January 08, 2018

The biofuel crony capitalist revolving door

Paul Driessen

Senator Chuck Grassley’s legislative director is about to join the National Biodiesel Board – to help that industry "navigate federal policy issues that most affect” its continued mandates, subsidies, growth, prosperity, and longevity as a permanent Washington and national fixture. Meanwhile, biofuel mandates are causing major problems for motorists, small engine users … and small refiners that produce gasoline and must blend increasing amounts of ethanol into smaller and smaller quantities of gasoline – or be fined or forced to spend millions of dollars buying certificates attesting to their attempts to comply with the mandates.

This crony-corporatist, fascist-style socialism means the government doesn’t own companies outright – but it does decree how they must operate, what they must produce, who pays and who benefits, and which environmental values are protected or sacrificed.

Yet another congressional aide is about to pass through Washington’s infamous revolving door to a lucrative private sector position. Kurt Kovarik, legislative director for Senator Chuck Grassley (R-IA), will become vice president of federal affairs for the National Biodiesel Board.

To grow and prosper, this industry relies on subsidies and mandates that require steadily increasing volumes of diesel fuel from crops and other sources. As the NBB said in a press release, Kovarik’s "decades of experience in the Senate will serve us well, as we navigate federal policy issues that most affect our industry.” His work on energy and tax legislation, familiarity with the key players in Washington, and knowledge of biofuels "are all reasons we are so happy to have him on our team.”

Translated into common English, Kovarik will help keep mandates inplace and revenues flowing into biodiesel coffers – even as justifications for its special treatment become less persuasive, claims about its supposed benefits are found wanting, and harmful effects on taxpayers and consumers become obvious.

Indeed, like corn ethanol, biodiesel is just one more federal program that has become a perpetual fixture, all butimmune from any revisions or reductions. That’s because powerful special interests band together to block any such attempts – and make major campaign contributions to friendly legislators.

Meanwhile, consumer interests adversely affected by the rules are too diverse, poorly organized and ill-funded to mount an effective campaign against the "renewable fuels” industry.

Thus, when the Environmental Protection Agency recently proposed a minuscule reduction in the total volume of corn ethanol required for blending into gasoline, the biodiesel lobby rose up united in righteous indignation against the idea – even though biodiesel was not being affected.

The legislatively created industries always take Ben Franklin’s warning to heart: "We must indeed all hang together,” Franklin said just before signing the Declaration of Independence in 1776, "or most assuredly we shall all hang separately.”

Billions of dollars are at stake for biofuel industries, and they will not fail to aid one another. Nor will they deviate from the narrative that plant-based fuels will somehow save Earth and humanity from the alleged ravages of planet-warming fossil fuels, even as developing nations burn more oil, natural gas, and coal every year – and the Northern Hemisphere suffers through anothernasty, frigid winter.

Biofuels from corn, oil palms, soybeans, or algae require vast expanses of land – dozens or hundreds of times more land than is needed to produce equivalent amounts of energy from coal, oil, or natural gas. That land once was or could now be wildlife habitat – and the direct and indirect effects on wildlife populations are often profound, especially when Indonesian and other forests are sacrificed on Gaia’s altar to establish oil palm plantations for illusory "sustainable, renewable” energy.

The same widespread land and wildlife impacts result from erecting wind turbine and solar panel facilities – to generate expensive, unreliable, weather-dependent electricity … and build (coal- or gas-fueled) backup generators, to provide electricity the 75% of the time when there is insufficient sun or wind.

Biofuels also require prodigious volumes of water, and in most cases huge amounts of fertilizers, pesticides, and fossil fuel energy. And when biofuels are burned in vehicles or fuel cells for electricity generation, they emit enormous quantities of carbon dioxide (CO2). In fact, across their full planting, harvesting, conversion, and use cycle, biofuels emit just as much carbon dioxide as fossil fuels.

