Last week the EPA dismissed a petition by the American Petroleum Institute seeking relief from the cellulosic ethanol mandate, which requires that oil refiners blend 8.65 million gallons of ethanol into the fuel supply by the end of 2012:
“In all cases, the objections raised in the petition either were or could have been raised during the comment period on the proposed rule, or are not of central relevance to the outcome of the rule because they do not provide substantial support for the argument that the Renewable Fuel Standard program should be revised as suggested by petitioners,” EPA told API, American Fuel & Petrochemical Manufacturers, Western States Petroleum Association, and Coffeyville (Kan.) Resources Refining & Marketing on May 22.“EPA’s mandate is out of touch with reality and forces refiners to pay a penalty for not using imaginary biofuels,” Bob Greco, API’s downstream and industry operations director, said on May 25. “EPA’s unrealistic mandate is effectively an added tax on making gasoline.”
Greco said the Clean Air Act requires EPA to determine the mandated volume of cellulosic biofuels each year at “the projected volume available.” However, in 2011 EPA required refineries to use 6.6 million gal of cellulosic biofuels even though, according to EPA’s own records, none were commercially available, Greco said.
EPA has denied API’s 2011 petition to reconsider the mandate and continues to require these nonexistent biofuels this year, he indicated. Greco called the action “regulatory absurdity and bad public policy.”
As regular readers of this blog will know, the whole problem with the EPA’s non-flexible mandate is that there is no commercially available cellulosic ethanol, thus making it impossible to meet the mandate. The EPA’s justification for this policy is that they need to maintain an incentive for companies to begin producing cellulosic ethanol, despite many past failures. The oil refiners are also required to purchase these cellulosic ethanol waivers, effectively giving the government money instead of purchasing the non-existent fuel.
If we assume, as argued, that this mandate is an “added tax”, how much tax is it? It would be a good point to make regarding the current price of gasoline, if we could point to how much of the price rise over the past few years is a tax for not buying ethanol that doesn’t exist.
EPA has research laboratories. EPA does research on technical issues. Why does EPA not establish a special purpose laboratory to perform and fund research on ways to produce cellulosic ethanol. EPA could divert the $10s of millions that EPA now is funneling to environmental activist groups into developing cellulosic ethanol. Of course, if they cannot find the holy grail before the deadline, then EPA has to drop its insistence that we use mythological ethanol. On the other hand, if EPA finds a way, they can license the process to energy companies and collect the royalties. This scheme would produce large quantities of earned cash for Government coffers and would resemble extortion only a little bit.