The Energy Policy Act of 2005 mandated that the Environmental Protection Agency (EPA) implement a Renewable Fuel Standard forcing fuel refiners to dilute their petroleum products with vegetable oil, corn, algae and animal fat so companies that label themselves “green” would reap a financial windfall. Refiners who can’t make those substances on their own are allowed to buy renewable-fuel credits to meet their federal quota. Each credit carries a 38-digit renewable identification number (RIN) as proof of purchase. The credits can be traded.
As this is an entirely artificial market that serves no purpose other than to make politicians and their political donors happy, it’s rife with fraud. Since November, the EPA has claimed 140 million invalid RINs have been sold. The agency alleges 48 million bogus credits came from Absolute Fuels of Texas, netting about $62 million. Another 32 million were purportedly sold by Clean Green Fuel LLC in Maryland for $9 million, and 60 million were marketed by Green Diesel of Texas, worth $84 million.
House Republicans expect the scam to hit at least 300 million fake credits. “Unfortunately, the production of and trade in fraudulent or invalid RINs has developed into a large and growing problem,” wrote House Energy and Commerce Committee chairman Fred Upton, Michigan Republican, and three other committee members in a May 24 letter to EPA Administrator Lisa Jackson. “And EPA’s efforts to address the problem so far appear ineffective, and in some respects have harmed the renewable-fuels marketplace.”
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