$50 Million Renewable Energy Scam


Guest essay by Eric Worrall

A Pennsylvania newspaper has reported details of a $50 million alleged renewable energy scam. More shocking is how easy it was, to allegedly defraud government subsidies.

An Easton engineer has admitted he rubber-stamped false reports to the U.S. Environmental Protection Agency for the owners of two Lehigh Valley biofuel companies charged in a $50 million clean energy scam.

According to the charges against Barnes [the engineer], company officials at Smarter Fuel and Environmental Energy Recycling hired Barnes in 2010 to complete engineering reviews of their plants to document their capacities as they applied for the EPA’s renewable fuel credit program.

To become eligible for the credit program, biofuel producers were required to submit to the EPA an independent engineering review based on a site visit to verify how the production plant would operate and how much fuel it was capable of producing each year.

According to the charges, Barnes took information he received from the company officials, including a ghost-written report by another consultant the companies had hired, and used it in the engineering reports without verifying it was correct.

The case is one of several across the country in which biofuel producers have been charged with fraud related to subsidies and credits made available by the EPA under the 2007 Energy Independence and Security Act.

The indictment says Dunham and Tommaso claimed subsidies and other payments for more than twice as much fuel as they actually produced by claiming in their totals partially processed waste oil that was sold to other refiners and wastewater produced in the processing of used cooking oil and ghost transactions that existed only on paper.

Read more: http://www.mcall.com/news/breaking/mc-biodiesel-fraud-easton-engineer-pleads-guilty-20160310-story.html

A $50 million local fraud case might not seem a big deal, but it should concern US taxpayers that there are other cases. Once fraudsters find an easily exploited systemic weakness, the situation can rapidly escalate. In 2010, Denmark lost 2% of their GDP, seven billion dollars, to out of control carbon credit fraud.

In this case, all the alleged criminals had to do, to get their hands on $50 million of federal money, was submit some paperwork, and find an engineer who was happy to pocket a fee without doing any work.

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March 11, 2016 7:39 am

great job Eric!!

March 11, 2016 7:54 am

the owners forgot to donate $10 million of the $50 million to the right reelection campaigns.

Reply to  ferdberple
March 11, 2016 8:29 am

I think this company has been made an example for any other “green” companies who don’t send in their kickbacks.

March 11, 2016 7:57 am

Anything called “Smarter Fuel” should have had special monitoring applied to it all along.

March 11, 2016 7:58 am

I trust the engineer was a loyal donor too.

NW sage
Reply to  Resourceguy
March 11, 2016 5:25 pm

Obviously not enough – hence his legal problems. He never learned to play Chicago style business.

March 11, 2016 8:01 am

The green blob is an appropriate term for the financial shenanigans, fund raising, subsidy mining, press release factorys, etc ad nauseam that seem like a weird parasitic organism. All the people benefitting from this sort of thing make political contributions, so it is not suprizing the Hildebeast and Sanders suck up to the green blob.

Steve Case
Reply to  Tom Halla
March 12, 2016 2:38 am

The “Green MOB” would be more appropriate. Call it what it is.

March 11, 2016 8:04 am

So-called biofuel projects are seldom financially feasible without a subsidy. Even then, it’s necessary to expect the subsidy far into the future, which is risky. So, fraud like this is no surprise.

March 11, 2016 8:09 am

Peanuts. Range Fuels took in almost $250 million on a promise to make cellulosic ethanol in response to Bush’s ‘switchgrass’ EISA07. Never produced a drop. Went bankrupt.

Reply to  ristvan
March 11, 2016 11:04 am

We’ll always have Solyndra Paris.

Reply to  ristvan
March 11, 2016 1:35 pm

I did some equipment consulting on mechanical equipment for Range Fuels. They had very nice digs in Colorado, spared no expense. I visited their Pilot plant also. I never thought their equipment would scale up well. No Surprise here.

Reply to  ristvan
March 12, 2016 12:00 am

The Ineos plant here uses trimmings to make ethanol. their first go produced cyanide gas that killed off the fermenting bacteria. 100 mill later, I don’think they will ever produce anything.in commercial quantities. IMO.

March 11, 2016 8:14 am

The EPA shouldn’t be involved in matters related to energy, like how the Canadian equivalent is forbidden… for now.
EPA has given Microsoft a award for reducing plant food in the atmosphere:

March 11, 2016 8:15 am

I just read an article that in my mind clarifies everything. Also answers why TPTB so desperately want a CO2 tax. http://www.washingtonsblog.com/2016/03/corruption-works-hillary-clinton-example.html

March 11, 2016 8:24 am

Other cases? Here is a list of scams and failures with links that was published in 2012:
It’s only money, let’s print some more.

