EDITORIAL: Imaginary optimism

The EPA sets a quota for a product that doesn’t exist

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Only in Washington would it take eight months to come up with a production quota for an imaginary product. The Environmental Protection Agency, which is all too real, announced this week the latest renewable-fuel standards, which were due in January. Now the oil companies must produce 6 million gallons of cellulosic ethanol, down from last year’s target of 11 million.

That’s still 6 million gallons too many, because cellulosic ethanol exists only in the fertile imagination of green fanatics. Environmentalists fantasize about a process for converting wood and switchgrass into the biofuel known as cellulosic ethanol. Oil companies could stop drilling for oil. Cellulosic ethanol will, they assure us, eliminate U.S. dependence on the Middle East and guarantee a cooler planet with less carbon dioxide. Unfortunately, fantasy dies hard in the cold light of the real world.

This magic elixir can so far be made only in a laboratory, and it’s impractical to produce in large quantities. Nonetheless, under a law signed in 2007 by President George W. Bush, the EPA tells fuel refiners how much imaginary product must be pumped into the gasoline supply.

The politicians insisted on production of 100 million gallons of switchgrass gasoline in 2010; the producers missed the target by 100 million gallons. Last year, the law demanded 500 million gallons of the stuff. The producers laid another goose egg. Of 10 plants humming with billions of dollars in government biofuel subsidies, only one plant remained active enough to refine a few gallons in an expensive pilot project. This year, a production “breakthrough” yielded enough cellulosic biofuel to meet 0.01 percent of the original congressional mandate.

Such nonsense has real consequences for everyone. “The continued push to mandate phantom fuels like cellulosic biofuel,” says Thomas Pyle, president of the Institute for Energy Research, “is driving up the cost of energy and food for everyone, disproportionately hurting middle-class and lower-income families.”

For every gallon of cellulosic fuel that the oil industry doesn’t produce, it must purchase a 38-digit renewable identification number from a politically connected firm as an environmental offset. This credit can be traded in an artificial, government-created market. It’s an invitation for corruption. The EPA has admitted that 140 million of these credits were fraudulent. Several companies of dubious origin concluded they could pocket actual cash by selling an imaginary offset for an imaginary product.

A bipartisan consensus is developing in Congress that the ethanol program is out of hand and that the law must conform to reality. Sens. David Vitter of Louisiana, the ranking Republican on the Environment and Public Works Committee; Mark L. Pryor of Arkansas, a Democrat; and James M. Inhofe of Oklahoma, a Republican, wrote to President Obama last week urging him to waive the 2014 standards “to ensure additional adverse impacts do not occur.” The senators want to give the industry breathing room “while Congress continues to examine options for a long-term policy solution.”

The permanent solution is not to amend this bad law, but to repeal it. The 2007 Energy Independence and Security Act not only drives up the price of gasoline, it bans the incandescent light bulbs that nearly everybody wants and pours more corn into automobile fuel tanks. Congress and the administration are incapable of predicting technology trends. They’ll learn the hard way to trust the market.

The Washington Times

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