Troubles roil biodiesel credit-trading market

In recent months, the tax credit-trading market for the biodiesel industry has been rattled by fraud allegations, plummeting confidence and numerous lawsuits. The Houston Chronicle reports the EPA has identified more than 140 million fraudulent credits across the country, a sizable figure considering that 1.6 billion credits were generated last year. The turmoil has raised concern about the EPA’s system for subsidizing production of biodiesel, which has transformed into a complex web of trading in largely unregulated financial instruments. The EPA is now taking action against several companies around the United States. Just this month, it notified Houston-based Green Diesel it is accusing the company of generating more than 60 million invalid credits, known as Renewable Identification Numbers, or RINs, in what is the largest alleged transgression to date, the EPA says. The number of active biodiesel producers fell from about 150 last year to 40 this year, likely because of the challenges many of them have faced in selling their RINs, says Eric Rubury, president of Ocean Connect, a RINs aggregator and dealer that is suing the EPA for failing to effectively crack down on biodiesel fraud. Since 2007, federal regulators have overseen the growth of the biodiesel industry, which converts discarded animal fats, used cooking oil and other materials into fuel that can power cars, bulldozers and heavy-duty trucks. Read the full story here.