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Shell and BP Halt Opposition to Renewable Fuel Standard

RP Siegel | Tuesday August 6th, 2013 | 11 Comments

PortraitOil companies don’t like biofuels very much. The reason why is pretty clear. Right now, 10 percent of what would have been gasoline sales is now being diverted to biofuels, primarily ethanol. Oilmen particularly don’t like the renewable fuel standard (RFS), which legally requires that gasoline producers include a minimum percentage of ethanol in every gallon sold, an amount that could grow to 15 percent in the near future, and eventually might go as high as 30 percent. By 2022, that means that 36 billion gallons will come from bio-based sources, though a maximum of 15 billion gallons can come from corn, a move intended to limit interference with the food supply.

That is why, both the American Petroleum Institute and the American Fuel and Petrochemical Manufacturers group are pushing hard for a complete repeal of the RFS.

Two oil companies, BP & Shell, however, have broken ranks with these trade groups, saying that they, “generally support” the legislation. Those are the words of John Reese, Shell’s downstream policy and advocacy manager. He does feel that the mandate could use some revision. Likewise, according to spokesman Matt Hartwig, “BP supports the goals of the RFS program to stimulate the development and deployment of biofuels technologies. There are challenges with the standard that must be addressed, and we continue to work with regulatory authorities to address these issues.”

This stands in fairly stark contrast with ExxonMobil, for example, whose VP of public and government affairs, Ken Cohen, said that “the RFS is broken beyond repair.” Cohen made this comment in a blog post in which he complained that the price of a Renewable Identification Number (RIN), a credit used to track each unit of renewable fuel, has been climbing rapidly due to a shortage of supply.

These comments were made at a two-day congressional policy briefing on the RFS, held last month by the House Committee on Energy and Commerce. Committee chairs Henry Waxman and Fred Upton issued the following statement.

We began this year with an understanding that the time had come for a review of the RFS and a belief that bipartisanship was our best path forward. We have spent the past four months conducting careful analysis, soliciting stakeholder feedback, and listening to expert testimony. The process has been a success, giving both members and the public an opportunity to better understand a policy that is both complex and far-reaching.

“We are going to use the August work period to discuss bipartisan solutions that take into account the broad range of concerns we have heard. Any reforms to the RFS will reflect our efforts to protect the interests of consumers, the environment, farmers, food and energy producers, and all of the American people. Building consensus will not be an easy task, and we are grateful for the members on both sides of the aisle who have stepped up to provide leadership on this important issue. We will continue looking to them, along with other members from both parties, both on and off the Committee, to ensure the wide range of perspectives are taken into account.  As we transition from reviewing the law to reforming it, our commitment to a collaborative, bipartisan process is stronger than ever.”

So, why the difference in opinion? It could be that both BP and Shell have invested heavily in biofuels. Shell has a partnership with Virent, aimed at developing biofuels in Houston while BP and DuPont have a joint project called Butamax Advanced Biofuels.

Virent produces a full spectrum of plant-based petroleum substitutes, including many petro-chemicals. They can process a variety of feedstocks ranging from conventional plant sugars such as beet, sugar cane, and corn, to cellulosic sources such as corn stover, grasses and wood.

Butamax produces bio-butanol, a fuel that boasts a higher energy density than ethanol. It is also approved for blending at higher ratios that ethanol, (16 percent vs. 10 percent).

Several fast food companies including White Castle and Wendy’s lobbied against the RFS, complaining that the standard would drive up food prices.

Many biofuel proponents claim that the RFS is essential to advance development of second-generation cellulosic biofuels which will provide far better energy yields with lower impact, compared with ethanol produced from corn.

[Image credit: US National Archives: Flickr.com]

RP Siegel, PE, is an inventor, consultant and author. He co-wrote the eco-thriller Vapor Trails, the first in a series covering the human side of various sustainability issues including energy, food, and water in an exciting and entertaining romp that is currently being adapted for the big screen. Now available on Kindle.

Follow RP Siegel on Twitter.

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▼▼▼      11 Comments     ▼▼▼

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  • Jonathan

    Shell and BP’s support of the RFS has nothing to do with support of biofuels per se. Due to structural flaws in the RFS, the program is causing a huge transfer of wealth from refiners (who produce gasoline and diesel) to fuel marketers (who blend gasoline with corn ethanol). Shell and BP happen to have disproportionately large marketing operations in relation to their domestic refining operations, meaning other refining companies with less marketing operations (Valero, Marqathon, etc.) are forced to write huge checks to Shell and BP. This is all happening while biofuels remains a relatively low-margin business.
    So Shell and BP are benefitting from a windfall due to a poorly designed regulation, and they’re laughing all the way to the bank. Of course they’ll say they support biofuels; that’s just good PR.

    • Dave Shires

      Cheeky geniuses…..

