Following up on Marlo’s post yesterday concerning the difficulties of bringing cellulosic ethanol to market, the Wall Street Journal wrote an editorial about the (lack of) fuel, and EPA’s decision to require refiners to buy ‘credits’ — Cellulosic Ethanol and Unicorns:

The EPA set the 2011 standard at six million gallons. Reality hasn’t cooperated. Zero gallons have been produced in the last six months and the corner isn’t visible over the next six months either. The EPA has only approved a single plant to sell the stuff, operated by Range Fuels near Soperton, Georgia. The company used to be a press corps favorite and has been lauded by the last two Presidents, but it shut down its cellulosic operations earlier this year to work through technical snafus.

The EPA is requiring oil refiners to buy permits for cellulosic ethanol, because no one is capable of producing it but they have to save face for the “mandate” they are enforcing. I wrote more about this senseless industry tax last month:

No companies have to this date been able to produce cellulosic ethanol that qualifies by EPA’s definition. Yet, presumably to save face, the EPA has not lowered the cellulosic ethanol “mandate” to zero gallons.

Now, what the mandate actually means is that companies will be heavily fined if they do not blend sufficient quantities of ethanol into the fuel supply — each gallon of ethanol having its own identification number, which is generated when the ethanol is created (of course, companies have to devote significant resources to navigating this regulatory-maze). Being that this ethanol does not exist, rather than facing fines for not being able to buy it, refiners are required to purchase “credits” from the EPA. Essentially, the EPA is requiring them to send them money in lieu of meeting the cellulosic ethanol mandate. The product they are required to use does not exist, and rather than giving them a pass, the EPA requires that they pay for phantom credits, despite not getting anything out of it.

The refiners haven’t complained much about this. I wonder if the EPA has ‘encouraged’ them to keep quiet in order to ensure the mandate stays on the low end of impossible.