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Should the EPA be able to fine oil refiners for not using a non-existent bio fuel?

Steverno~POTL~PWCM~JLA 2012/06/23 06:27:49
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Cellulosic ethanol is not yet commercial, but according to the Institure for Energy Research, US politicians and the Environmental Protection Agency (EPA) are not aware of that fact since they are mandating US refiners to blend it into petroleum products or pay a fine, the Institute declared last week.

Refiners will be required to pay about $6.8 million in penalties for not blending enough cellulosic ethanol into gasoline in 2011. Even though cellulosic producers did not sell a single gallon of cellulosic ethanol commercially in 2010 and it is not clear if they sold any cellulosic ethanol in 2011, EPA has mandated that refiners blend even more cellulosic ethanol in 2012.

EPA now requires refiners to blend 8.65 million gallons of cellulosic ethanol or pay EPA millions of dollars in fines. The current system rewards EPA for picking an unrealistic number so that EPA can increase the fines it receives. It also means that consumers will be paying higher gasoline prices.

Cellulosic ethanol is ethanol made out of biomass such as wood chips, corn cobs, or so-called energy crops such as switch grass and poplar. Cellulosic ethanol from wood was first produced in Germany in 1898. The Germans developed an industrial process that was also used in two commercial plants in the southeast United States during World War I. The plants closed shortly after World War I due to a drop in lumber production.

During World War II, the United States again turned to cellulosic ethanol, but because the technology was still not profitable, the plant closed after the war. Construction of pilot scale cellulosic ethanol plants requires considerable financial support through government grants and subsidies.

When Congress created the cellulosic ethanol mandate, they assigned EPA the task of determining a new mandate each year, if cellulosic producers do not produce the mandated level. Although the agency provides a much lower mandate than what Congress hoped for, EPA’s mandate is far higher than the amount available from pilot plants and higher than the amount suggested by the Energy Information Administration (EIA). The penalties for not blending the prescribed EPA amount are eventually paid by consumers at the pump.

Evolution of Cellulosic Ethanol Mandates

The Energy Independence and Security Act of 2007 (EISA) contains a renewable fuel standard that mandates the production of ethanol to the level of 36 billion gallons by 2022, where 15 billion gallons is to be corn-based and the remainder is to come from advanced forms of biofuels, including cellulosic ethanol.

The advanced biofuel contribution starts at 0.6 billion gallons in 2009 increasing to 1.35 billion gallons in 2011, 2.0 billion gallons in 2012 and eventually to 21.0 billion gallons in 2022. Because cellulosic ethanol was not yet commercial, EPA issued changes to the original act that requires four separate standards including 1.0 billion gallons of biomass-based diesel by 2012 and 16 billion gallons of cellulosic biofuels by 2022, subject to annual assessments that EPA will set each November for the following year.

The original legislation set the goal for motor fuel from cellulose at 250 million gallons for 2011 and 500 million gallons for 2012. EPA lowered those figures to 6.6 million gallons for 2011 and 8.65 million gallons for 2012, just a small fraction of the original numbers (about 2 per cent), but an incredibly large amount when the cellulosic biofuel does not exist commercially.

Should the EPA be able to fine oil refiners for not using a non existent bio fuel

The Clean Air Act requires the EIA to provide EPA each October with an estimate of the amount of transportation fuel, biomass-based diesel and cellulosic biofuel projected to be available in the following calendar year. EIA’s estimate for 2012 for cellulosic biofuel production is 6.9 million gallons, 20 per cent lower than the EPA requirement established for 2012.[iii] To see that even EIA’s lower estimate is high, for 2011, EIA predicted cellulosic biofuel production to be 3.94 million gallons, but “actual sales, if any, are expected to fall well below the estimate” according to the agency.

The State of Cellulosic Ethanol Producers

One reason the mandates cannot be met is that the companies that were expected to produce cellulosic ethanol and that received the first round of subsidies from the government did not make it commercially. About 70 per cent of the cellulosic ethanol mandated for 2010 (about 70 million gallons) was expected to come from Alabama-based Cello Energy. However, that projection was made before Cello Energy had built the cellulosic ethanol plant and before the technology was proven to work. In 2009, a jury ruled that Cello Energy lied about how much cellulosic biofuel it could produce and in October 2010, the firm declared bankruptcy.

