Refining companies face $7M in fines for not adding nonexistent additive to fuels

January 22, 2012 10:21 PM

Refining companies face $7M in fines for not adding nonexistent additive to fuels
posted by leffler (50 comments total)

I am not an expert, but I'm gonna take a shot in the dark and say that seven million dollars is chump change to these companies.
posted by zardoz at 10:26 PM on January 22 [18 favorites]

Well, if it's good enough for the spokesman for the National Petrochemicals and Refiners Association, then it's good enough for me!
posted by joe lisboa at 10:26 PM on January 22 [6 favorites]

On its face, of course, this seems absurd. But what happens if you write the law such that the fines only kick in if the blend is available and oil companies deliberately make it difficult for EPA to declare blends that are commercially available by normal standards available. It opens up a huge loophole for exploitation.

However, wouldn't it have been better to mandate characteristics and not specific technologies beyond perhaps stating that alcohol made from edible food would not count?
posted by wierdo at 10:37 PM on January 22

So let me get this straight, the oil industry has had since 2007 to figure out how to digest and ferment cellulose (hint - cows), hasn't bothered, and now they're crying because they don't have any of this stuff they knew they were going to be required by law to use four years ago and now I'm supposed to feel sorry for them?
posted by Kid Charlemagne at 10:41 PM on January 22 [34 favorites]

Bullshit. The cost of the fines was not worth the cost of investing in the development necessary to avoid them. For fucks sake this is a country that built an atomic weapon FROM SCRATCH in four years, to do it we built FUCKING RIDICULOUS centrifuges capable of SEPARATING ISOTOPES, we developed Teflon because nothing else could hold the caustic materials needed, built reactors to generate ELEMENTS that were up until then only theoretical, and we made the whole damn thing work the first time. Not only that but we build a second COMPLETELY DIFFERENT bomb in parallel just to be sure. These oil companies had the same four years to manage to turn carbon compunds into somewhat more useful carbon compounds.

Impossible my ass.
posted by Blasdelb at 10:42 PM on January 22 [111 favorites]

Ladies and gentlemen: your liberal media!
posted by joe lisboa at 10:44 PM on January 22 [13 favorites]

Impossible, no. Cutting into precious profits? Yes.

All hail the short-term bottom line, the only thing that matters. Ever.
posted by fifteen schnitzengruben is my limit at 10:44 PM on January 22 [9 favorites]

But what happens if you write the law such that the fines only kick in if the blend is available and oil companies deliberately make it difficult for EPA to declare blends that are commercially available by normal standards available.

Not to mention that most oil companies have massive investments in their own supply chains. If they don't like paying the fine this year, there's a simple solution: they can invest in cellulosic biofuel technology now and then sell the extra fuel to everyone else a few years down the line. And if they're not doing that, as Blasdelb points out, then perhaps the fine isn't as high as it ought to be...
posted by vorfeed at 10:47 PM on January 22 [3 favorites]

Mr. Drevna of the refiners association argued that in contrast to 2007, when Congress passed the law, “all of a sudden we’re starting to find tremendous resources of our own, oil and natural gas, here in the United States, because of fracking,” referring to a drilling process that involves injecting chemicals and water into underground rock to release gas and oil.

Pretty shitty attitude there. "Yeah but we found all this other oil so we don't want to do that other thing because it's too hard and costs money."

Not to fully undermine the complaint. I largely agree that being punished for not using a product that doesn't exist is ridiculous. It could make a bit of sense if the fine went towards funding biofuel production, maybe.

But then there's this:

The underlying problem is that Congress legislated changes that laboratories and factories have not succeeded in producing. This is not for want of trying, and efforts continue. [... mention of failed efforts or ones ramping up now but not currently producing biofuels, which also all seems a bit unexplained to me ...]

Airlines have had marginally more success with renewable fuels, but mostly because they have been willing to pay huge sums for sample quantities. Alaska Airlines said recently it had paid $17 a gallon. Lufthansa plans to fly a Boeing 747 from Frankfurt to Dulles International Airport near Washington using 40 tons of a biofuel mix.

... so in other words... these fuels do exist. But they're expensive. Okay.
posted by six-or-six-thirty at 10:47 PM on January 22 [5 favorites]

I guess the fine isn't quite big enough yet.
posted by the_artificer at 11:02 PM on January 22 [9 favorites]

If it really was impossible, I have no doubt at all that the oil companies would have made that point to Congress via their massive lobbying apparatus.
posted by JHarris at 11:04 PM on January 22 [1 favorite]

Looks like another Oil Industry promotional piece at the NYT.
posted by oneswellfoop at 11:06 PM on January 22 [7 favorites]

I was going to rant, but I think everyone is on the same "This fine was a carrot/stick approach to necessary innovation" page.
posted by Slackermagee at 11:09 PM on January 22 [1 favorite]

$7M from a market of 180 billion gallons? Hmmm so that's *colbertish calculator basking* oh, nothing at all.

