Biofuels have recently been touted as a “green” alternative to gasoline. Biofuels are a type of ethanol gasoline made from wood, grass or other agricultural waste such as corn husks. Despite the EPA’s efforts, the market for these fuels has remained virtually non-existent. The solution, as the EPA sees it, is to mandate the use of biofuels in gasoline by requiring that any transportation fuel produced also contain a certain percentage of biofuel. They stated in a recent letter that “the standard that we set helps drive the production of volumes that will be made available.” Scanning some recent headlines, it seems that biofuels are not able to win on their own in the market. Despite the EPA’s efforts to champion them, even the mandates aren’t able to create a demand.
Biofuel-blending battle rages on as EPA releases new projections
Recently, a court struck down fines to oil and gas companies for not complying with the EPA rule that gasoline contain a certain percentage of biofuels. Gasoline companies were not defying the rule in outright protest, but because the fuels simply do not exist. The EPA mandate would have required 8.65 million gallons to be added to gasoline last year. There was no biofuel produced in 2010 and 2011–in 2012 only 21,000 gallons were produced.
“The court recognized the absurdity of fining companies for failing to use a nonexistent biofuel,” said Bob Greco, director of downstream operations for the American Petroleum Institute, the principal lobbying group for the oil and gas industry.
But just a week after the court struck down any fines or responsibility for not using the non-existent fuel, the EPA mandates were issued for 2013. Instead of going down, the mandates were raised to a whopping 14 million gallons!
Canada to end biofuel subsidy in 2017
Canada, on the other hand, has recognized that the biofuel industry is not sustainable, requiring billions in subsidies and likely causing fuel and grain prices to rise for consumers. They have repealed the biofuel subsidy and will phase it out over the next 5 years.
The government biofuel mandate in the United States has created a system of biofuel “credits,” which in turn has led to a new kind of scam. Instead of buying the fuel to add to gasoline, gas companies can opt to buy “credits” for biofuels produced and used elsewhere. One man was recently sentenced to prison time for selling these credits to companies but not actually producing any of the 23 million gallons of biofuels to back them up.
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