Oil companies pay $6.8 million in fines for not using cellulosic biofuels that don't exist

Oil companies will pay $6.8 million in fines for not meeting federal quotas for blending in cellulosic biofuels – those produced from grasses, wood and plants – even though there weren't enough of those biofuels available for use, the New York Times reported. Those fines are likely to rise in 2012 because the cellulosic biofuel quotas that refiners have to meet will rise more than 30 percent to 8.65 million gallons.

Charles Drevna, the president of the National Petrochemicals and Refiners Association, said the imposition of the fines "belies logic," while Dennis McGinn, a retired vice admiral who serves on the American Council on Renewable Energy, said that the quota "is the right thing to do" even if the imposition of the fines "doesn't seem to make a lot of sense," the Times reported. Environmental Protection Agency (EPA) spokeswoman Cathy Milbourn said the 2012 quota was "reasonably attainable." Hence the fines.

The fines illustrate the emphasis the federal government is putting on production of biofuels in an effort to cut dependency on foreign oil. Last month, the EPA said it boosted its 2012 goals for production of non-corn-based biofuels by about 36 percent. Specifically, the EPA increased its production goal for advanced biofuels, whose feedstocks range from sugarcane ethanol to algae, by 48 percent, while increasing its goal for cellulosic biofuels by 34 percent. Production of biomass-based biodiesel is set to rise 25 percent this year, according to the EPA.

Annual increases in the EPA's renewable-fuel production guidelines are a response to the Renewable Fuel Standard 2 (RFS2) and 2007's Energy Independence and Security Act (EISA), which, in part, set a U.S. production goal of 36 billion annual gallons of renewable fuel by 2022.

Share This Photo X