A 2011 report by the National Academy of Sciences (NAS) concluded that “currently, no commercially viable bio-refineries exist for converting cellulosic biomass to fuel.” The reason, according to the NAS, is because of “the high cost of producing cellulosic biofuels compared with petroleum-based fuels, and uncertainties in future biofuel markets.” According to NAS, even the 2022 target will not be met “unless innovative technologies are developed that unexpectedly improve the cellulosic biofuels production process.” The report also concludes that the renewable fuel standard “may be an ineffective policy for reducing global greenhouse gas emissions,” since the full life cycle of the fuel, including its transport, could result in higher emissions than conventional petroleum.

The federal government under Presidents Bush and Obama has poured at least $1.5 billion of grants and loan subsidies to potential cellulosic producers. Recently, in August 2011, the Obama Administration funded a $510 million program in partnership with the Navy to produce advanced biofuels for the military. In September 2011, the federal government loaned $134 million to Abengoa Bioenergy to build a cellulosic plant in Kansas and the Department of Energy provided POET, which advertises itself as the “world’s largest ethanol producer,” a $105 million loan guarantee for cellulosic biofuels.

Refiners Must Pay Penalties

Refiners have to purchase waiver credits for failing to comply with the mandate to purchase cellulosic biofuel that does not exist commercially. For 2011, the cost is estimated at $6.8 million, but the amount will not be determined until refiners close their books in February. According to Charles Drevna, president of the National Petrochemical and Refiners Association, the credits cost about $1.20 per gallon.[vii] These costs are passed onto consumers of gasoline and diesel fuel, so the renewable fuels mandate becomes an invisible tax paid at the gas pump. It is just another way for the federal government to tax consumers, and in this case without most of them suspecting it.

Conclusion

Congress subsidized a product (cellulosic biofuel) and mandates its use although that product does not exist and is punishing oil companies for not purchasing the nonexistent product. And the federal government is still subsidizing the industry in the hope that someday it might exist. All along, consumers and taxpayers are paying for the debacle whether at the pump and/or in subsidies and loan guarantees.

From: thebioenergysite.com

Read More: http://www.thebioenergysite.com/articles/1122/do-r...

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  • Steverno~POTL~PWCM~JLA 2012/06/23 06:31:56
    The EPA is out of control because....
    Steverno~POTL~PWCM~JLA
    +17
    This is a perfect example of what's wrong with the EPA.The fines are passed off in a higher price of gasoline to the American consumer.And another hidden tax for more money to Washington!

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  • Sherlock Dog BL - a Gazillion 2012/06/29 12:21:47
  • Boo 2012/06/28 20:52:14
    Other Thoughts!
    Boo
    +1
    No! They need to be done away with. They are more interested in collecting fines and putting industry out of business than they are the environment! It's a useless agency with too much power.
  • John Hall 2012/06/26 19:24:51
    The EPA is out of control because....
    John Hall
    +1
    i work for a corporation that owns refineries and i know what our company goes through .
  • none 2012/06/25 19:43:47
    The EPA is out of control because....
    none
    +1
    I think it's about time to get rid of the EPA, they are out of control and are ruining the chance for many businesses to grow and hire Americans who are out of work.
  • Stevern... none 2012/06/29 15:13:21
    Steverno~POTL~PWCM~JLA
    +1
    You haven't seen nothing yet.The EPA is getting ready to install Draconian CO2 limiting regulations.That will effect all businesses,large and small.And the "Endangerment Finding" on CO2 by the courts & the EPA will snuff out America's industrial base forever.If they have their way!

    Draconian EPA Regulations To Cause Rolling Blackouts
    http://epajobkiller.blogspot....

    The EPA CO2 regulation – Dec 7th 2009, a day we will not soon forget
    http://wattsupwiththat.com/20...
  • none Stevern... 2012/06/29 17:16:35
    none
    +1
    The EPA regulations are ruining American businesses, stopping the creation of jobs, Americans are losing their jobs, and they are helping to ruin the economy. The EPA has gotten totally out of control and they are a danger to the country.
  • Stevern... none 2012/06/29 19:24:11 (edited)
    Steverno~POTL~PWCM~JLA
    +1
    I see an impending depression for America.And a real possibly of an economic collapse.When these EPA CO2 regulations are put in place.Along with the pending tax increases from Obamacare & the ending of "Bush's tax cuts for the rich" (on Jan.1,2013).And on top of it all the bills for all the massive deficit spending start to come due.