Pamela Gray
March 11, 2016 8:24 am

Hmmm. Someone wants to grow a biofuel product. Take a report off the shelf. Send it in. Grow the product regardless of whether or not it has a chance in hell of doing well. At least someone notices and says something.
A kid needs academic help. Take a box of curriculum off the shelf and apply. Don’t bother looking up whether or not this box of curriculum has been shown effective in independent studies related to the learning issue the kid has. Eventually the kid gets referred for special education and lands in a long term program because once in, it takes a big-ass effort to get them back out. Happens every day and no one gives it a second thought. No do-over. No fraud. No penalty. No recall of the box of curriculum for being useless. And suziecue gets 8 years of special ed.

Steve in SC
March 11, 2016 8:25 am

Wonder how this caper unraveled? Surely the EPA is not smart enough to figure it out. They were probably complicit in the deal. These guys probably didn’t make the appropriate campaign donations and got made an example.

Pamela Gray
March 11, 2016 8:26 am

Hmmm. Comment must have had an unacceptable word in it cuz comment didn’t show up.

Janice Moore
Reply to  Pamela Gray
March 11, 2016 8:42 am

Hi, Pamela!
I’m hoping you’ll see this: so…. (wink)… how’s it goin’? Last report was quite positive on the post-farmer man. Sorry so nosy, but, I selfishly want the vicarious joy in YOUR joy, so, I ask!
Re: bad words…. I do it ALL the time. Here are a couple (that I keep forgetting), hu$tlers, sc@m, various forms of “the D word,” and…. and like you probably already knew those! Sometimes it is a name, I think I did that with Tren-berth, for there was NO other bad word in my comment… well, just thinking aloud.
Take care O Professor of Wit and Wisdom,

Pamela Gray
Reply to  Janice Moore
March 11, 2016 8:54 am

My guy is by my side through thick and thin and is absolutely the best thing that has ever happened to me, along side having my three children.
My comment could be stuck somewhere in limbo. My internet connection is horrible and my computer virus product wrecks havoc when doing a scan. Oh well. In the hinter lands of NE Oregon, at least we can still ride a horse through town when other forms of transportation through unplowed roads isn’t available.

Janice Moore
Reply to  Janice Moore
March 11, 2016 9:09 am

Yay! 🙂 🙂 🙂
Thanks for sharing, Pamela. May the years to come find you walking (and riding –cool) along the streets of town — together.
I’ve had comments come back from the dead after over an hour — don’t give up!
Re: that jerk C0ttn… sure wish we could get some help to Spencer, he needs a real-time, ruthlessly vigilant, moderator team… and maybe, he needs someone (for he is too busy) to take up his cause with the F.B.I. or other cyber-policing group — Cttn is stalking and harassing and should have a cyber restraining order written so that if he violates it, he can be charged and, ultimately, arrested and put in jail. It is not the content of his speech which is being condemned, but the FACT of his essentially trespassing and harassing by commenting at all.
Sorry to vent here, but, there’s nowhere else to comment on that!

Janice Moore
Reply to  Janice Moore
March 11, 2016 9:12 am

Hi, Pamela,
lol, my reply went into moderati0n. Shrug. I talked about that (bad word) who h@rassed and sta1ked $pencer until he shut down his b1og comments.
Sorry about your internet woes — hope that can be improved one of these months!

Janice Moore
Reply to  Janice Moore
March 11, 2016 9:40 am

Well, thought my comment (and yours — bummer) might show up, oh, well. So, just this to say essentially what I said, “Yay!” Very happy for you.

Janice Moore
Reply to  Pamela Gray
March 11, 2016 10:59 am

Re: Pamela Gray at 0824 today: I’m pretty sure that the word was: “fr@ud.”

Leo Smith
Reply to  Pamela Gray
March 11, 2016 12:37 pm

One of mine has vanished too. No smut at all.

Janice Moore
Reply to  Leo Smith
March 11, 2016 2:56 pm

From an often-in-the-spam-binner… possible reasons, just FYI, Mr. Smith:
1. multiple links in comment
2. “bad word” spelled normally (e.g., fr@ud, den1er, sc@m, hu$tler, maybe con$piracy, and likely others)
3. name of someone on moderati0n hold (so always previewed before posted), e.g., M0sher or St0kes.
4. likely a few “four letter word” type words — THOSE I have no idea… I’m pretty sure he!! (just in case, I wrote them weird, here) and d@mn and other milder expletives are okay.
1) PATIENCE (sometimes, a comment appears after over an hour — they are volunteering in their already busy lives)
2) copy/paste comment into your own Word doc. (or an email to yourself) to save to try to post again with possible changes — but, again, wait at least 2 hours. (I usually, still forget sometimes GRR, do a: (1) highlight all text + (2) Ctrl-C and just keep it in the temp memory buffer until it successfully posts — THEN, if not, I copy that text (Ctrl-V) into a Word doc for later, if needed)
Best wishes Mr. Smith!
Janice (who even though she knows all that above stuff STILL forgets and ends up……. in…… the….. bin…. *clink* <– clink because it is made of metal and my comments are such gems lolololol)

John Robertson
March 11, 2016 8:44 am

Kleptocracy Rules.
So many naked emperors, so little time.

