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EDITORIAL: Clean green fraud

Government’s ethanol mandate invites corruption

- The Washington Times - Wednesday, February 8, 2012

The spectacular failure of Solyndra opened a lot of eyes. Yet the bankrupt solar panel manufacturer is far from the only fly-by-night outfit to take advantage of the current "green energy" fad. No program is more ripe for abuse than the renewable fuel standards set by the Environmental Protection Agency (EPA).

Last week, House Energy and Commerce Committee Chairman Fred Upton, Michigan Republican, and Energy and Power Subcommittee Chairman Ed Whitfield, Kentucky Republican, opened their own investigation into the fraudulent outfits that sell tradeable biodiesel fuel credits to legitimate companies that need to meet the arbitrary mandates established by the EPA and Congress.

In 2007, President George W. Bush signed a law declaring 36 billion gallons of ethanol would be used in gasoline by the year 2022. Though the move purportedly would help the environment, it's no secret that the corn fuel mandate has more to do with politicians seeking Midwestern votes. There wasn't a lot of thought put into the consequences of this unrealistic and pointless command handed down from above.

As a result, each fuel refiner and importer has to meet a quota of "renewable" fuel that must be blended into proper petroleum products. For 2012, EPA decided the total amount needs to add up to 15.2 billion gallons. Companies that can't meet the target on their own can purchase credits from renewable fuel producers. These credits are available on the EPA Moderated Transaction System, a trading scheme that lets companies that claim an abundance of "green" fuel to rake in the cash. It's basically a government-run equivalent of the Chicago Climate Exchange that would have sold "carbon credits" had Congress enacted cap-and-trade legislation.

Beginning in 2009, the Maryland-based firm Clean Green Fuel sold credits representing 21 million gallons of biodiesel on the EPA trading system. This company was a model of political correctness, claiming it dispatched employees to collect waste vegetable oil from 2,700 nearby restaurants so that it could be converted into fuel. According to EPA, however, Clean Green had no facilities to collect or convert anything. Court documents assert that Clean Green's owner pocketed $9.1 million in cash, which he then used to collect quite a carbon footprint from more than two-dozen luxury and sports cars, including several Ferraris, a Lamborghini and a Bentley purchased with a check for $377,210. Court documents also show the owner's wife enjoyed $81,950 worth of diamond jewelry.

While the U.S. attorney is going after Clean Green, EPA is passing the blame to the 24 oil companies and brokers that purchased credits from the apparently fraudulent firm. In November, EPA sent notices of violation, insisting it is up to credit purchasers to verify that they are not buying flim-flam credits. Failure to do so exposes legitimate oil producers to penalties of up to $32,500 per day.

Such absurdity naturally follows when the government creates an artificial market. The best way for Congress to address the fraud problem is to pull the plug on the renewable mandate entirely.

The Washington Times

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