23 December 2012

Going Green



Bioversel Trading hired CN Rail to import tanker loads of biodiesel to the U.S. to generate RINs, which are valuable in the U.S. because of a "greening" policy regulating the petroleum industry. The EPA's "Renewable Fuel Standard" mandate that oil companies bring a certain amount of renewable fuel to market, quotas they can achieve through blending biofuel with fossil fuel or by purchasing RINs as offsets.
Because RINs can be generated through import, the 12 trainloads that crossed into Michigan would have contained enough biodiesel to create close to 12 million RINs. In the summer of 2010, biodiesel RINs were selling for 50 cents each, but the price soon fluctuated to more than $1 per credit.
Once "imported" to a company capable of generating RINs, ownership of the biodiesel was transferred to Bioversel's American partner company, Verdeo, and then exported back to Canada. RINs must be "retired" once the fuel is exported from the U.S., but Bioversel says Verdeo retired ethanol RINs, worth pennies, instead of the more valuable biodiesel RINs. Bioversel claims this was all perfectly legal.
However, one of the companies Bioversel approached to be the ‘importer of record’—Northern Biodiesel Inc. of Ontario, N.Y. — discovered that the same fuel was going back and forth across the border and the same gallons were being used to repeatedly generate new RINs under their company’s name. The company called the EPA and also sent a letter that would become an open letter to the biodiesel industry, accusing Bioversel of “trying to perpetrate a fraud against NBI and the Renewable Fuel Standard program.”

I think the only person who could love this story is Paul Krugman because while Bioversel broke a few metaphorical windows in the process of pretending-to-but-not-actually-saving the planet, it at least provided some stimulus in the form of extra jobs.

Anyway, what’s really great about this story is how the efforts of the green lobby have not only been a colossal waste of money, but have actually ended up harming the planet even more than would have ordinarily been the case, at least by the standards of those who propose these sorts of policies.  Basically, the green lobby is not only wasteful, but also harmful.  And so, while the green lobby should have been disbanded simply because it imposed unreasonable costs on the American taxpayers, it appears that it should also be disbanded because it is fail.

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