    IMHO When all these additional government burdens are put all together.It will crush the middle class out of existence.Leaving only the super rich class,ruling elite class,government worker class & the rest of the country...the dirt-poor class.Like every other third world socialist country!
  • none Stevern... 2012/06/29 19:40:40
    none
    +1
    The fools in Washington just don't get it and from all I've seen they don't give a damn either.
  • Stevern... none 2012/06/29 20:14:24
    Steverno~POTL~PWCM~JLA
    +1
    I think it even worse.Obama and the people behind him want to "collapse the system".In order to reform the government to socialism.As envisioned in the Cloward–Piven strategy.

    http://en.wikipedia.org/wiki/...
  • none Stevern... 2012/06/29 20:47:29
    none
    They're working on it as fast as they can, the country can't afford another four years of the Obamanation. NOBAMA in 2012!
  • GeorgeAMartini 2012/06/25 05:20:27
    Other Thoughts!
    GeorgeAMartini
    +3
    I personally know two years old that have more common sense than 90% of the idiots I've had to deal with in the federal government.
  • texasred 2012/06/25 03:05:42
    The EPA is out of control because....
    texasred
    +2
    The EPA is as worthless as the U.N. They do nothing other than to try to validate their existence. I could only hope that both the UN and the EPA would cease to exist... much like the dinosaur... which is what they both are.
  • Michaelene 2012/06/25 01:38:05
    The EPA is out of control because....
    Michaelene
    +2
    The EPA iw workinging on energy espionage and I full believe they will soon attempt to nationalize our energy industries.
    It's happening in most socialist and communist countries.
  • Steve Johnson 2012/06/25 01:34:48
    The EPA is out of control because....
    Steve Johnson
    +3
    The EPA is fining oil refiners for not adding a commercially unavailable additive, while they regulate coal-burning electric plants out of commission. The EPA won't be happy until we're paying the same for gas that folks pay in Europe.
  • wysiwis 2012/06/24 23:58:10
    The EPA is out of control because....
    wysiwis
    +1
    Leave it to the EPA. The oil refineries need to tell the EPA to screw themselves, while handing them the list of providers that can't provide the product. Demand a source from the EPA that CAN provide this biocrap. Let the biocrap providers pay the fines, they are the reason it's not available.
  • CHUCK 2012/06/24 19:03:24
    The EPA is out of control because....
    CHUCK
    +1
    WE LET IT..

    TRANSPARENCY OUT THE WINDOW..

    http://www.sodahead.com/unite...
  • The Duke 2012/06/24 17:39:17
    The EPA is out of control because....
    The Duke
    +3
    It is just one more example of a government agency run amok. Not adding a non-existant biofuel? Welcome to the Twilight Zone of government bureaucracy.
  • ScottyG - Faqueue 2012/06/24 16:42:16
    The EPA is out of control because....
    ScottyG - Faqueue
    +5
    Because the agency is full of complete eco nut jobs NOT elected by any persons in the US.

    Mandate using a product that doesn't exist? Complete lunacy and beyond all logic and reason.
  • Racefish 2012/06/24 16:02:02
    The EPA is out of control because....
    Racefish
    +3
    How can they do this if it doesn't exist? Maybe these noobs don't understand the difference between "cellulosic" and "grain".
  • ★Calliope★ 2012/06/24 14:56:13
    The EPA is out of control because....
    ★Calliope★
    +6
    One more instance of ridiculous regulation.

    I think environmental crazies are driving the bus at the EPA, not thinking, rational beings.
  • ☆Ed☆ 2012/06/24 11:35:13
    The EPA is out of control because....
    ☆Ed☆
    +5
    There is NO doubt that the EPA, and environmentalists in general, are completely out of control!!!

    However, I have to wonder what the oil companies are trying to pull with this particular issue because we ALL know that, with their incredible batteries of lawyers on staff, that they could have EASILY DEFEATED the EPA's requirement!!!
  • Michaelene ☆Ed☆ 2012/06/25 00:19:32
    Michaelene
    +3
    That's not happening, many companies are getting out of the refining industry.
  • ☆Ed☆ Michaelene 2012/06/25 01:41:40
    ☆Ed☆
    +4
    Exactly my point!!!

    The oil companies could EASILY defeat the EPA and its ridiculous regulations, yet, they don't even fight!!! WHY?!?

