Companies Fined Over Non-Existent "Green" Fuel

Companies that supply motor fuel will be closing out their fiscal year in February with 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 U.S. law.

But the problem isn't the amount in penalties they will pay (which is pennies to companies making trillions a year), but rather the issue is that the biofuel is completely unavailable.

These companies will be paying penalties for something they cannot achieve...

The required ingredient is cellulosic biofuel, which does not exist outside of a few laboratories and workshops throughout the world. The ingredient is made from wood chips or the inedible parts of plants like corncobs. Requirements were to blend 6.6 million gallons into gasoline and diesel in 2011 and reach a quota of 8.65 million gallons for 2012. In 2012, the oil companies are expected to pay even higher fines for failing to blend in the fuel.

We're basically force feeding a technology that simply isn't ready. Some have called it "enviro-racketeering".

“It belies logic,” Charles T. Drevna, the president of the National Petrochemicals and Refiners Association, said of the 2011 quota. Drevna says that it is outrageous to expect these companies to reach the raised quota for 2012 when there is zero production of the biofuel.

So why is the U.S. punishing these fuel companies for something they have no control over?

As the New York Times explains,

Penalizing the fuel suppliers demonstrates what happens when the federal government really, really wants something that technology is not ready to provide. In fact, while it may seem harsh that the Environmental Protection Agency is penalizing them for failing to do the impossible, the agency is being lenient by the standards of the law, the 2007 Energy Independence and Security Act.

The law, aimed at reducing the nation’s greenhouse gas emissions, its reliance on oil imported from hostile places and the export of dollars to pay for it, includes provisions to increase the efficiency of vehicles as well as incorporate renewable energy sources into gasoline and diesel.

The mix requires the use of three alternative fuels: cars and truck fuel made from cellulose, diesel fuel made from biomass and fuel made from biological materials but with a 50% reduction in greenhouse gases.

The overall goal that was set by the law for vehicle fuel from cellulose was 250 million gallons from 2011 and 500 million gallons for 2012. In comparison to the American fuel market, the estimation of gasoline sales in 2012 will be about 135 billion gallons while highway diesel will equal around 51 billion gallons.

By 2022, as part of the overall goal, the standards for cellulosic fuel is set to reach 36 billion gallons of biofuels incorporated annually. Experts say, though, that significant amounts of technical progress would need to happen for that figure to be met. And progress looks to be limited. 

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.”

Some companies are on their way as early sources of the biofuel. A Texas renewable fuels company named KiOR has a plant in Mississippi that is starting to turn Southern yellow pine chips into gasoline and diesel components in the fourth quarter of 2012. Their annual rate of 11 million gallons may just be the beginning for the small company.

Another prospect is energy company Poet. They produce ethanol from corn kernels and are projected to produce up to 25 million gallons a year of fuel alcohol from corn cobs starting in 2013.

A company partly owned by General Motors, named Mascoma, announced last month that it would get up to $80 million from the Energy Department to help build a plant in Michigan. There it would make fuel alcohol from wood waste with the help of Valero Energy and the State of Michigan in funding.

Dennis V. McGinn is a retired vice admiral who serves on the American Council on Renewable Energy and he defends the energy requirements enacted by the U.S. 

Even if the standards for 2011 and 2012 are not met, he said, “I am absolutely convinced from a national security perspective and an economic perspective that the renewable fuel standard, writ large, is the right thing to do.” With oil insecurity and climate change related to greenhouse gas emissions as worrisome as ever, advocates say, there is strong reason to press forward.

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