Shell and BP Halt Opposition to Renewable Fuel Standard

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 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.

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