March 11, 2016 8:58 am

Sounds like the good old” magical device adds water to your gasoline and increases mileage by 100%”. Hurry while they last!

March 11, 2016 9:01 am

We need to start a running list of functions EPA fails at. We know mining engineering is a fail, ghost employee management is a fail, smart green finance lending is a fail, and asthma analytics assessment and attribution is a fail.

Reply to  Resourceguy
March 11, 2016 9:40 am

Add Gold King mine spill-Colorado, anything to do with water management/water resources, fracking hostility, and now the methane boogy-man…I could go on and on.

Reply to  Resourceguy
March 11, 2016 10:08 am

“EPA fails” A good study of so called superfund sites should be revealing in that regard. I know of at least one Air Force base (listening post) sold off by the government to an enterprising developer who then accessed 2.7 million in superfund clean up $. No Clean up to this day and enterprising developer in the wind. Site is no longer eligible for funding to clean up (because the money has already been spent once) nobody is in jail and the EPA chugs along doing business as usual. No civil servants were fired, of course. AND THE SITE STILL NEEDS TO BE CLEANED UP!

March 11, 2016 9:12 am

There is a reason intelligent life from other solar systems have not contacted us. They know a high risk, highly leveraged rock when they see one.

March 11, 2016 10:30 am

They used to say “where there’s muck, there’s brass”.
Now they say “when it’s green it’s fraud”.

Reply to  Bitter&twisted
March 12, 2016 3:15 pm

Now see this:
Massachusetts Clean Electricity Partnership
“Affordable Hydro and Wind. For our future
Canadian hydro-power + wind. A new initiative Feb., 2016 because New England needs electric power after their conventional power plants are shut down.

March 11, 2016 11:00 am

perhaps a $600 million fail –
“Legendary venture capitalist Vinod Khosla backed a startup called KiOR as part of his ambitious push for green energy. Now KiOR is bankrupt, he and company executives are being sued for fraud, and Khosla’s big biofuel bet is looking increasingly questionable”.
“turn wood chips into a biofuel that could power vehicles more cleanly than oil, using a first-of-its-kind technology that wowed engineers, politicians, and investors …”

Reply to  Bubba Cow
March 13, 2016 10:56 am

I hadn’t heard of the leg-end-ary Khosla, V.
But I have heard – If it looks too good to be true, it probably IS too good to be true.
Although if it’s a green ‘project’, and you get your campaign contributions in on time . . . .

March 11, 2016 12:34 pm

The renewable fuel subsidy program was created to encourage fossil fuel producers to introduce renewable biofuels, such as biodiesel made from used cooking oil, into the national fuel supply.
Why are good little CAGW weenies even looking at any bio-fuels ? … they are based on that EVIL carbon.

Leo Smith
March 11, 2016 12:35 pm

$50 million alleged renewable energy scam.
Is that all
Those are a dime a dozen…

Janice Moore
Reply to  Leo Smith
March 11, 2016 5:23 pm

Ah, there’s your answer, Mr. Smith (re: yours of 12:37pm above): sc@m. Tsk, tsk, heh.

March 11, 2016 1:19 pm

They will soon cut a deal to save VW jobs—for a fat donation of course.

Bruce Cobb
March 11, 2016 1:21 pm

“Green” energy, of course, is the modern-day equivalent of snake oil. Its only use is in lining the pockets of Big Green, at the expense of all.

March 11, 2016 1:43 pm

Scammers are always looking for a comfortable roost and fraud-ridden CAGW is the umbrella organisation for a multitude of comfy roosts as it is all built on lies. $50,000,000 lost is small beer compared to some huge scams.
Very bad news that Roy Spencer has had to shut comments after repeated attacks by arch-irrelevant Doug J. Cotton. Comments are the life-blood of these investigative sites.

