The EPA’s Alt-Fuels Tax

An oil and gas trade group filed a lawsuit Monday challenging the Environmental Protection Agency’s renewable fuel regulations, saying the rules are unachievable and amount to a stealth tax on the industry. The American Petroleum Institute has requested that the D.C. Circuit Court review the EPA’s rules for cellulosic biofuel, a renewable fuel source made out of plant material such as switch grass and woodchips. In a statement, API Director of Downstream and Industry Operations Bob Greco said the EPA’s mandate was “divorced from reality” and “forces refiners to purchase credits for cellulosic fuels that do not exist.” The EPA’s renewable fuel standards were first passed in 2007 and require refiners to blend certain amounts of renewable fuel annually, including cellulosic biofuel. In 2010 the mandate for cellulosic fuel was 100 million gallons, rising to 250 million in 2011 and 500 million in 2012. However, there is no commercially available cellulosic fuel available in the United States. Rather than waive the mandate, which it has the power to do, the EPA lowered the target to 6.6 million gallons for 2011 and 8.65 million gallons for this year. Refiners must buy a 78-cent waiver credit for every gallon under the target, amounting to approximately $6.8 million in penalties paid to the Treasury. And that’s not counting the other costs of the mandate...more