Just Say ‘No’ to Performative Policy

As the U.S. is flooded with questionable used cooking oil from China, it might be time to stop using Western guilt to justify bad policy

In George Orwell’s 1984, the government conceals its true, totalitarian nature by giving its agencies names which contradict their actual functions. For example, the so-called Ministry of Truth manufactures propaganda; the Ministry of Peace is really the war ministry, keeping the country in a perpetual state of war to justify governmental control of resources. Orwell was perhaps inspired by the British government during the Second World War: The Ministry of Food was responsible for food rationing, and the Ministry of Information was more concerned with suppressing info than supplying it. It’s essentially a cheap way to make less-than-palatable policies easier for the public to digest (i.e. to manipulate public sentiment). One of Joe Biden’s crowning achievements as President has been to add a new example to this list. Enter the inaptly named Inflation Reduction Act.

The Inflation Reduction Act (‘IRA’) was heralded as the bill that would draw a line under COVID, re-invigorating the economy and controlling inflation. Instead, it has made headlines for doing precisely the opposite—sending the American economy into an inflationary death-spiral and, at best, slow-drip regrowth.

Recently, yet another failure of the IRA has come to light. The IRA’s ‘Clean Fuel Production Credit’ scheme extends tax credits to companies for using or producing certain ‘Biofuels’—biologically-sourced alternatives to gasoline, diesel and jet fuel. This would supposedly yield two separate benefits: (1) a reduction in net carbon emissions, since Biofuels have a lower CO2 profile than fossil fuels, and (2) an increase in American soybean crops, since soy is one of the raw materials, or ‘feedstocks’, used to produce Biofuels.

So what’s the problem? Well, the IRA doesn’t require that Biofuel feedstocks be sourced domestically. And it turns out Chinese Used Cooking Oil (‘UCO’) is a cheaper feedstock than American soy. So, instead of boosting soy crops in Illinois, Biofuel producers have begun importing hundreds-of-millions of tons of last month’s Chinese veggie oil into the US. Two years into the IRA, American soy production is down 14% and China, who supplied <0.1% of America’s UCO in 2022, is now our largest supplier of UCO.

Evaluating the Environmental Benefits

OK, so the IRA’s tax credits-for-Biofuels scheme has resulted in economic ‘friendly-fire’. But at least it’s helping the environment, right? Not exactly. It turns out Chinese UCO salesmen haven’t always been honest about the contents of the UCO they export. Unlike the American soy industry, the Chinese UCO market is unregulated. So, rather than sending pure UCO (as labelled) that meets US regulatory requirements, Chinese exporters have reportedly been mixing their UCO with fresh palm oil, which is cheaper and more readily available than genuine UCO. Not only does this violate US Biofuel laws, but palm oil is a known environmental menace, heavily linked to global deforestation and significant carbon emissions. Also—fresh palm oil? Isn’t the whole point to reuse oil manufactured for a different purpose? Isn’t that what makes Biofuels a ‘sustainable’ energy source?

Regardless of your stance on climate change, we should all be able to agree that legislation which stymies free trade for the sake of reducing greenhouse gases should result in some palpable net reduction in greenhouse gases. But it appears that’s too much to ask. Due to the increase in Chinese UCO imports, and the nature of the Chinese UCO market, any environmental benefit from the Clean Fuel Production Credit scheme is, at best, unverifiable. In fact, experts believe the ‘fake UCO’ imported by China not only “skews market dynamics” by incentivizing the import rather than domestic production of sustainable feedstocks, it also “undermines attempts at preserving the environment and reducing greenhouse gas emissions.”

That’s right. Our very own Inflation Reduction Act has opened the US market to the import of unregulated, probably-fraudulent Chinese Cooking Oil, which has naturally increased global shipping-related CO2 emissions, dealt a blow to American farmers, and incentivized the depletion of carbon-reducing rainforests—all in the name of environmental justice.

The Lobbyist Effect

The obvious question is why doesn’t the IRA require that eligible Biofuels be sourced domestically? Seems like a big oversight—a notable ‘oops’ moment, perhaps? I wouldn’t bet on it. When the IRA was passed in 2022, the European Union had been importing Chinese UCO for several years, and had already become aware that fraudulent, impure UCO was undermining the ‘sustainable’ benefit of Biofuels, to the extent that the EU has now installed aggressive tariffs on Chinese UCO, effectively preventing its import into EU countries.

