineries, he said.

But the EPA is unmoved by that or the fact that cellulosic fuel is unavailable:

But Cathy Milbourn, an E.P.A. spokeswoman, said that her agency still believed that the 8.65-million-gallon quota for cellulosic ethanol for 2012 was “reasonably attainable.” By setting a quota, she added, “we avoid a situation where real cellulosic biofuel production exceeds the mandated volume,” which would weaken demand.

Hmmm … expert: “We’re closer to the beaker than the barrel”.  Bureaucrat: “Even though the product is not commercially available, we still believe the mandate for this year is reasonably attainable.”

Yet there is nothing on the horizon for commercially available cellulosic ethanol in 2012:

One possible early source is the energy company Poet, a large producer of ethanol from corn kernels. The company is doing early work now on a site in Emmetsburg, Iowa, that is supposed to produce up to 25 million gallons a year of fuel alcohol beginning in 2013 from corn cobs.

And Mascoma, a company partly owned by General Motors, announced last month that it would get up to $80 million from the Energy Department to help build a plant in Kinross, Mich., that is supposed to make fuel alcohol from wood waste. Valero Energy, the oil company, and the State of Michigan are also providing funds.

Yet other cellulosic fuel efforts have faltered. A year ago, after it was offered more than $150 million in government grants, Range Fuels closed a commercial factory in Soperton, Ga., where pine chips were to be turned into fuel alcohols, because it ran into technological problems.

Yes that’s right folks, Government Motors is sucking up $80 mil in taxpayer dollars for a startup on a product that experts say isn’t ready for prime time and, as demonstrated by the Georgia plant, still has technical problems which apparently prohibit the commercial production of the desired alternate fuel (after it sucked up $150 mil of tax payer money).

This is ideological agenda driven madness abetted by bureaucratic stupidity.  However, no one has ever claimed bureaucracies deal in reality. They’re fall back for such absurdities is process.   Fining companies for not using a product that isn’t available but mandated simply underlines how decidedly absurd they can be.  The EPA is on a mission.  It has been directed to push that agenda by whatever means necessary.

Meanwhile the changes that should be reflected in the new reality – more abundant domestic and safe oil and gas, are being roundly ignored and their exploitation mostly hindered.  And you, Mr. and Mrs. Taxpayer, are being fined and looted to push this absurd agenda.

~McQ

Twitter: @McQandO

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27 Responses to EPA: When reality meets bureaucratic inertia

  • You’re missing out on the larger picture here of precedent.

    Think of the things they can fine us for not doing or using!

    A yearly tax based penalty for failure to sequester our waste in quantum mechanical holding cells outside our universe. The tax based penalty for not using cold fusion power for 20% of our electric needs.
    The tax based penalty for not employing enough oppressed minorities from alternate dimension Epsilon-Tau 3 Alpha.

    Clearly our problem has been we allow reality to infringe on our view and that’s just as clearly a flawed defense for not doing as the government based wishocrats and dreamocrats demand. As far as the legality of it all, as Nancy Pelosi observed when asked if Congress has the authority to make you do those things, “Are you serious?”

    • @looker You’re damn right they should pay a penalty if they are not going to give jobs to us! I have three little podlings to support!

  • What this tells me is that we should except no less from our politicians than we expect from industry.
    Politicians have no excuse for not performing the “impossible.”

  • But they have to fine them. How else would they ever enforce the new CAFE standards if the let them off just because it was impossible ?

  • Such “fines” are obviously taxes.

    The expense of these “fines” are NOT accounted as business expenses, and therefore off-set against corporate taxes.

    Hence, they are TAX INCREASES under Obama.

    GOTS to LOVE that…!!!

  • <I>By setting a quota, she added, “we avoid a situation where real cellulosic biofuel production exceeds the mandated volume,” which would weaken demand.</i>

    What that tells <I>me</i> is that even the EPA knows that nobody wants this crap.

    If people really wanted cellulosic biofuel, they’d use every drop that was made, and there wouldn’t be a problem with “overproduction”.

    • @sigivald Meanwhile, Joe Oliver, Minister of Natural Resources writes:

      Canada is on the edge of a historic choice: to diversify our energy markets away from our traditional trading partner in the United States or to continue with the status quo.

      Virtually all our energy exports go to the United States. As a country, we must seek new markets for our products and services and the booming Asia-Pacific economies have shown great interest in our oil, gas, metals and minerals. For our government, the choice is clear: we need to diversify our markets in order to create jobs and economic growth for Canadians across this country. We must expand our trade with the fast-growing Asian economies. We know that increasing trade will help ensure the financial security of Canadians and their families.