    I honestly believe that the reductions in refineries work to the oil companies' benefit as it helps them continually raise prices due to higher demand and shorter supplies, along with the cost reductions enjoyed by the oil companies of operating fewer refineries!!!
  • Michaelene ☆Ed☆ 2012/06/25 13:18:43
    Michaelene
    +3
    I know the last 3 refineries to close in PA were due to enormous repetitve EPA fines, tons of redtape in allowing the companies to purchase oil to operate at minimum capacity, constant pressure from the EPA for new equipment or upgrades to avoid fine, safety issues due to operating at minimum capacity and 3+ years of unprecented business losses for both companies.
    No new plants are allowed to be built but a couple of plants are upgrading capacity in the Southwest.
  • ☆Ed☆ Michaelene 2012/06/25 16:51:31
    ☆Ed☆
    +1
    And that is exactly why I stated that the oil companies are USING the EPA's own regs to stuff their corporate profits in their wallets through supply and demand.
  • Michaelene ☆Ed☆ 2012/06/26 14:24:00
    Michaelene
    +2
    I find it funny that people vilify the oil industry over profits and ignore the reality that their profits are not high compared to other companies (i.e. Apple, Microsoft).
    The reason their profits are so high is because energy is a necessary commodity when compared to an Ipod.
  • ☆Ed☆ Michaelene 2012/06/26 17:02:19
    ☆Ed☆
    +2
    I agree with you, people seem to expect the oil companies to be supplying us out of the "goodness of their hearts" instead of being a "for profit" corporation. Although, as you say "energy is a necessary commodity", that is why I believe that the oil companies should be better regulated to break up their "price fixing" and "price gouging" of the public!!! While I readily accept and expect the oil companies to make profits, their manipulation of the market concerning higher travel holidays and weekends should NOT be tolerated any longer!!!
  • Michaelene ☆Ed☆ 2012/06/26 18:36:19
    Michaelene
    +2
    You are right about "price fixing" but that is not an oil company policy. It is a state and federal fixed tax on gasoline sales. So we must start there.

    WIth an increasing cost of good paying American refining and drilling and rigging and jobs factored in the cost of production along side infrastructure costs, the cost of R & D, the cost of federal income tax (the top three U.S. oil companies alone paid $42.8 billion in income taxes in 2010, according to the Securities and Exchange Commission (SEC).

    On top of that, you have a moderate fluctuation in cost of oil (with the strange spike to $147 pb during the election of 2008?)

    Our WHOLE economy could be helped by more good paying American refining and drilling and rigging and jobs, and cheaper gas!

    Price gouging is illegal and the retailer should be reported immediately. They WILL lose their license unless they know the municipal code enforcer wink wink

    In case you haven't noticed, something strange is going on with the cost of gas. Dosen't it usually go up during the summer season holidays and weekends? But it's not, it's dropping when refining costs increase due to gov't regulated additives. Yes, the even unnatainable additives like cellulostic material, fuel that should be food, and other EPA ideas.
  • ☆Ed☆ Michaelene 2012/06/27 02:57:11 (edited)
    ☆Ed☆
    +2
    I couldn't agree more, except when it comes to "price fixing". Many years ago I drove a tanker truck for Texaco and saw first hand the "price fixing" that goes on between the refineries and the stations. If an independently owned Texaco station attempted to "undercut" other Texaco stations' prices they would be QUICKLY "put on notice" to get their prices back in line. If they didn't follow the "recommendations" they would INSTANTLY find that they were completely unable to get timely deliveries of future fuel, if at all, and, according to their CONTRACT with Texaco, if they bought from ANY OTHER supplier, say a Conoco, they would immediately lose ALL rights to the Texaco name, brand, and products!!! This was true with ALL refineries and not merely Texaco.

    I believe that the drastic drop in prices for oil by the barrel is due to the worldwide economic turmoil causing the industrialized nations (especially China) to cut back on their manufacturing thus creating far less demand for fuel. And the drastic price drop at the pumps being due to the fact that, with the worldwide economic downturn creating much less demand for oil, the American oil companies are in the position that they can not claim the higher seasonal driving is creating an oil shortage, although I have NO doubt as to ...