Meh.
posted by pompomtom at 11:20 PM on January 22 [1 favorite]

Pretty shitty attitude there. "Yeah but we found all this other oil so we don't want to do that other thing because it's too hard and costs money."

Sounds like a pretty reasonable attitude.

The problem here is that large scale production of second generation biofuels like cellulosic ethanol simply isn't quite ready for prime time yet, though it may be reaching the tipping point of real viability soon enough. So what to do other than pay the fine, as absurd as it is? Just the cost of doing business to get passed on to consumers in the long run anyways.
posted by 2N2222 at 11:31 PM on January 22

The oil industry has consistently failed to invest in alternative fuels; and so this example is another in a long series.
posted by eustatic at 11:52 PM on January 22 [1 favorite]

If it helps, think of it as the X Prize for cellulosic biofuel.
posted by biffa at 12:25 AM on January 23 [2 favorites]

Yet if we "taxed" oil companies 7m and earmarked the money for producing alternative fuels, and offered a "tax credit" for oil companies if they used an alternative fuel, that would be okay, correct? Am I right that it's only the language that is actually objectionable, because a "fine" is supposed to be punitive and avoidable?
posted by cotterpin at 12:30 AM on January 23 [4 favorites]

If requiring the additive is a good idea (I don't know anything about that) then the legislation should have been written with an escalation clause: $7m this year, $14m next year, doubling every year. I guarantee that someone would synthesise it in commercial quantities before a decade is out.
posted by Joe in Australia at 12:31 AM on January 23 [1 favorite]

What a terrible, terrible article.

Firstly, "cellulosic biofuel" does exist. It's even the oldest fuel in history: it's called firewood.

Secondly, if what the journalist meant was a cellulosic biofuel suitable to use as an additive to gas and diesel, that also exists and is regularly used in drag races: it's called methanol, which can be produced from cellulosic feedstocks (it's also called "wood alcohol", after all).

Thirdly, even if methanol is a bit tricky (that with being highly toxic and stuff), cellulosic ethanol plants are already online, producing millions of gallons of the stuff (which admittedly isn't much in the wider scheme of things). There is a big shortfall compared with the legal mandate, but it certainly isn't "nonexistent".

Fourthly, if the oil industry has failed to fulfil its quota, this only means that the fines are too low. Of course they aren't going to invest heavily in this technology without a large enough stick or carrot. But it isn't rocket science.

Finally, this:

Even advocates of renewable fuel (sic) acknowledge that the refiners are at least partly correct in complaining about the penalties.

“From a taxpayer/consumer standpoint, it doesn’t seem to make a lot of sense that we would require blenders to pay fines or fees or whatever for stuff that literally isn’t available,” said Dennis V. McGinn, a retired vice admiral who serves on the American Council on Renewable Energy.

What this hack fails to mention is that, although the American Council on Renewable Energy may be a genuine advocate of renewable fuels, it counts Chevron and BP among its sponsors. There's thus a small conflict of interest in this particular matter.

I hope this shill at least got a tankful for his efforts.
posted by Skeptic at 12:41 AM on January 23 [22 favorites]

If requiring the additive is a good idea (I don't know anything about that) then the legislation should have been written with an escalation clause: $7m this year, $14m next year, doubling every year. I guarantee that someone would synthesise it in commercial quantities before a decade is out.

Based on this: "Refiners were required to blend 6.6 million gallons into gasoline and diesel in 2011 and face a quota of 8.65 million gallons this year." I think that may be what they have done.
posted by biffa at 1:38 AM on January 23

I pay $2.1 NZD a litre, which working through your archaic measurement units and global currency is about $7m USD a gallon.

You're welcome.
posted by Samuel Farrow at 2:20 AM on January 23 [2 favorites]

Yeah this is another of "OMG INSANE GOVERNMENT" - but in fact what they're doing makes perfect sense.

the point of the law is to incentivize the creation of cellulosic biofuel. And it's not true that it doesn't exist:

But there was none to be had. Outside a handful of laboratories and workshops, the ingredient, cellulosic biofuel, does not exist.

So, it's possible to make, they chose not too. So now they can pay the fine.
posted by delmoi at 2:27 AM on January 23 [5 favorites]

Brazil does it with sugar cane. Other than companies dragging their feet as usual, my guess is they're finding the corn feedstocks are terrible at producing enough ethanol.

I'm not sure it is worth it either, gasoline blended with ethanol seems to produce lower mileage.
posted by narcoleptic at 3:28 AM on January 23

digest and ferment cellulose (hint - cows) ... Impossible my ass.