      Unfortunately, there are environmental and other radical groups that would seek to block this opportunity to diversify our trade. Their goal is to stop any major project, no matter what the cost to Canadian families in lost jobs and economic growth. No forestry. No mining. No oil. No gas. No more hydroelectric dams.

      • @Neo_ @sigivald “Unfortunately, there are environmental and other radical groups that would seek to block this opportunity to diversify our trade. Their goal is to stop any major project, no matter what the cost to Canadian families in lost jobs and economic growth. No forestry. No mining. No oil. No gas. No more hydroelectric dams.”

        He underestimates their goal – their goal is to stop humans. Not all humans of course, just the ones that upset them when they want to groove with Gaia, which would be most of the rest of us because we want houses, and food, and heat, and light and want to be able to go back and forth to work between eating and drinking and making more little Gaia abusing clones of ourselves.

        • @looker @Neo_ @sigivald Ezzzzz-ackly…

        • @Ragspierre @Neo_ @sigivald I like that they live in natural caves and farm and eat only vegetables by hand, wearing the clothing that nature provides. It’s rare and unusual that they muster up their best hand picked cotton and oak leave suits to trek on foot into the big city on their wooden shoes and speak for Gaia as they do.

    • @sigivald “we avoid a situation where real cellulosic biofuel production exceeds the mandated volume,”
      Yes, and we really NEED to avoid a situation where the demand is weakened! If we had a lowered demand for a product we have no demand for, we’d have…well, something that we’re not prepared to deal with! So, we should recognize the fact that we managed to avoid this as a tremendous success!

    • @sigivald About a hunt=dred years ago, I postulated that bio-engineering the micro-flora in termite guts so that cows could use them would be a Nobel Prize-winning proposition.

      Cows that could use lignin would be excellent. But NOOOOooooooobody listened to Rags…

    • @sigivald,

      There isn’t overproduction of cellulosic ethanol, that’s the whole point to the article.

      And I would gladly pour that stuff in my car, if it was capable, for the right price.

      • @jpm100 @sigivald You know, if there WAS an overproduction, we could probably get a government subsidy to stop producing so much of it. We could promise not to open a refinery and promise not to produce it and probably be able to retire on the income from not making something.

        • @looker @jpm100 @sigivald Via the magic of the market, overproduction would lead to lower prices.

          These, would, in turn, signal that fuel could be had cheaply, driving up demand until prices followed and equilibrium was reached.

          Nobody would have to do a damn thing to “manage” the dynamic system. Funny…

  • (Seriously? Again?

    What IS IT with comment widgets on QandO eating formatting and paragraph breaks?

    I’d hoped that the switch to Livefyre, as annoying as Livefyre is, was going to fix that, but plainly I was mistaken…)

  • The question remains, why isn’t industry fighting this tooth and nail? The legal doctrine of impossibility comes to mind. The likeliest answer, unfortunately, is industry capture (i.e. crony capitalism).

    • @MichaelJosephWade “Impossibility” is a contract doctrine, which can excuse performance. Not so much with stupid regulation.

      • @Ragspierre : yes, I’m well aware of what it is — a common law doctrine that excuses performance. The same principal applies here, and I’m sure some enterprising attorney could advance a successful argument that, say in the context of takings for example, the doctrine would apply here also. That no such arguments are apparently being made is suspect.

        • @MichaelJosephWade No, not at all suspect. You put your resources where the benefit will be likely greatest.

          In a regime where they are known to be as implacably adverse to “old energy” as this one, your argument…while a pretty one…would have a very short life-span. Besides, as I noted above, the costs will be borne by the consumers. As always.

        • @Ragspierre : The Obama administration wouldn’t hear the case, so its aversion to “old energy” is immaterial. The industry would most likely win at some level given that the government is seizing property without and due process or compensation.

          In fact, under the applicable provisions, there are specific waivers built in when the required additives aren’t available. Which, again, makes it really suspect that this isn’t being fought.

  • This is how regulations now work. They have decided that they can create markets and make people hit stretch goals or whatever…CARB had some chemical regulations that had to be astericked with “if technically feasible.”

    Now, here’s the thing, we most likely will start running into asymptotic limits for some improvements…I’m thinking of the chain store that sent us a “zero tolerance” lead policy…uhhh, sorry, but nobody can hit zero parts per billion, lady.