Cross-border train mystery highlights problems with energy credit program

A well-traveled CN tank car. Photo: Michael Rosenstein, CC some rights reserved

As reported this week by the CBC, a mystery involving strange cross-border train traffic has been linked to possible fraudin a green-energy credit program.

Basically, by shipping the same load of bio-disel back and forth across the international border valuable credits could be created, without activity of any ecological value taking place. (The subject is sufficiently complicated to warrant clicking through the source articles, should you wish to learn more.)

CBC reports that CN Rail is promising full cooperation with the Canada Border Services Agency and the U.S. Environmental Protection Agency as those agencies investigate further.

This is not the first time programs that generate energy credits known as renewable identification numbers, or R.I.N.’s. have run into concerns about accountability. As explained in a July 2012 New York Times article about other fraud cases in the U.S.:

Biodiesel producers registered with the E.P.A., and every gallon of fuel they produced generated a number known as an R.I.N. The numbers are bought and sold by traders, who broker deals with petroleum companies that need to fulfill their renewable fuel obligations.

More about the Renewable Fuels Standards Program (RSF2) and RINS can be found at this EPA FAQ page.

Incidents like these do raise some basic questions about various programs, however well-intended.

Here’s a start:

1. Does an identifiable problem exist?

2. If so, does the proposed solution genuinely remedy said problem?

3. Is the program vulnerable to fraud/waste/abuse?

4. How can said program be measured for results and be protected against exploitation?

Few taxpayers favor fraud and outright criminality. But situations like these frequently expose a large chasm of distrust. One faction believes government programs can help solve large societal issues. Another see government programs or intervention as part of the problem.

Here, then, is a question for each side:

Pro-government faction: Can government programs be effective and avoid fraud/waste?

Anti-government faction: Do you seriously think the private sector can solve problems without government restraint?

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10 Comments on “Cross-border train mystery highlights problems with energy credit program”

  1. Arlo T. Ledbetter says:

    Gee, fraud in the green energy market? I wonder how many of Obamas donors are involved in this one? Can anyone find any green companies whose big wig bosses donated or bundled hundreds of thousands or millions to Obama that have actually succeeded?

    Hot debate. Like/Dislike Thumb up 0 Thumb down 9

  2. Lucy Martin says:

    By winning two terms in office President Obama has also won the blame for whatever fraud happens under his watch.

    I’d rather make the question bigger than just one presidency.

    Because fraud happens, period. As long as we have greed, there’s going to be fraud. (Wouldn’t you agree, Arlo?)

    Sometimes fraud partners with corruption. But even under good, honest leaders, fraudsters are still there, sniffing for opportunity. That fact needs to be kept in mind when designing programs in the first place, or assessing their worth once established.

    I am editorializing here, but environmentalists in particular must beware of policies that lean too heavily on good intentions, or wishful thinking.

    Given the chance, greed enjoys eating good intentions for lunch!

    Hot debate. Like/Dislike Thumb up 5 Thumb down 2

  3. dave says:

    “Pro-government faction: Can government programs be effective and avoid fraud/waste?”

    Of course. And the vast majority of them are and do.

    As citizens we experience the benefits of well run government programs all day long, everywhere… so pointing to a couple of bad examples and extrapolating out that all government is therefore bad and inefficient is a logic I’ll never understand.

    I do, however, personally think that swap markets – derivatives, currencies, etc – are more prone to higher levels of fraud and inefficiencies. And energy credit programs are exactly this.

    Popular. Like/Dislike: Thumb up 5 Thumb down 0

  4. Arlo T. Ledbetter says:

    “So far, 34 companies that were offered federal support from taxpayers are faltering — either having gone bankrupt or laying off workers or heading for bankruptcy. This list includes only those companies that received federal money from the Obama Administration’s Department of Energy and other agencies. The amount of money indicated does not reflect how much was actually received or spent but how much was offered. The amount also does not include other state, local, and federal tax credits and subsidies, which push the amount of money these companies have received from taxpayers even higher.

