The Wood Chip Solyndra
Everyone has heard of Solyndra, the shuttered company that cost U.S. taxpayers a cool half a billion in ARRA “stimulus” money in a solar panel scandal. It’s the poster child of government green technology waste under President Obama.
What nobody has heard of is a similar outrage started under President GW Bush.
In this one, instead of solar panels, something called “cellulosic ethonol” is the culprit. The renewable energy source is different, but the net result is the same… a massive waste of taxpayer money on a well-intentioned big government idea.
There is more intrigue to the story. The EPA started it all.
In 2005 the EPA mandated that a non-existent additive be put into every gallon of gasoline you buy! That mandate contributes to higher gas prices today. Isn’t that special?
MarketWatch reports that oil refiners are suing the EPA over the cellulosic ethanol requirement.
This boondoggle could be called the “wood chip” Solyndra.
What is “cellulosic ethanol”?
It is a concept. The concept is to produce a renewable ethanol biofuel from unwanted leafy plants, grasses and wood. By far, the largest source for this biofuel would be wood chips.
It is a different process than producing biofuel from corn or sugar cane. The EPA already requires a 15% blend of that biofuel in your tank. In the U.S. most of it is made from corn. That, of course, drives up the cost of corn and corn-based foods.
The great thing about making biofuel from wood chips is that nobody uses them for much.
In Steps the EPA!
Anticipating that the technology to produce cellulosic ethanol would be invented, the EPA jumped the gun and created a regulation requiring it to be added into every gallon of gasoline sold.
Being the benevolent agency it is, the EPA created Rule 40 CFR 80.1456 where affected oil refiners can buy waivers from the government if they fail to meet the cellulosic ethonol requirement.
Producers have bought the waivers ever since. That contributes to higher gas pump prices.
What Happened to Cellulosic Ethanol?
According to a Bloomberg story last December, “Range Fuels Cellulosic Ethanol Plant Fails, U.S. Pulls Plug“, a taxpayer supported company called Range Fuels Inc. went belly up… just like Solyndra did.
It cost us less than Solyndra. This time it was maybe $156 million. Dramatically, it was approved on the last day of the Bush Administration on January 19th, 2009.
The reason it folded is because Range Fuels could not produce cellulosic ethanol. The government foreclosed when the company defaulted on its loan payments. Now its gone and so is the $156 million.
Unlike Solyndra and solar panels, Range Fuels apparently was the only existing cellulosic ethanol plant.
The Oregon Gotcha
Scandals like this can have far reaching unintended consequences. Take Oregon, for example.
Like Wisconsin, Oregon elected a new governor in 2010. He, too, faced a $3+ billion deficit to solve and a state law requiring him to balance the budget. Oregon’s innovative new governor, John Kitzhaber, quietly solved his budget crisis.
Under very tight fiscal constraints, Kitzhaber sought and got approval to spend $200,000 to explore the feasibility of turning waste timber underbrush into wood chips in an economically depressed area of southern Oregon. It was to become a long-term supplier for cellulosic ethanol production.
In one of the precious few new spending initiatives he asked for, Kitzhaber hoped it would be a job creating investment in Oregon’s economic future.
It was a clever idea from a clever man.
Then the bottom dropped out in 2011. Whoops!
Like Solyndra, this is yet another example of well-intentioned big government ideas gone awry.
It not only wastes taxpayer money up front, but unnecessarily costs all consumers more for the energy they need. In a depressed economy it’s a lose-lose proposition. It takes money out of the economy that would otherwise generate demand to revive it.
The reasons for it were well-intentioned… to promote a clean environment and fight global warming. The EPA is creating zillions of regulations that drum up money which the government can plow into green energy. The ill-fated cellulosic ethanol regulation is just one of them.
No one expects all government ideas to work out. But here is one idea that can… natural gas!
Natural gas is America’s domestic energy future. It is cheap, plentiful and is creating thousands of jobs all over the place.
And – YES – right now today it IS reducing U.S. CO2 and other greenhouse gas emissions!
It is eco-friendly.
The EPA seeks to regulate and reduce its production to promote and fund renewable energy initiatives.
Someone in government, especially at the EPA, needs to wake up and smell the roses.
(Note: Special thanks to Jim Gourdie for bringing cellulosic ethanol to people’s attention)