Just now catching up with this. CBC News reported a couple of weeks back that a mysterious train loaded with biofuels had crossed back and forth 24 times between Canada and the U.S. in 2010 without ever unloading. The biofuels train to nowhere was apparently part of a scheme to exploit a loophole in U.S. regulations requiring oil companies to blend 1 billion gallons of biodiesel into fuels each year. According to CBC News:

Bioversel Trading hired CN Rail to import tanker loads of biodiesel to the U.S. to generate RINs (renewable identification numbers), which are valuable in the U.S. because of a "greening" policy regulating the petroleum industry. The EPA's "Renewable Fuel Standard" mandate that oil companies bring a certain amount of renewable fuel to market, quotas they can achieve through blending biofuel with fossil fuel or by purchasing RINs as offsets.

Because RINs can be generated through import, the 12 trainloads that crossed into Michigan would have contained enough biodiesel to create close to 12 million RINs. In the summer of 2010, biodiesel RINs were selling for 50 cents each, but the price soon fluctuated to more than $1 per credit.

Once "imported" to a company capable of generating RINs, ownership of the biodiesel was transferred to Bioversel's American partner company, Verdeo, and then exported back to Canada. RINs must be "retired" once the fuel is exported from the U.S., but Bioversel says Verdeo retired ethanol RINs, worth pennies, instead of the more valuable biodiesel RINs. Bioversel claims this was all perfectly legal.

It may well be perfectly legal, but it certainly did nothing to advance the environmental protection goals at which the federal government program supposedly aims. The energy news website, Oilprice.com, notes that the EPA has cracked down on other bad actors who have scammed the $2 billion per year market for biodiesel RIN credits. It always seems that there are no government schemes that cannot be scammed.

Hat tip to David Sterner.