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.

To this day, not a single drop of cellulosic ethanol has ever been commercially produced!

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)


About azleader

Learning to see life more clearly... one image at a time!

Posted on Jun 22, 2012, in climate change, culture, economics, energy policy, Global Warming, Life, news, Opinion, Politics, Thoughts. Bookmark the permalink. 8 Comments.

  1. Thanks for the nod. You can’t make this stuff up, can you. Insanity in action!

  2. When trying to promote and develop new technologies there will be failures along the way. It is part of the process. Certain measures can be taken to protect our investments but there will always be risk. What I find most damning relates to your last point about natural gas. In addition to investing in new sources of energy we should also expand available sources that could be used to reduce CO2. As you mentioned natural gas can do this. Natural gas could serve as an intermediary to get us off oil until some newer technologies develop more fully. Its cheap, we know it works. For example using natural gas in cars could signifigantly reduce pollution. We just need to invest in the infrastructure to make natural gas more available at gas stations to make natural gas powered cars more viable for consumers.

    Our goal should be to completely switch to co2 free renewables, however sometimes it is necessary to take intermediate steps before fully achieving this goal. I think converting our auto fleet to natural gas is practical and would be very beneficial to our environment and reducing our dependence on foreign oil.

    • I strongly believe that an all-of-the-above energy strategy is essential to America’s future at so many levels.

      Further, I strongly believe that safe, eco-friendly and environmentally safe energy development of all types is equally as important. Renewables can and will play a growing roll in America’s energy future.

      Costly mistakes like Solyndra and Range Fuels will be made along the way. We must shake them off, learn from them and move on.

      What is not in doubt is that Natural Gas will play a pivotal roll in our energy future through 2035 and probably decades longer. That train has left the station and built up a head of steam!

      It is environmentally friendly and has done more to reduce CO2 emissions than the IPCC has since Kyoto. It is ironic that the U.S. never signed onto Kyoto.

  3. The cost effective, resource efficient way to produce ethanol is with sugar cane, not wood chips or even corn. Sugar cane is a worthless plant except for its sweet juice. We should use it, but government policy puts heavy armor in the way like bans from Cuba and import duties on ethanol from Brazil. We do this to prop up American farmers, but the end result is we are wasting our precious land to use a food substance which can help the hungry instead to fuel our suburban lifestyle SUVs.

  4. Wood chips are hardly an unwanted byproduct. It is used as bedding for large animals, pellets for heating, and of course landscaping, to name a few. During the housing bust, the price spiked. You got to love capitalism……a nice market (already) exists for what was once a waste/headache for the timber industry.

    E85, etc have been a challenge for the small engine markets. The problem being that ethanol is ~ 50 times more hygroscopic than non-ethanol gasolines. Everyone is advised to dump their fuel every 100 days and to NEVER leave it in the unit when not is use, especially in cold months where the gas/absorbed water will separate. Ironically, our local emergency services folks use non-ethanol gas, because they need their equipment to start. The rest of us are left to fiddle around…….. Thanks EPA!

    • Wood chips, of course, have many useful purposes… its just that they are not food products like corn and sugar cane. I still remember the cone shaped wood chip burners once common in the timber industry. Fortunately, they are all gone now.

      What is great about Oregon Governor Kitzhaber’s idea is that he advocates harvesting forest wastes and dried underbrush in forests that make wildfires worse. Nobody does anything with most of that wood. Its a smart idea. It kills two birds with one stone.

      In the guise of its legitimate function to protect the environment, EPA regulations target limiting development of 80% of U.S. total domestic energy. It actively stifles production of that source. It is this nation’s most abundant, affordable energy resource for at least 50 years to come… fossil fuels.

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