<em>WSJ</em>: Biodiesel's advocates smarter than corn ethanol's | Gristmill: The environmental news blog

WSJ: Biodiesel's advocates smarter than corn ethanol's

Subsidies contribute to muddying of biodiesel instead of boosting the industry

Posted by Joseph Romm (Guest Contributor) at 3:36 PM on 01 Apr 2008

Read more about: biofuels | energy | shenanigans | business

The WSJ reports today:

The U.S. taxpayer forks over a $1 subsidy for every gallon of biodiesel that is blended in the U.S. for export later. The idea was to give a nudge to the U.S. biofuel industry. But it is boomeranging, as the Guardian reports today in the latest installment on biodiesel "splash-and-dash."

...

Increasingly, traders ship biodiesel from Asia or Europe to U.S. ports, where it is blended with a "splash" of regular diesel, the paper reports. That qualifies the shipment for U.S. export subsidies. Then it is shipped back to Europe where it is also subsidized. European biofuels organizations talk about between $30 million and $300 million in U.S. subsidies being exported that way to Europe.

The result? Biofuel's already-tarnished environmental reputation comes under more fire, because round trips across the Atlantic add unnecessary transport emissions to the mix. And Europe's own biodiesel industry has been shutting plants, despite its own efforts to ramp up production to meet political mandates. Imports are undercutting local producers on price.

The Christian Science Monitor has more details:

If the ship holds roughly 9 million gallons, it takes only about 9,000 gallons of traditional diesel (0.1 percent of the total) to make the entire load eligible for the blenders tax credit.

The U.S. importer of the load applies to the Internal Revenue Service for the credit -- a dollar for each of the 9 million biodiesel gallons, Mr. Baize calculates. The next day the tanker can set sail -- dash -- for Europe. There, the U.S. importer resells the biodiesel, taking advantage of European fuel-tax credits that, in effect, keep biodiesel prices above US prices.

April Fools! Oh, wait, no. It just sounds too absurd to be true. They say, "You can't make this stuff up" -- and it turns out you really can't.

For story: WSJ: Biodiesel's advocates smarter than corn ethanol's
16 Comments | Post a Comment

"Synfuels" made that way for decades!

Synfuels = coal sprayed with a tiny amount of diesel oil. Has enjoyed a special tax credit since the 70s. As Lilly Tomlin says, cynics just can't keep up.

The 5% Project

by JMG at 6:15 PM on 01 Apr 2008

Errors in the Grauniad article

For one, The Guardian uses confusing terminology. In the linked article they seem to be using the term "splash and dash" to refer only to round-trip shipments of biodiesel from Europe to the USA and back. Actually, the term "splash and dash" previously has been used to include shipments of ANY biodiesel, from any (foreign) source to the USA involving the addition of a small amount of petroleum diesel so that the whole shipment of biodiesel can qualify for the $1.00/gallon blender's credit. This is how Biodiesel Magazine defines it:

Splash-and-dash, a variation of "touch-and-go" trade, is the name given to the practice of shipping large volumes of foreign biodiesel into U.S. ports, topping biofuel-laden tankers off with a "splash" of petroleum diesel and "dashing" off to Europe where more subsidies await. Adding just one-tenth of a percent of petroleum diesel allows the importer--acting as the blender--to qualify for the U.S. federal biodiesel excise tax credit of 1 cent per percentage of biodiesel blended with diesel.

That shipments are making round trips between Europe and the USA is, however, news. The Guardian writes:

It is estimated that 10% of the 1 million tonnes of biodiesel exported from the US to Europe is part of the splash and dash trade.

It would be hard to imagine that ANY exports of biodiesel from the United States to Europe DO NOT benefit from the $1.00/gallon tax credit. Besides the fact that biodiesel producers everywhere are operating on paper-thin margins (because of the record-high prices of feedstock vegetable oils), why would a U.S. exporter forgo the tax credit if he or she was entitled to one?

Note, also that 1 million tonnes corresponds to about 300 million gallons. That is a huge percentage of U.S. production, which according to the folks at Iowa State University, was less than 500 million gallons in 2007. Some of those exports probably were re-exports of biodiesel from places like Argentina that stopped off in the USA, officially changed hands there (i.e., was "imported"), earned the $1.00/gallon subsidy through a splash of diesel, and then dashed (i.e., was re-exported) to Europe, where prices for biodiesel are higher than anywhere else in the world because of the high fuel taxes on petroleum diesel, from which biodiesel is fully exempted in some countries.

Whichever way you look at it, it is a crazy policy -- a costly loophole kept open only to keep U.S. producers in business. (At one point last year, Congress was going to close the loophole. It hasn't happened.)

