Skip to comments.The Biofuels Fiasco - Rube Goldberg would recoil in horror from this regulatory contraption [Iowa]
Posted on 10/28/2011 12:45:47 AM PDT by Cincinatus' Wife
So the United States now imports ethanol from Brazil to meet the federal mandate for ethanol use, and yet those imports are subject to a 54-cents-per-gallon tariff to protect the U.S. domestic ethanol industry. Ethanol is also imported from Canada, which is not subject to a tariff, and owing to trade agreements and foreign policy considerations, the United States is committed to importing ethanol from all Caribbean Basin countries, with special set-asides for El Salvador and Costa Rica. Remember: Despite all this import and export activity, ethanol policy was justified on grounds of U.S. energy independence.
Yet, just as the shortfall of advanced biofuels has created a new demand for Brazilian sugar ethanol imports, Brazil has reduced its ethanol production. In fact, Brazil has even begun to import ethanol to meet its own biofuel mandates. Imports into Brazil so far in 2011 include corn ethanol from the United States. Before long, ships carrying U.S. corn ethanol southbound could regularly pass ships carrying Brazilian sugar ethanol northbounda sort of splash and dash part two, driven by the U.S. mandate for advanced biofuels rather than by a tax credit.
On top of all the complexity of the tax credits, tariffs, and the import quotas, the federal mandate by feedstock category creates an intricate compliance system. Energy companies who comply with blending regulations to meet the mandate are issued a renewable identification number, known as a RIN. These are 38-character numeric codes to trace the transfer of biofuels. Even the National Biodiesel Board itself confesses that a RIN may look, at first glance, like a wicked advanced algebra problem, but in reality, it is the basic currency for . . . credits, trading, and use by obligated parties and renewable fuel exporters to demonstrate compliance, as well as track the volumes of renewable fuels.
There is a sophisticated secondary market for RINs among obligated partiesi.e., energy companies who must blend biofuels into petroleum-based fuels to meet the standards. Companies who earn RINs may sell them to companies who dont. It is a miniature cap and trade regime.
Energy companies who cannot procure advanced biofuels on the market because supplies are not available are forced to buy RINs. Given the production situationoverproduction of corn ethanol combined with severe underproduction of advanced bio-fuelsit came as no surprise to industry observers when a Maryland biodiesel producer was indicted for fraudulently selling counterfeit RINs.
Finally, as if that werent enough, in the offing lurks another compliance challenge. The 2007 energy statute limits the production of crops for biofuels mainly to land that was existing agricultural land at the enactment of the bill. Specifically, that means land that was cleared or cultivated prior to December 19, 2007, and since that time has been in continuous agricultural use. While the fuel market is a little more than halfway to its ultimate 36 billion gallon goal for biofuel use by 2022, land use is already at 98 percent of that cap. Once the cap is met, each gallon of biofuel will have to be classified by its feedstock and also certified to have originated on preexisting farmland. More regulation, more record keeping, more costs.
Ethanol started out as the quintessential subsidy program back in the 1970s. It cost a large number of taxpayers a relatively small amount of money apiece to provide a large benefit to a relatively small number of beneficiaries. It didnt hurt that most of the beneficiaries wereand still arein Iowa, where 25 percent of all ethanol is produced. Average farmland prices in the Hawkeye State have grown from about $2,600 per acre to $6,400 per acre since 2004, the year before the latest mandate was put in place. In 2004, owning 385 acres of typical Iowa farmland made you a millionaire. Today 160 acres will do the trick.
If politicians had set out to cater to and enrich some of the most influential voters in our presidential primaries every four years, they could scarcely have come up with a more ingeniously targeted policy. But the program is now starting to collapse under the weight of its own complexity and market distortion. Indeed, biofuels policy is now recognized by many of those same politicians as a program of dubious if not harmful environmental impact that imposes major costs on taxpayers and food consumerswith additional costs to motorists soon to come.
There are proposals in Congress to establish a trigger based on corn stocks to waive the corn ethanol mandate temporarily, to let states opt out of the federal mandate, and to deny the tax credits afforded biofuels. Those proposals are intended to address the budgetary costs and the now-widely recognized food versus fuel impact of biofuel -policy. But, even if they are adopted, a mind-numbingly convoluted regulatory regime will be left in place. As long as Iowa looms large in our -quadrennial selection of presidential candidates, dont look for leadership on the issue to arise in this White House, or its successors.
Well, Gov. Rick Perry HAS addressed these issues. The author understands bio-fuel energy is a political hot potato not likely to be addressed by the candidates but as he has done with the immigration and national security problems facing us on the Mexican border, Gov. Perry takes on the important issues, tells you what the problems are, where he stands and what needs to be done.
And if you read the entire piece you'll find this as well as other good information: ["The Environmental Protection Agency is finalizing a regulation to allow 15 percent blends (so-called e-15), but even the EPA has admitted this can harm engines, issuing a statement warning that all motorcycles, all vehicles with heavy-duty engines, such as school buses, transit buses, and delivery trucks, all off-road vehicles, such as boats and snowmobiles, all engines in off-road equipment, such as lawnmowers and chain saws, and all model year 2000 and older cars, light-duty trucks, and medium-duty passenger vehicles (SUVs) are prohibited from using e-15. Needless to say, this will cause chaos at the gasoline pumps."]
......"We dont need to have government picking winners and losers in this business, Perry said during a news conference in Des Moines. Let the folks get out there with the regulations off their back. I have a good idea that the farmers in Iowa can compete with anybody in the world........