So then why, just as Europe was closing its doors to Chinese UCO, did we prop ours wide open? This, like so many other failings of modern politicians, is attributable, at least in part, to the pernicious influence of lobbyists. Looking at the IRA, the only group who lobbied the Tax Credits-for-Biofuels portion of the bill was the Advanced Biofuels Association (‘ABFA’), an organization that represents the interests of the world’s largest producers, refiners, and distributors of Biofuels—the very companies this tax credit scheme was intended to benefit. It includes companies like Finland’s Neste—the biggest collector of Chinese UCO in the US—who leased a Chinese port to boost their export volume of UCO back in 2020. And companies like Renewable Energy Group—the biggest biodiesel producer in the US. Convenient, eh?

Lucky for us, under the Lobbying Disclosure Act, lobbyists must publicly disclose the bills they worked on and the specific issues they lobbied. One look at the ABFA lobbyists’ disclosures tells us all we need to know. The disclosure form clearly states the ABFA lobbied IRA legislators for inclusion of the “use of used cooking oil under Renewable Fuel Standard,” revealing why the Clean Fuel Production Credit scheme has failed pretty much everyone… apart from the companies who lobbied for its enactment.

Sorry, American soy farmers—despite what our politicians may have said, this was never really about you.

The Larger Psychological Problem

Believe it or not, lobbyists aren’t even the pertinent issue here. We already know lobbyists suck; that they advocate on behalf of parties with adverse interests to those of the US. But at the end of the day, they still need to persuade our elected politicians to get on board with their proposals, and those politicians are still accountable to their constituents for making bad policy, even if the lobbyists asked them to do it. No, the problem isn’t the lobbyists. The problem is that, for several years, our political dialogue has been boobytrapped. On certain ‘sensitive’ topics—climate change, racism, gender—logic and practicability have been abandoned in favor of performative posturing, facilitating a surge of illogical policymaking.

On climate change, for example: a bill with even speculative, unverifiable environmental benefits is now passable—even if, as in the case of the Clean Fuel Production Credit scheme, it’s detrimental to American economic interests. Consider ‘Keystone XL’—the pipeline that would’ve shipped 830,000 barrels/day of crude oil from Alberta, Canada to Nebraska, creating an estimated 11,000 American jobs in the process. Joe Biden killed the pipeline on his first day in office through executive order, citing its negative environmental impact. The only flaw in Biden’s logic is that the death of the pipeline did nothing to halt the flow of oil from Alberta. We’re just shipping it into the US using oil tankers and railway cars instead of the pipeline—which may well be the more environmentally hazardous method of transportation.

Biden’s reasoning was both defective and enlightening in equal parts: “Approval of the pipeline would undermine U.S. climate leadership by undercutting the credibility and influence of the [U.S.] in urging other countries to take ambitious climate action.” I see. So this was never even a real attempt to address climate change. This was yet another case of virtue signaling, designed to make the Biden administration look like “the good guys”. Even though their actions cost American workers jobs, raised fuel prices, and potentially undermined the very issue they purported to address.

These days, cases like the UCO and Keystone XL mishaps are not rare. They’re a product of the ‘social justice’ movement, which preys on the guilt and negative emotionality of certain portions of the public. As long as there is a facially valid moral basis, politicians now have plausible deniability with respect to illogical, even counterproductive policy.

This is why, in recent years, we’ve begun outsourcing issues (like climate change) to countries (like China) that care about these issues 0%—and assuming those countries will abide by our rules. It’s a bit like appointing Jeffrey Epstein the head of Child Protective Services. It’s also why our government is too often able to sell its own citizens down the river with a straight face, even taking pats-on-the-back for the favor. No longer does every legislative proposal have to make sense on its face—if there is even a tenuous ‘social justice’ benefit, at least half of Congress and the public will support it, very few questions asked.

Make Policy Logical Again

Again, the UCO problem was probably caused by lobbyists, but it was facilitated by the larger systemic problem, which is that a spate of miasmic issues has distorted the logical standard for political policymaking. Climate change, racism, gender—the bitch and the beauty of these issues is that it’s impossible to gauge their improvement with any real degree of certainty. Hence, we now have policies like the Clean Fuel Production Credit scheme, which appear superb at first glance but aren’t actually helping their associated causes.

Like any disease of the social psyche, there is no simple solution. But as a threshold matter, we must return to some kind of common-sense standard for policymaking, where non-economic benefits are empirically calculable rather than hopeful gestures. And we must reject the moral showmanship used to justify toothless, even anti-American policy.

Which brings us back to George Orwell’s 1984. Just as the Ministry of Truth spewed nothing but lies, the Inflation Reduction Act didn’t reduce inflation. The ‘Clean Fuel Production Credit’ scheme probably didn’t produce cleaner fuel. But they sounded great and left us feeling all warm and fuzzy inside.

Shouldn’t we start demanding more than that?

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