In another error, The Guardian refers to the $1.00/gallon tax credit as an "export subsidy". That term should not be invoked lightly, as a true export subsidy would be "contingent, in law or in fact ... upon export performance" (which the blender's tax credit is not), and true export subsidies are prohibited under Article 3 of the WTO's Agreement on Subsidies and Countervailing Methods.

These are only my personal opinions.

by Ron Steenblik at 10:33 PM on 01 Apr 2008

Playing With Fire

When Grist talks about this or that technology being better, it reminds me of a recent cartoon I saw. A knight was standing in front of a princess. On his helmet it said "Blu-Ray". In his hand was the severed head of another knight, "HD".

The princess was sitting at a computer, facing the screen, and she was saying "just a minute...I'm downloading a movie from the Internet".

So, while all the world is a buzz with "Greenery" real scientists have figured out how to take the radiation from nuclear fission and turn it directly into electricity. No more boiling water, or making "fuels" explode in cylindars or having to litter the landscape with giant "wind turbines" or cover the earth in "panels".

With this simple technology, we can even use the waste products of fission...stuff we used to bury...and use it for batteries in cars and laptops!

http://www.shortnews.com/start.cfm?id=69692

US scientists have reportedly been able to construct materials capable of extracting electricity from nuclear radiation, instead of the traditional method. This may have considerable impact on transportation technology, namely cars.
While the complex process involves carbon nanotubes and other materials, the simple explanation is that the materials have the capacity to absorb nuclear radiation, and convert it directly to electricity.
Traditional nuclear power is produced via heat, which produces steam pressure, which in turn drives electricity generating turbines. This new method allows for the technology to be packed into small batteries, capable of powering an array of devices.

Now, if Al Gore had his way, those scientists would have spent their time busing to work and maybe never discovered this technology. But, luckily, most people ignored him and this new technology has been discovered.

Hurray for Real Science!

Texeme.Construct(function(x)=Participation(x))

by jabailo at 11:25 PM on 01 Apr 2008

Look at the date of the article, John Bailo

April 1st. To quote your hero, George Bush, "[F]ool me once, shame on ... shame on you. Fool me ... you can't get fooled again."

These are only my personal opinions.

by Ron Steenblik at 12:29 AM on 02 Apr 2008
[ Parent ]

now not later

April Fools or not, to quote the article (not the shortened version jabailo seems to be quoting):

"However perfecting new nuclear technologies requires years of development, he adds.

Popa-Simil agrees, saying it will be at least a decade before final designs of the radiation-to-electricity concept are built."

At least a decade before final DESIGN concept is built... hmmmm.... I thought all this energy talk was about transition, not holding out for future science whizmos that may never come to fruition.

by weaselteeth at 6:17 AM on 02 Apr 2008

JT gotcha

JT only looked as far as the tabloid excerpt of the original article. Here's the original.

http://technology.newscientist.com/article/dn13545-nanoma ...

"Tests of layered tiles of carbon nanotubes packed with gold and surrounded by lithium hydride are under way. Radioactive particles that slam into the gold push out a shower of high-energy electrons. They pass through carbon nanotubes and pass into the lithium hydride from where they move into electrodes, allowing current to flow."

Nuclear batteries eyyh? Made with gold (check gold prices of late)? Want those in your cell phone? Put it in your pocket, near your reproductive organs.

The freak babies resulting will get you headlines on the same tabloid site JT reads! Check out some of the recent headlines.

"Current Events 24 NEW
Politics, Crimes, Curiosities, ...

Third Graders Plot to Attack Teacher with Knife, Cuffs, Duct Tape
Man Jailed for Asking Women to Kick Him in the Groin"

http://www.shortnews.com/start.cfm

You been baited by the jabbertroll (JT) folks. That's how it's done.

http://amazngdrx.blogharbor.com/blog

by amazingdrx at 7:28 AM on 02 Apr 2008

On the thread

Since this rip off of US taxpayers, disguised as an alternative energy subsidy, has been revealed in the prestigious WSJ, will legislators quickly cancel it?

Don't hold your breath.

Because biodiesel's green image, like that of all farmed fuels is actually built on mass delusion. The delusion? Farmed fuels are carbon neutral. It just isn't so.

http://amazngdrx.blogharbor.com/blog

by amazingdrx at 7:36 AM on 02 Apr 2008

MSNBC

Now covering the teacher assault story. Nothing important happening today? Must be.

In a tabloid culture can we blame poor, troubled, feeble minded trolls? Hehey.

http://amazngdrx.blogharbor.com/blog

by amazingdrx at 8:10 AM on 02 Apr 2008

date of the article...

The announcement was made during the last week of March, so the summary articles spilled into April 1st.

From March 27th 2008:

http://technology.newscientist.com/article/dn13545-nanoma ...

