U.S. struggles with renewable energy credits fraud

Brett Millar filling up with vegetable-derived biodiesel fuel in San Diego. A federal program seeks to support production of the fuel. / Sandy Huffaker for The New York Times

By Matthew L. Wald

A Maryland man is awaiting sentencing for what may seem an unusual crime: selling bogus renewable energy credits and using the $9.3 million in illicit proceeds to buy jewelry and a fleet of luxury cars.

In a similar case in Texas, a man has been indicted for selling a whopping $42 million in counterfeit credits. He bought real estate, a Bentley and a Gulfstream jet.

As a result of such cases, the Environmental Protection Agency is scrambling to retool a program that relies on such credits to encourage the use of cleaner diesel fuel in engines. The refining industry has meanwhile seized on the schemes to argue that government fuel mandates don’t work and the rules should be relaxed or scrapped.

Under the E.P.A. program, initiated in 2009, a producer who makes diesel fuel from vegetable oils and animal fats receives renewable energy credits for every gallon manufactured. The producer can then resell the credits to refiners, who pay millions of dollars for them under a government mandate to support a minimum level of production.

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