Talk about mission that has crept so far that it doesn’t meet either of its two original goals.
Combine a Perry energy policy with a Cain immigration policy and you might have something great.
Good morning. Our time on FR seems to overlap. I’m starting my day.
"Green" has turned our economy and rational thought on its head. Perry's been going after the EPA -- regulations, lawyers, federal dictates -- they're on his Washington TO DO list big time.
thanks for the post
CALIFORNIA: .Texas Gov. Rick Perry has become a folk hero for people like Stewart as he's marketed his state as a low-cost and business-friendly alternative to California, which is fertile job-hunting ground for Perry.
Texas has added 929,000 jobs since 2001, while California has lost approximately 635,000 manufacturing jobs in that same time, Stewart said.....
Perry has taken the state's regulatory process and managed it himself, Stewart said
[CA Economic Development Corporation President Mark] Lascelles emphasized that it does no good to belabor California's regulatory environment.
"Unfortunately, we can't avoid it. We have to deal with it," he said. Speaker focuses on job creation
Sept 12, 2011From Treehugger - A Discovery Company ..For a flavor of what's to come we have only to look to Texas Governor Rick Perry, who seems to channel the vibe pretty well and gets only the rare local challenge .. Instead of dealing with the realities of climate change--regardless of whether you or they think it is caused by human activities--Texas politicians will keep playing the lynch mob role toward EPA, at least until the next Presidential election is over. It works as a political strategy - for now ..
Sep 20, 2011: Ex-President Clinton: Green movement needs money " NEW YORK (AP) -- Former President Bill Clinton said Tuesday that the success of the alternative energy movement is hampered by a lack of financing. His comments came as world leaders attending his annual philanthropic conference expressed fears about rising seas.
The ex-president's three-day Clinton Global Initiative for VIPs with deep pockets began Tuesday with a frank discussion about addressing global climate challenges, co-hosted by Mexican President Felipe Calderon and South African President Jacob Zuma.
There was a sense of frustration among the world leaders over the failure to create a legally binding world agreement on carbon emissions.........."
When they wouldn't renew the waiver, and it was being discovered that MTBE is nasty stuff, that left only ethanol as an approved oxygenating additive.
We were in short supply, then, and importing Brazillian ethanol to make up that shortfall. Now, it's worse.
The EPA said the flexible permits Texas issued were unclear and confusing and obscured the true nature and amount of plants emissions. Texas assigned a single big number to a plant, some covering more than a square mile; the EPA demanded a separate number for each emission source in the plant in order to boost clarity and make enforcement easier. The EPA disputed other technical aspects as well.
Armendariz ordered the affected plants, eventually numbering about 140, to respond with plans to seek permits in line with federal law. If Texas refused to change its permit system, the EPA would take the permits over and issue them itself.
For Perry, the EPAs effort epitomized an overreaching, command-and-control approach that put a target on the back of a state where he maintained business-friendly ways had created jobs and cut pollution while the national economy suffered.
His supporters said federal censure of Texas air-pollution policies also masked Democratic payback to a solidly Republican state.
Thats when Perry issued his warning that the EPAs rejection of Texas flexible permits would kill tens of thousands of Texas jobs. He cited the number repeatedly, at one point even blasting the EPA in a news release datelined Shanghai while on a trade visit there.......
Energy companies who cannot procure advanced biofuels on the market because supplies are not available are forced to buy RINs.
anybody seen Al Gore?
This is quite a hole we find ourselves in.
....”ABC News recently reported that a $529 million loan from the Energy Department was used to back an electric car company, Fisker Automotive, that is creating jobs in Finland and not in the U.S. The loan announced in 2009 to Fisker Automotive was part of the Energy Departments Advanced Technology Vehicles Manufacturing (ATVM) loan program that was initiated during the Bush administration.
The loan to Fisker Automotive financially benefited Al Gore and his billionaire venture capital business partner John Doerr, who is a member of President Obamas Council on Jobs and Competitiveness and a big political donor to Democrats. Al Gore and John Doerr are partners in the venture capital company Kleiner Perkins Caufield & Byers (KPCB).”.....
Yes, but it is one we can drill our way out of (with a little help from the Canadians via the pipeline).
If offshore was reopened, including Alaska, the offshore areas left to the States (look at the revenue potential vs. the number of coastal States in the red), and onshore areas opened up as well (Federal Lands), the disaster coming up from the new Caliphate being formed in North Africa and the Middle East imposing an embargo won't materialize, and dollar's reserve currency status would be nearly moot if we produce enough of our own.
Otherwise, we're likely in for hard(er) times.
There was a sense of frustration among the world leaders over the failure to create a legally binding world agreement on carbon emissions..........”
Aw jeez, not this $#1t again. Our enemy...carbon. The God players at it again. A failure that is really a resounding success.
If we can’t repeal regulations like this that everyone concedes are harmful, then I don’t see how we’ll ever get rid of Obamacare.
And now there is the threat of a Third Party sticking it’s nose into the mix. The last paragraph in the article is the money quote:
“That start is certain to be an interesting experiment no matter what happens. But its real potential will come in 2014 and beyond if it can stay on the ballot and break the two parties’ oligopoly in congressional elections, where the real problem lies.”
Chaos is the natural result of government meddling. When do we declare Carter’s Energy Dept. a failure and dismantle it?
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The inmates are running the asylum.