All that extra CO2 is good for forests, grasslands, crops, and other plants – and recent studies confirm thatCO2 is greening our planetby helping plants grow faster and better. That this CO2 is also causing "dangerous man-made climate change” isincreasingly in doubt, despite what climate doomsayers continue to claim). The assertion that crop-based biofuels are "sustainable” is not supported by evidence.

In reality – as scientist, engineer, former MIT professor, and energy analyst Peter Huber observes in his book,Hard Green: Saving the environment from the environmentalists: A conservative manifesto– the best, greenest, most ecologically sound, most sustainable fuels are those that get the most energy per pound of material that must be mined, trucked, pumped, pipelined, and burned.

Supposedly, "renewable” energy sources do not pass this simple test. (Seehere,here,andhere.) But in liberal policy, media, and regulatory circles, they are routinely exempt from the criticism, calumny, and punishment so regularly meted out to fossil fuels and companies that produce them.

For poor developing countries, renewable-only energy policies demanded or imposed by World Bank, EU, environmentalist, and other interests perpetuate poverty, joblessness, disease, and malnutrition, ensuring nasty, brutish and short lives. Such policies are immoral, genocidal, and properly detested by nations determined to bring health and prosperity to their people.

Thanks to fracking and modern exploration and production technologies, the world still has decades or even centuries of natural gas, oil, and coal. For a world that still depends on these fuels for85% of its total energy, that is good news. It’s even better news for the future, when humanity will still need fossil fuels for over75% of a 28% larger total energy supplyin 2040, according to the Energy Information Agency.

Fossil fuels (as well as nuclear and hydroelectric power) should be embraced, not excoriated, and used with pride until energy sources just as reliable and affordable are discovered someday in the future.

It likewise makes little sense to promote biodiesel and corn ethanol while also advocating electric cars. That approach not only increases the demand for reliable, affordable electricity generation – an increasingly impossible dream if we are supposed to rely more and more on wind and solar electricity.

It exacerbates problems resulting from mandates that require blending ever more ethanol into decreasing supplies of gasoline for fewer internal combustion engines: e.g., having so much ethanol in gasoline for those engines that gaskets are damaged and warrantees are voided, andfraud problemsassociated with RINs (Renewable Identification Numbers) used to ensure compliance with renewable fuel standards.

Plant-based fuels that enrich regional biofuel interests increasingly cause multiple other problems for refiners that provide nearly 90% of vehicle fuels: gasoline and conventional diesel. Under pressure from Big Biofuel and corn-state senators, the EPA raised its 2018 biofuel requirement to 19.3 billion gallons, a huge increase from its 16.3-billion-gallon mandate in 2014. That means smaller, independent refiners will be unable to blend enough ethanol into their gasoline to meet the mandate – and will have to buy RINs, at inflated and unpredictable prices, to comply artificially with the impossible blending requirement.

As TheWall Street Journal notes, Dallas-based HollyFrontier Corp. must spend over $300 million per year on RINs, forcing it to freeze hiring, defer capital expenditures and investment, penalize its blue-collar workers, and transfer massive wealth from refiners to ethanol producers, whostill demand more.

The absurd situation caused Senator Ted Cruz(R-TX) to copy corn-state senators on hostage taking. (They held up EPA nominees until the agency caved in on ethanol.) Mr. Cruz is preventing action on the Agriculture Department nominee who would control a lot of biofuel money, until a compromise can be worked out between biofuel and conventional petroleum fuels. He secured a meeting but so far no deal.

Under fascist-style socialism, the government doesn’t own companies outright; it merely decrees how they must operate, what they must produce, who pays and who benefits. That’s where U.S. biofuel policies have taken America’s energy sector. It’s time to reform these policies – to reflect today’s economic, climate, oil depletion, andoil import realities– and set a time certain for ethanol and biofuel mandates toexpire. Let real free enterprise operate, instead of crony-corporatist government decrees.

Posted by: Timothy Birdnow at 10:32 AM | No Comments | Add Comment
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