    The complete list of faltering or bankrupt green-energy companies:

    Evergreen Solar ($25 million)*
    SpectraWatt ($500,000)*
    Solyndra ($535 million)*
    Beacon Power ($43 million)*
    Nevada Geothermal ($98.5 million)
    SunPower ($1.2 billion)
    First Solar ($1.46 billion)
    Babcock and Brown ($178 million)
    EnerDel’s subsidiary Ener1 ($118.5 million)*
    Amonix ($5.9 million)
    Fisker Automotive ($529 million)
    Abound Solar ($400 million)*
    A123 Systems ($279 million)*
    Willard and Kelsey Solar Group ($700,981)*
    Johnson Controls ($299 million)
    Brightsource ($1.6 billion)
    ECOtality ($126.2 million)
    Raser Technologies ($33 million)*
    Energy Conversion Devices ($13.3 million)*
    Mountain Plaza, Inc. ($2 million)*
    Olsen’s Crop Service and Olsen’s Mills Acquisition Company ($10 million)*
    Range Fuels ($80 million)*
    Thompson River Power ($6.5 million)*
    Stirling Energy Systems ($7 million)*
    Azure Dynamics ($5.4 million)*
    GreenVolts ($500,000)
    Vestas ($50 million)
    LG Chem’s subsidiary Compact Power ($151 million)
    Nordic Windpower ($16 million)*
    Navistar ($39 million)
    Satcon ($3 million)*
    Konarka Technologies Inc. ($20 million)*
    Mascoma Corp. ($100 million)

    *Denotes companies that have filed for bankruptcy.

    Like/Dislike this comment: Thumb up 2 Thumb down 1

  5. Two Cents says:

    That’s quite a list. Would like to see who some of the principles are connected with these companies.

    Like/Dislike this comment: Thumb up 1 Thumb down 0

  6. Lucy Martin says:

    That’s an intriguing list Arlo.
    As so many purported “facts” get passed around willy-nilly on line, I was interested in finding the source.

    Did that come from this Oct 18 post in The Foundry?

    If so, that particular article goes on to say the following:

    “The problem begins with the issue of government picking winners and losers in the first place. Venture capitalist firms exist for this very reason, and they choose what to invest in by looking at companies’ business models and deciding if they are worthy. When the government plays venture capitalist, it tends to reward companies that are connected to the policymakers themselves or because it sounds nice to “invest” in green energy.”

    That paragraph describes a perfectly predictable problem.

    It is the sort of thing that needs fair-minded attention – including accurate scrutiny from the press.

    Like/Dislike this comment: Thumb up 3 Thumb down 0

  7. Ken Hall says:

    As a retired member of the, widely detested, set of US Government bureaucrats I find it amusing that the conservative mindset is “government bad”, “corporations good”. If fraud is being perpetrated to obtain lucre from government programs. are not the perpetrators of such schemes members of the “corporations good” set? How do those of us who were/are employed in the “government bad” set gain by enabling such schemes?

    Like/Dislike this comment: Thumb up 2 Thumb down 0

  8. Two Cents says:

    You don’t. You were blinded by the hype and b.s. and sucked dry and tossed aside.

    Like/Dislike this comment: Thumb up 0 Thumb down 0

  9. Two Cents says:

    ..hypothetically speaking

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  10. Rancid Crabtree says:

    Ken, the conservative mindset is not “gov’t bad, corp good”. The conservative mind set is “over reaching, over sized, inefficient gov’t bad, well managed, vibrant, free enterprise good”. The particular corps mentioned above are not “good” in that sense. They are examples of the unholy alliance of gov’t, political favoritism and greed. If it had been a Republican giving billions to donors to build clean coal plants that then failed the result and improper behavior would be the same.

    How did the “gov’t bad” gain? Campaign donations, money and power of course. Not you in particular, but your bosses up the line.

    Like/Dislike this comment: Thumb up 1 Thumb down 0

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