March 11, 2016 2:55 pm

This post led me to investigate “fossil fuel subsidies”. The concept started with the IEA (International Energy Agency) listing countries that cover the cost of providing fossil fuel to their citizens. These include mostly third world countries and some producers such as Saudi Arabia, Venezuela, Russia. Conspicuously missing are Canada, USA, England, Europe http://www.worldenergyoutlook.org/media/weowebsite/2015/Subsidies20122014.xlsx. Therefore according to the IEA, these countries don’t provide subsidies.
This led me to the question, why are some groups claiming that fossil fuel is subsidized? Oil Change International states “In the United States, credible estimates of annual fossil fuel subsidies range from $10 billion to $52 billion annually yet these don’t even include costs borne by taxpayers related to the climate, local environmental, and health impacts of the fossil fuel industry. As of July 2014, Oil Change International estimates U.S. fossil fuel subsidies at $37.5 billion annually, including $21 billion in production and exploration subsidies.” (http://priceofoil.org/fossil-fuel-subsidies/). They provide a spreadsheet of their calculations which reveals a very strange thought process. They take the approach that any tax breaks the production, distribution, and consumption of fossil fuels is considered a tax break. Thus the subsidies include items like:
– expensing exploration and development costs (which are necessary expenses to find the oil which will be taxed),
– temporary expensing of equipment for refining (instead of capitalizing and taking capital costs yearly),
– partial expensing for advanced mine safety equipment
– reduced tax for thin-seamed coal (not a rebate but just less tax than thick-seamed coal production pays)
– exclusion of low-volume oil and gas wells (which reduces the taxes collected on their production),
– low income home energy assistance program,
– fuel tax exemptions for farmers, County Boards of Education, Public Administrations
These are just a few examples of what this org considers subsidies. I question how these can be considered subsidies. They include standard business practices for calculating taxes (no business pays tax on expenses), a lower tax rate for some marginal profitable endeavors, and tax relief to poor people and organizations that are funded by tax dollars. They even include “Alternative fuels production credit” as a subsidy to the fossil fuel. Huh?
I then thought what if the same logic were applied to calculate the subsidies to the renewable energy industry. On top of the grants, preferred pricing, enforcing legislation etc. one would have to add the preferred tax rates, rebates, taxes charged on other energy sources (ie. carbon tax, clean energy tax). In addition, one would have to consider the loss of taxes and royalties that are collected from the fossil fuel industries that are not paid by the alternative energy sector. And the boondoggles that this blog discusses.
But when I considered the enormity of these subsidies, I decided that it was time to stop. The result would surely put me into a depression from which it would take years to recover.

NW sage
Reply to  DCS
March 11, 2016 5:40 pm

Isn’t it interesting? – IAEA is the ultimate and only AUTHORITY when deciding such issues such as what is a subsidy and what is not. There IS NO RECOURSE OR APPEAL. Only suitable political contacts AND a large bank account can push against their decisions.
Is THIS the way world government is supposed to work? NOT!!!

NW sage
Reply to  NW sage
March 11, 2016 5:46 pm

NOT IAEA, IEA, my bad!

Evan Jones
March 11, 2016 3:21 pm

OT shout out.
For gosh sake, Dr. Spencer, please, oh, please do not discontinue UAH. I can understand zapping the comments, but I beg you not to forsake your life’s work, the only reliable metric left for global temperatures.

John F. Hultquist
March 11, 2016 3:22 pm
Reply to  John F. Hultquist
March 11, 2016 6:49 pm

Tesla’s “Tesla battery swap” video is no longer available. Surprise, surprise.

Reply to  Mjw
March 12, 2016 2:46 am

@ Mjw – Is this the one? https://www.youtube.com/watch?v=q9zpOjOZgbk

Retired Kit P
March 12, 2016 10:29 am

“Bush’s ‘switchgrass’ EISA07”
Compared to how many successful energy projects? For example, four large reactors are now under construction in the US. New reactor construction was unthinkable under Clinton.

Retired Kit P
March 12, 2016 11:00 am

One way to judge subsidized projects is performance over a long period and the noise critics make. For example many of US hydro projects were depression era make work projects that brought prosperity to the regions. Besides power, recreation, flood control and irrigation are benefits the critics ignore when they want to tear down ‘big’ dams.
A few wood waste power plants remain from the Carter era. The benefit was improved air quality by cleaner burning waste disposal. Standard fluidiezed bed boiler technology has not been replaced by gasification to run in an engine or gas turbine despite many attempts.

The Original Mike M
March 13, 2016 5:28 am

Whenever politicians come up with new give-away to ‘help’ people you can guarantee that thieves will be the first in line to grab it and that those same politicians will be blind to the theft in their zeal to boast about the “success” of their program. After all, why should they care about the theft? It isn’t their money being stolen.

James in Perth
March 14, 2016 10:35 am

Uh, oh. I think that’s my energy company!! Oh no!!!!

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