    • D Finch

      So a regulation designed to reward oil corporations for aligning with the vision for a renewable future… actually rewards the corporations best aligned with the vision for a renewable future. Sounds like a win to me. Sorry to the decaying refiners and such who haven’t been able to get on the wagon.

  • Steve

    QUOTING – “Several fast food companies including White Castle and Wendy’s lobbied against the RFS, complaining that the standard would drive up food prices.”

    It’s always amusing when companies like “White Castle and Wendy’s” have the audacity to claim what they produce is “food”. More expensive corn means less junk food and a much healthier society.

  • Consultant

    Ethanol = Bad for your mileage, bad for your engine and is a subsidized genetically altered corn product that is destroying food crops. Why would anyone want this? Lobbyists that’s why!

    • D Finch

      “Why would anyone want this?” Because it’s clean-burning, homegrown, renewable, supportive of rural economy, supportive of agricultural science, and it’s the only commercial product digging its heels in to prevent gas prices from going through the roof!

    • TJames

      I’ve compared the mileage my 2004 Chevy Impala gets with Unleaded, 89 octane gasoline and with 10% ethanol, 89 octane fuel and there is no difference in mileage. Maybe even about a 0.5 mpg increase when using 10% ethanol. And there has been no side effects on my engine, the power, or performance of my vehicle.

    • motoxrider365

      Well, you don’t know what you’re talking about. Ethanol has a much higher octane rating than gasoline. Which is actually great for performance and efficiency in your vehicle. It is true that it can be bad for your engine if your engine was not designed for ethanol. This is mainly due to the seals and rubber rings in fuel lines, injectors, etc… The finger needs to be pointed at everyone. Auto manufacturers could create vehicles in which any level of ethanol could be used, but this would require more components (that would measure the amount of ethanol in the fuel, which would be used to determine how much fuel will mix with the air). That means more money that they have to shell out, which of course they’d rather not do. So at this point in time, E85 and crap like that isn’t efficient at all because your car still has to pretend it is injecting pure gasoline (or else your engine could experience pre-detonation). This basically means that more E85 is burned than is needed. So you really pay more to use E85 as a consumer. E85 also requires a crap ton of corn, and the farmers love that! They get to sell like heck. But, more crops requires more fertilizer, and fertilizer happens to get in the water supply. Did you think it just poofed away? Overall everyone is f*#%^d by ethanol, except the farmers. Ethanol at this time = inefficiency due to not using it correctly, damage to the environment by fertilizer runoff, and more money out of your pocket. So where is YOUR benefit, as a consumer. It isn’t there, at all, whatsoever. The only person saving your butt right now is the oil industry, and you’re running out of their support as they start to shift toward biofuel investments. It’s time for you to act.

  • Ed Winkle

    Good job, sir!
    Here is my blog response:
    I just saw this topic in a commercial on my local news channel, a CBS affiliate. I heard it on WJR radio on the way to Cleveland, too. The commercial is full of falsehoods like E-15 will damage your engine, the standard will make food prices go up and blah, blah blah. It mentions the support of AAA and I am a member. I don’t like that reference.
    What’s the truth? “Oil companies don’t like biofuels very much. The reason why is pretty clear. Right now, 10 percent of what would have been gasoline sales is now being diverted to biofuels, primarily ethanol. Oilmen particularly don’t like the renewable fuel standard (RFS), which legally requires that gasoline producers include a minimum percentage of ethanol in every gallon sold, an amount that could grow to 15 percent in the near future, and eventually might go as high as 30 percent. By 2022, that means that 36 billion gallons will come from bio-based sources, though a maximum of 15 billion gallons can come from corn, a move intended to limit interference with the food supply.
    That is why, both the American Petroleum Institute and the American Fuel and Petrochemical Manufacturers group are pushing hard for a complete repeal of the RFS.
    Two oil companies, BP & Shell, however, have broken ranks with these trade groups, saying that they, “generally support” the legislation. Those are the words of John Reese, Shell’s downstream policy and advocacy manager. He does feel that the mandate could use some revision. Likewise, according to spokesman Matt Hartwig, “BP supports the goals of the RFS program to stimulate the development and deployment of biofuels technologies. There are challenges with the standard that must be addressed, and we continue to work with regulatory agencies to address these issues.”
    As a corn grower, I haven’t seen ethanol damage an engine or make my food bill go up. Fuel costs and other inputs drive the price of food, not ethanol. You stand on one side of the issue or the other or you just don’t care. I care. I support the idea of burning corn ethanol. I burn lots of it. I like the jobs it creates and the lack of dependence on foreign oil. Still, we are now a major export of gasoline because of the fracking industry.
    I admit farming was more stable at $2 corn but it made sense to distill a crop we can grow so much of.
    You either agree or you don’t or you just don’t care.
    Ed Winkle

  • CharliePeters

    VETO the AB 8 Pavley “Wallet Flushing” 1%’er $2.3 billion tax subsidies

  • CharliePeters

    BP and Shell GMO fuel ethanol affect the beef or water?

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