Texeme.Construct(function(x)=Participation(x))

by jabailo at 8:29 AM on 02 Apr 2008
[ Parent ]

Green Scaremongers

"Nuclear batteries eyyh? Made with gold"

Why are the "Greens" such scare mongers.

Unless it's a technology that is funded by billion dollar taxpayer grants promoted by their favorite Democratic candidate, they spend more time and effort than GM and Exxon combined to disparage it!

Nuclear batteries have been in use since 1960 in satellites. The breakthrough at the end of March (not April 1st) is that the conversion rate from radiation to electricity is now something like 40 percent.

This destroys any of the alternatives like wind, solar, biofuels because its always available, always on and limitless. It's not dependent on the seasons, or clouds and it doesn't use up acres of resources.

Of course the Greens would hate nuclear batteries because they'll ideal for the consumer!

Texeme.Construct(function(x)=Participation(x))

by jabailo at 8:33 AM on 02 Apr 2008
[ Parent ]

Riiight, JT.

"...ideal for the consumer!"

Those freak babies are a great income source as well.

I bet your folks were sad to see you go out on your own and leave the carnival sideshow behind.

http://amazngdrx.blogharbor.com/blog

by amazingdrx at 8:44 AM on 02 Apr 2008

Undercutting the Greens

Those freak babies are a great income source as well.

I'm loving it.

You Greens are "irked" by Nuclear Batteries.

Why? Because with a nuclear battery, a home owner of a huge 4 bedroom suburban home, can go to wal mart and pick up a $10,000 nuclear battery and put it in his basement and have carbon free power for 10 years! Same with his SUV.

And he doesn't have to pay any tolls to the solar, wind and biofuel lobbies!

It's over.

Technology wins.
Ranting loses.
Al Gore is obsolesced by the techno-industrial-military complex.

Hooray Techno-Industrial-Military Complex!!

Techno-Industrial-Military Complex 1
Greens 0

Texeme.Construct(function(x)=Participation(x))

by jabailo at 8:53 AM on 02 Apr 2008
[ Parent ]

winguttery!

wingnuttery!

I humbly refer the resident troll to the Columbia study, Unskilled and Unaware.

http://www.apa.org/journals/features/psp7761121.pdf

For those trying to educate trolls, try this excerpt out.

"People tend to hold overly favorable views of their abilities in many social and intellectual domains. The
authors suggest that this overestimation occurs, in part, because people who are unskilled in these
domains suffer a dual burden: Not only do these people reach erroneous conclusions and make
unfortunate choices, but their incompetence robs them of the metacognitive ability to realize it. Paradoxically,
improving the skills of participants, and thus increasing their metacognitive competence, helped them
recognize the limitations of their abilities."

It is cruelty to try to educate a troll.

by anotherID at 1:36 PM on 02 Apr 2008

Lol, more bailo stuff.

I'm loving it.
You Greens are "irked" by Nuclear Batteries.
Why? Because with a nuclear battery, a home owner can go to wal mart and pick up a $10,000 nuclear battery and put it in his basement and have carbon free power for 10 years!
Hooray Techno-Industrial-Military Complex!!

Well thats climate change of a different disaster :P
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/12/ ...

by GreyFlcn at 3:40 PM on 02 Apr 2008

re: bailo

Last I checked, carbon nanotubes were about $1000 a teaspoon.

by GreyFlcn at 7:28 PM on 02 Apr 2008

US Biodiesel Industry Opposed to Splash & Dash

The U.S. biodiesel industry is adamantly opposed to the "splash and dash" loophole described above. There is clearly no energy or tax policy justification for this practice. The National Biodiesel Board (NBB), the trade association for the U.S. biodiesel industry, is working with both Congress and the Executive Branch to address this issue. With NBB's support, the U.S. House of Representatives has, on three separate occasions passed legislation that would deny the biodiesel tax incentive on splash and dash transactions. We fully intend to continue working to stop this unacceptable practice.
The U.S. biodiesel industry is making a positive contribution as a part of our nation's overall energy strategy, and there is a significant public policy good that comes from increased biodiesel production and use. Domestic biodiesel production is adding new fuel and new refining capacity to address America's energy needs and is helping to make us less dependent on foreign oil. Biodiesel is an environmentally safe fuel that reduces lifecycle carbon dioxide emissions by 78%. In 2007 alone, the biodiesel produced in the U.S was the equivalent of removing 700,000 vehicles from the road. Lastly, biodiesel has a positive impact on the economy. Last year, the industry added over $4 billion to the nation's GDP and supported over 21,000 jobs.

by Don Scott at 11:21 AM on 04 Apr 2008

ADVERTISING POLICY

You are not logged in. Thus, you cannot post a comment. If you have an account, log in. If you don't have an account, well, by all means go make one! Meet you back here in five.