The "free market" response - if its so easy, go develop it yourself and sell it to 'em.

A response that reflects actual reality:

In the early 1990s a European genetic engineering company was preparing to field test and then commercialize on a major scale a genetically engineered soil bacteria called Klebsiella planticola. .... a genetically engineered microorganism that would kill all terrestrial plants The punchline: But as Ingham points out, the lack of pre-market safety testing of other genetically altered organisms virtually guarantees that future biological monsters will be released into the environment.

Given the sociopathic nature of Corporations - should they be trusted with the biosphere?

As to the 'cows' comment more directly:
Researchers at Bio Architecture Lab, Inc. (BAL) and the University of Washington, Seattle have designed a strain of microbes, derived from stomach bacteria, that can convert seaweed into ethanol.

Brining seaweed onto land for processing - the post processed material has historically been used as a fertiliser but such a practice should be mindful of the contaminates in the seaweed like PCBs, radioactive material, et la.

the corn feedstocks are terrible at producing enough ethanol.

Yes, so bad that the 190 proof Everclear brand is now 150 proof.
posted by rough ashlar at 4:03 AM on January 23

Oh and don't forget that separating water and alcohol is an energy intensive process which consumes 1 time only fossil fuels in most typical applications in the US of A. Things like coal and natural gas.
posted by rough ashlar at 4:06 AM on January 23

..... FROM SCRATCH in four years, to do it we built FUCKING RIDICULOUS centrifuges capable of SEPARATING ISOTOPES, we developed Teflon because nothing else could hold the caustic materials needed, built reactors to generate ELEMENTS that were up until then only theoretical, and we made the whole damn thing work the first time. Not only that but we build a second COMPLETELY DIFFERENT bomb in parallel just to be sure. These oil companies had the same four years to manage to turn carbon compounds into somewhat more useful carbon compounds.

That was then, this is now.
posted by GreyFoxVT at 4:29 AM on January 23

Brazil does it with sugar cane. Other than companies dragging their feet as usual, my guess is they're finding the corn feedstocks are terrible at producing enough ethanol.

Er, the key word here is cellulosic. Making ethanol from long-chained cellulose (as in grass, wood, etc) is somewhat more complicated than from short-chained sugars (like sucrose and corn syrup). Corn ethanol has a terrible carbon balance: according to some calculations, it costs more oil to produce than what it replaces. Sugarcane ethanol is better, but cellulosic ethanol is the Holy Grail, because it could be produced from waste products like wood chips, straw, corn stalks or grass, rather than from food crops.

But while commercial cellulosic ethanol production is proving more difficult to bring forward than initially thought, this article is a hack job, clearly pushing the line of the oil companies.
posted by Skeptic at 4:49 AM on January 23 [1 favorite]

Wow, the corn lobby made the energy lobby look like a bunch of chumps.
posted by 0xdeadc0de at 5:03 AM on January 23

That $7m eventually gets passed on to the consumer anyway...."it's the ciiiircle of strife."
posted by samsara at 5:04 AM on January 23

Blasdelb: For fucks sake this is a country that built an atomic weapon FROM SCRATCH in four years

And they did it without the GODDAMN GOVERNMENT ON THEIR BACKS, STICKING THEIR NOSES INTO oh wait
posted by hangashore at 5:12 AM on January 23 [3 favorites]

Oh and don't forget that separating water and alcohol is an energy intensive process which consumes 1 time only fossil fuels in most typical applications in the US of A. Things like coal and natural gas.

Or you could use ethanol to power the distillation. Or burn cellulose (i.e. wood)
posted by delmoi at 5:14 AM on January 23

Looks like the U.S. managed to pass a carbon tax after all.
posted by oneironaut at 5:22 AM on January 23

a strain of microbes, derived from stomach bacteria, that can convert seaweed into ethanol.

A million Laphroaig drinkers suddenly look up in hope.
posted by Joe in Australia at 5:31 AM on January 23 [3 favorites]

Or you could use ethanol to power the distillation

Do the thermo equations. It doesn't pay.

Or burn cellulose

And how much "wood" would that be?

cellulosic ethanol is the Holy Grail,

And one of the attempts to get that Grail (the GMO noted) would have been a big problem - imagine the roots of plants exposed to alcohol.

And what's the plan to return the post-processing cellulose back to the land from where it came?
posted by rough ashlar at 5:46 AM on January 23

The biofuel production industry in NA is characterized by many small facilities operating at low volume. For instance, in Canada, there are about 25 facilities making ethanol and biodiesel. They produce enough to meet about 1% of the total on-road fuel needs---not counting heating oil, power plant and ship fuel. By contrast, 19 oil refineries produce the other 99% of road fuel, as well as all the heating, power plant and ship fuels. The situation in the US is almost identical, but I don't have the specific figures at hand.