    I couldn't agree more, except when it comes to "price fixing". Many years ago I drove a tanker truck for Texaco and saw first hand the "price fixing" that goes on between the refineries and the stations. If an independently owned Texaco station attempted to "undercut" other Texaco stations' prices they would be QUICKLY "put on notice" to get their prices back in line. If they didn't follow the "recommendations" they would INSTANTLY find that they were completely unable to get timely deliveries of future fuel, if at all, and, according to their CONTRACT with Texaco, if they bought from ANY OTHER supplier, say a Conoco, they would immediately lose ALL rights to the Texaco name, brand, and products!!! This was true with ALL refineries and not merely Texaco.

    I believe that the drastic drop in prices for oil by the barrel is due to the worldwide economic turmoil causing the industrialized nations (especially China) to cut back on their manufacturing thus creating far less demand for fuel. And the drastic price drop at the pumps being due to the fact that, with the worldwide economic downturn creating much less demand for oil, the American oil companies are in the position that they can not claim the higher seasonal driving is creating an oil shortage, although I have NO doubt as to this being very, very temporary!!!

    Also, an opinion that Stephen Moore of the WSJ pointed out concerning the current dropping oil prices was that it was NOT a GOOD sign for the economy, that it indicated even WORSE economic turmoil to come. Sadly, I have to agree with him.
    (more)
  • Michaelene ☆Ed☆ 2012/06/27 15:26:07
    Michaelene
    +2
    Sadly, I agree with Moore (and WSJ) too.
  • ruthannhausman 2012/06/24 06:52:38
    Other Thoughts!
    ruthannhausman
    +4
    I'm not highly educated in the sciences, but I've been reading and hearing an awful lot of things about the EPA that sound awfully fishy to me, period. I think that department is being used by some pretty whacky folks to do major damage to our basic industries. And they've thus far been doing a great job of that! A lot of their tyrannical shenanigans have bankrupted some pretty important businesses in our country at a time in which our glorious leader has pledged his intentions to change the basic concept of our energy industry and to literally cause prices to skyrocket in order to further justify his so-called Green Projects.

    Suffice it to say I am not very happy about what I've been learning about the EPA and I am pretty much leaning into the line of thought that the entire department needs to be wiped out, period.
  • Stix 2012/06/24 06:41:50
    The EPA is out of control because....
    Stix
    +5
    Green is the New Red...
  • ☆Ed☆ Stix 2012/06/24 11:38:26
    ☆Ed☆
    +2
    Yes indeed, just like the U.S. Navy's algae biofuel production, at a manufacturing cost of $400+ per GALLON!!!
  • KingdomNow 2012/06/24 06:07:47
    The EPA is out of control because....
    KingdomNow
    +2
    They serve no rational purpose.
  • Small man big mouth 2012/06/24 04:39:07
    Other Thoughts!
    Small man big mouth
    +2
    No way first of all right off the bat it sounds crooked its like saying you will be fined because your car doesnt run on nuclear power. Secondly the whole "running out of fossil fuels" is bs, and third the epa is just another tentacle of the United Nations that wants to control countried through sanctions and such. For example the global warming hoax. Not to mention that the u.n. Is run by a bunch of luciferian psychopaths (the theosophical society, share international, alice bailey a disciple of helena blavatsky). All in the name of sustained development tying the hands of entire economies with red tape.
  • TheTailor 2012/06/24 02:32:30
    The EPA is out of control because....
    TheTailor
    +5
    ... they are commanded by leftist lunatics.
  • Christine/Rest in peace Pet... 2012/06/24 01:02:20
    The EPA is out of control because....
    Christine/Rest in peace Peter Br
    +6
    When you threaten to close down, or fine refinaries because they are using a chemical that does not exist except in a labatory, it is the ultimate abuse of power. The sad thing is that this is probably not a mistake, but done on purpose to push the refinaries into closing. Considering that our country has over fifty percent of our electricity generated by coal, it will mean skyrocketing costs and rationed usage.
  • bob'45 2012/06/24 00:57:54
    The EPA is out of control because....
    bob'45
    +8
    The EPA is destroying this country, one insane regulation at a time. epa out of control cartoons
  • Roger 2012/06/23 22:06:35
    The EPA is out of control because....
    Roger
    +4
    If we payed attention to the constitution the epa shouldn't exist and everyone in there should be excuted for treason
  • Murph 65 2012/06/23 22:00:13
    Other Thoughts!
    Murph 65
    +4
    This is completely ridiculous and everyone knows it's ridiculous except those in the EPA where it makes complete sense. I'm wondering...do they have the guys in white coats drive these fellows to the office every morning or do they just work out of the local mental hospital?

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