It really strikes me as odd when I hear the Environmentalist crowd demagoguery on protecting the earth “at ALL costs,” even if the cost is too great and may even do damage to the marketplace.

I came across an article recently from the Independent Institute on the Environmental Protection Agency trying to push gasoline and diesel fuel refiners to transition from the use of fossil fuels to using the alternative, cellulosic biofuel. The Orwellian Energy Independence and Security Act of 2007 is making this coercive push. This act required refiners of gasoline and diesel fuel to mix 6.6 million gallons of cellulosic biofuel into petrol products shipped to market in 2011. 6.6 million. This year the quota has been raised to 8.65 million gallons of cellulosic biofuel.

The problem with this alternative fuel, as pointed out by William Shugart of the Independent Institute,  is it’s lack of commercial availability. Yet and still, the EPA waits with baited breath to lay down billion dollar penalties on the refiners for not meeting the quota of produced cellulosic biofuel. If that isn’t bad enough, with the quota for this year being raised, knowing that the quota can not be realistically met, this will mean deeper penalty costs.

If the intent of the EPA was to spur cellulosic biofuel as a profitable good, then their regulatory efforts have backfired. With the excess of penalties due to the oil refiners, the EPA will want to keep prices of the cellulosic biofuel artificially high which, economically, makes absolutely no sense and will only result in a waste of precious resources and money. If there is no desire nor profit-potential for the product on the market, then it will make no sense in investing money in it when the the resources can be spent on other useful means. Furthermore, it backs up the argument of the obsolescence of government investment and coercive compliance in private market affairs.

Having said that, this can be added to the list of regulatory nonsense brought on by the EPA and quite honestly, the best solution for this nonsense would be a full repeal of the EPA. Considering that it is the driving force of regulatory burden on businesses (namely, the smaller ones) in the market today, it would definitely lift a lot of the burden on the market and facilitate energy market practices.
-Nathan

Sources:  http://blog.independent.org/2012/01/14/take-or-pay-at-the-epa/ ;
http://www.sba.gov/sites/default/files/rs371tot.pdf

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