The biofuel and oil markets are more than two orders of magnitude different. Biofuel producers are all small to medium businesses, the oil majors a some of the biggest companies in existence. As far as I know, none of the major oil companies participate or have significant investments in any of these biofuel plants.

There's a company, about 5 km down the road from me who have lignin-ethanol conversion going on a pilot scale. They have investors but, again not from the majors.
posted by bonehead at 6:01 AM on January 23 [2 favorites]

The major problem holding back Cellulosic conversion is that it requires enzymes that do not exist outside of a cow's stomach ( yes, other ruminants too).
Do you think it would be a problem if Monsanto or someone else genetically altered some cellulosic stock crops, say corn, since they are already so good with that, so that it can be converted without the enzyme? Or what if they could build their own enzyme. In either case the Occupiers and their ilk would have a field day. Why build it if you can't use it?
posted by Gungho at 7:01 AM on January 23

It seems like the law is not very well-written, from a political perspective. Requiring the companies to pay a fine for want of a product that doesn't exist, while it may make perfect sense, will only lead to a lot of articles like the NYT piece, and in time could make it easier to undermine the law itself. While it may be a clever solution to the demand-creation problem, I'd argue that US voters don't like "clever." Being clever is not a political winner.

However, if the fine was funneled directly into government research to create the fuels, or could be waived in lieu of provable R&D spending of some multiple of the fine amount, then it might not seem so ridiculous on its face. That would undercut the "OMG government Catch-22 killing industry!!11" claims that I'm sure we'll only hear more of as the fines escalate.
posted by Kadin2048 at 7:03 AM on January 23

How much did this article cost them?
posted by bonobothegreat at 7:31 AM on January 23

Fines are just a cost of doing business.

Genuflect.

Repeat.
posted by Benny Andajetz at 7:32 AM on January 23

Related: US must stop promoting biofuels to tackle world hunger, says thinktank.

Global Hunger Index says US government support for corn ethanol was a factor in this year's food price spikes.
posted by ts;dr at 7:49 AM on January 23

You know what else was a factor in food price spikes? THE HIGH COST OF OIL.
posted by maryr at 8:15 AM on January 23 [2 favorites]

Do you think it would be a problem if Monsanto or someone else genetically altered some cellulosic stock crops, say corn, since they are already so good with that, so that it can be converted without the enzyme? Or what if they could build their own enzyme.

Working on it. Well, no, right now I'm reading Metafilter, I'll get back in the lab now.

Working on it for someone else I should say. I do not work for Monsanto. Although if they wanted to buy us for a lot of money and make my stock worth something, I wouldn't complain too much.
posted by maryr at 8:17 AM on January 23

Of course, if legislators had just trusted the innovative power of free enterprise and implemented a carbon tax instead of trying to pick winners and losers, this wouldn't have happened.
posted by [expletive deleted] at 8:24 AM on January 23 [1 favorite]

Oh and don't forget that separating water and alcohol is an energy intensive process...

Given 1 gallon of gasoline and 1 gallon of clear ferment supernatent, I'm willing to bet that I can get most of the alcohol into the gasoline with equipment I could build using crap I already have around the house (or maybe after throwing $20 at McMaster Carr) with only trivial amounts of energy involved.
posted by Kid Charlemagne at 10:31 AM on January 23

On the plus side if cellulosic ethanol becomes a real thing we may finally have a good use for the NY Times.

The thing about cellullosic energy is that Mother Nature has been working on this for a very very long time and most of the solutions she has produced are relatively low energy yield. If you want to get the energy out of a tree fast you set it on fire, if you want it out slowly you digest the tree with fungi and microbes.
posted by The Violet Cypher at 10:38 AM on January 23

So let me get this straight, the oil industry has had since 2007 to figure out how to digest and ferment cellulose (hint - cows), hasn't bothered,

Kid Charlemagne, cows can't digest cellulose.

But termites* can.

* with associated gut flora, of course.
posted by IAmBroom at 12:51 PM on January 23 [1 favorite]

That lovely Mexican corn smut, or huitlacoche, can as well.
posted by maryr at 1:00 PM on January 23

They required us to put seatbelts in our cars. Seatbelts! Nobody even *makes* seatbelts, where on earth are we supposed to get these things?
posted by tylerkaraszewski at 2:34 PM on January 23 [1 favorite]

Once, while driving through some boreal forest, I jokingly said that Canada would be a real energy super-power when they discovered a way to turn pine trees into gasoline. Now that there's a slight chance that might actually happen some day, it's a terrifying prospect. If people really get good at turning biomass into motor fuels, I expect the most likely outcome is we'll strip bare the entire biosphere in a few generations.
posted by sfenders at 4:59 PM on January 23