The Environmental Protection Agency is proposing rules to expand the use of renewable fuels and thwart scams in a program hit by fraud and facing increasing criticisms from U.S. refiners.The EPA yesterday called for a mandate of 16.55 billion gallons for renewable fuels such as ethanol for this year, up 8.9 percent from 2012 and in line with a target set by Congress. Parties have 45 days to comment before a final mandate is set. The agency also issued rules aimed at preventing scams, after the EPA determined that three separate companies sold fraudulent Renewable Identification Numbers, or RINs, for fuel they never produced.Enlarge image
The EPA yesterday called for a mandate of 16.55 billion gallons for renewable fuels. Photographer: Daniel Acker/BloombergEnlarge image
Fermentation tanks stand at the Mid Missouri Energy ethanol plant in Malta Bend, Missouri. Photographer: Patrick Fallon/Bloomberg“Following a number of high-profile RIN fraud cases, EPA expects its rulemaking to improve the overall liquidity in the RIN market and in particular make it easier for smaller renewable fuel producers,” the agency said in a statement.A 2007 federal law requires that refiners such as Exxon Mobil Corp. (XOM) blend certain amounts of renewable fuels with gasoline each year, with the amount determined by their share of the fuel market. Instead of producing the fuels themselves, refiners can buy credits, or RINs, from other producers to fulfill their obligations.Under the proposal issued yesterday, purchasers of the renewable-fuel credits would have them verified through third- party audits. The rule would also specify the conditions under which invalid RINs must be replaced, and by which party would be responsible to pay.Cellulosic Biofuels
The EPA also issued its proposal for 2013 quotas for the production of ethanol and related biofuels. As part of the overall total, refiners would have to make or purchase credits for 2.75 billion gallons of advanced biofuels, such as biodiesel, and 14 million gallons of cellulosic biofuels.While the EPA’s standards to prevent fraud were worked out with both refiners and producers, those two groups are split on the overall merit of the program. Ethanol and biodiesel producers praised the EPA for preserving a program they say is increasing American energy independence and reducing greenhouse- gas emissions.Refiners say they’re gearing up to press Congress to repeal the entire renewable-fuels legislation, as its usefulness has expired with the boom in domestic oil production. Newer, greener fuels from items such as farm waste or algae have been slow to materialize.The “decisions by EPA are emblematic of an irreparable Renewable Fuel Standard and underscores the reasons why Congress should repeal the program,” Charles Drevna, president of the American Fuel & Petrochemical Manufacturers in Washington, said in a statement yesterday.http://www.bloomberg.com/news/2013-01-31/epa-seeks-to-increase-renewable-fuel-mandate-by-8-9-for-2013.htmlGross Says Credit-Based Markets Running Out of Energy
By Liz Capo McCormick - Jan 31, 2013 8:14 AM ETBill Gross, manager of the world’s biggest bond fund, said investors are increasingly at risk as global financial markets run out of energy and time.“The countdown begins when investable assets pose too much risk for too little return,” Gross wrote in his monthly investment outlook posted on Newport Beach, California-based Pacific Investment Management Co.’s website today.Enlarge image
Pimco's Bill Gross wrote, “The countdown begins when investable assets pose too much risk for too little return.” Photographer: Tim Boyle/BloombergThe record monetary stimulus of the Federal Reserve, triggering near-zero interest rates, has crippled savers and prior business models that were based on a positive real return, he said. Real growth of the economy has suffered in the process as net interest margins at banks fall, insurance companies struggle to make returns and pension funds are increasingly underfunded.Investors should position for eventual inflation as the “end stage of a supernova credit explosion” is likely to produce more inflation than growth by holding Treasury Inflation Protected Securities, Gross wrote. “Get used to slower real growth; QE and zero-based interest rates have negative consequences. Move money to currencies and asset markets in countries with less debt and less hyperbolic credit systems” such as Australia, Brazil, Mexico and Canada.Following the end of it two-day rate-setting meeting yesterday, the Federal Open Market Committee kept its debt purchasing, in its latest quantitative easing program, at the rate of $85 billion a month. The Fed is purchasing $40 billion a month of mortgage bonds and $45 billion a month of Treasuries. The Fed has held its target rate in a range of zero to 0.25 percent since December 2008.
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