Here’s a wonderful story about the perverse unintended consequences of a well-intentioned public policy. A Canadian firm is making millions by shipping by rail on what CBC News calls “the train to nowhere” biodiesel fuel into the United States and then, without unloading it, shipping it back to Canada. CBC News calls it “the train to nowhere.” Paper transactions changing ownership enable the company to claim millions of dollars of biodiesel credits tradeable on markets. The credits have been established by the Environmental Protection Agency to track the production and importation of ethanol and biodiesel. Ethanol credits are worth only pennies, but biodiesel credits have been worth more than $1. The Canadian company paid $2.6 million shipping charges but gained 12 million credits: you do the math.

Hat tip: Tyler Cowen’s wonderful Marginal Revolution blog.